When veteran executive Elliott Hill was tapped to take the helm at Nike as chief executive officer, the global sportswear giant was reeling from the aftershocks of an aggressive direct-to-consumer strategy. Under previous leadership, the company had pivoted heavily toward its own digital channels and physical retail outlets, pulling back from long-standing wholesale partners and leaving them feeling abandoned. This strategic miscalculation allowed agile competitors to gain a stronger foothold across the retail landscape, capturing market share that Nike had long dominated.
Compounding the friction with wholesale partners was an overly generous distribution model that flooded the market with some of Nike’s most iconic and core footwear franchises—specifically the Air Force 1, Air Jordan, and Dunk lines. By oversupplying these staples, the company inadvertently dented their coveted "cool factor" and drove down resale values.
At the time of his appointment, Hill offered a straightforward philosophy to address these systemic problems: “Let’s see more of Nike being Nike.” A successful turnaround, he argued, required the sportswear behemoth to refocus its entire organization on sport, accelerate product innovation, reset its core footwear franchises, and aggressively reignite its damaged relationships with wholesale partners.
Yet, steering a multi-billion-dollar athletic apparel empire out of a self-inflicted slump has proven far more complex and protracted than initially anticipated. Having already cut about 2% of its corporate workforce earlier that year, Nike announced additional layoffs in 2025, trimming less than 1% of its employees as Hill restructured the company around key sports categories versus traditional consumer demographics. These targeted reductions were meant to position the company to win, according to corporate communications.
However, those adjustments were far from the final chapter. Nike’s subsequent earnings report revealed yet another operational reset, bringing news of an unspecified number of layoffs slated for the new year. Compounding matters, the company’s underlying business challenges have expanded well beyond the initial fallout of its DTC overreach and oversupplied product lines.
John Donahoe, the former CEO who championed the ill-fated direct-to-consumer pivot, had touted “strong growth” across the Nike, Jordan, and Converse portfolios at the close of fiscal 2023. During that earnings call, he declared that the Chinese consumer was officially back and that the Jordan brand was well on its way to cementing its status as the second-largest footwear brand in North America.
Three years later, the reality on the ground tells a starkly different story. Converse, the Greater China region, and the Jordan brand are all experiencing double-digit revenue declines. The core sportswear division, which houses several of the brand’s most critical footwear franchises, is suffering a similar fate.
During the company’s most recent earnings call, Hill acknowledged the depth of the challenge facing the organization. Taken together, he noted, Sportswear, the Jordan Brand, and Greater China represent a significant amount of heavy lifting ahead. At the same time, he expressed confidence, emphasizing that leadership understands what a healthy business looks like and is taking deliberate, calculated actions to get there.
While the ongoing declines at Converse remain a significant concern for the enterprise, industry analysts are closely monitoring the three core operational areas that Hill identified as critical for improvement as Nike embarks on its latest restructuring phase.
Nike Sportswear
Nike’s sportswear segment, which encompasses some of its highest-grossing and most recognizable footwear franchises, saw a low double-digit revenue decline during the retailer’s most recent quarter. Despite the drop, the division still accounted for a little under half of the company’s total revenue for the period.
Explaining the contraction, Hill noted that the downward trajectory reflected a combination of deliberate management actions, product underperformance, and broader, macroeconomic marketplace pressures. Among the deliberate choices was a conscious effort to scale back Dunk revenue by nearly 50%, a move that excised $200 million from the division’s top-line performance in the first quarter alone. Furthermore, certain legacy footwear styles within the sportswear portfolio sold well below initial corporate expectations, casting a shadow over future order books as Nike works closely with wholesale partners to clear out excess inventory.
Market observers have voiced concern over the brand’s current cultural resonance in this critical category. Jessica Ramírez, co-founder and managing director of The Consumer Collective, pointed out in commentary that the company’s sportswear offerings often feel out of touch with modern consumer tastes. She questioned whether leadership is fully equipped to handle the nuanced demands of the lifestyle category, warning that competitive sportswear brands and lifestyle labels with strong sneaker assortments will likely continue to capture market share at Nike’s expense.
Despite the headwinds, pockets of strength remain. A newly launched Studio Fleece collection emerged as the retailer’s best-performing apparel line of the quarter. Meanwhile, the classic Air Force 1 is successfully driving a stable, full-price business, and several other footwear franchises managed to post double-digit growth during the quarter. When the company introduces genuine product innovation and newness at scale, leadership noted, early success consistently follows.
Even with these bright spots, ongoing challenges in the sportswear category are expected to weigh on Nike’s sales performance throughout the remainder of the current fiscal year and well into the next. Hill admitted that the lifestyle space is currently suffering from a broader lack of energy, which is subduing customer traffic. While acknowledging that consumers have grown increasingly cautious, he maintained that as the undisputed leader in the industry, the onus is on Nike to inject greater creativity back into sportswear.
Greater China
After enduring consecutive revenue declines across fiscal 2025 and fiscal 2026, the Greater China market kicked off Nike’s fiscal 2027 with an additional 22% drop in revenue.
To steer the region back toward sustainable growth, Nike has rolled out a multi-layered strategic plan. New regional leadership was installed with longtime Nike veteran Cathy Sparks taking over as vice president and general manager of Greater China, joining Hill’s senior leadership team alongside the heads of Nike’s other core global geographies.
Over the summer, the company also unveiled a sweeping overhaul of its digital distribution ecosystem in China, which had previously become heavily fragmented across more than 1,000 digital storefronts managed by a patchwork of roughly 16 partners. Moving forward, digital sales will be consolidated onto the official Nike app and website, alongside flagship experiences across major platforms like Tmall, JD.com, and Douyin. Hill explained that the initiative is designed to establish a much more premium brand presentation, deliver clearer product narratives, and foster a seamlessly connected consumer journey.
In tandem with digital consolidation, Nike is ramping up investments in localized product development. The first merchandise collection designed specifically to cater to the unique preferences of Chinese consumers is slated for release this month. According to Hill, the collection will debut exclusively through brick-and-mortar storefronts, paving the way for a continuous pipeline of products that are locally conceived, designed, developed, and manufactured within China.
The company is also turning its attention to upgrading the physical retail experience across the region, observing that many local retail partners have failed to renovate or refresh their storefronts over the past seven years.
While these comprehensive interventions are necessary for long-term health, they carry immediate costs. Hill cautioned that revenues and profitability in Greater China will face continued pressure in the near term, predicting that the digital cleanup and inventory rationalization will take multiple seasons to fully execute.
Wall Street analysts share a similarly sober outlook. Needham analysts led by Tom Nikic noted that declines in Greater China are likely to worsen for the remainder of the year and will likely impact Nike’s financial results well into fiscal 2028.
Adding complexity to financial oversight is Nike’s broader structural reorganization. Under the ongoing Pace restructuring program, Greater China is set to be merged into a larger reporting segment alongside the Asia Pacific region in fiscal 2028. Equity research analysts have warned that this consolidation will reduce transparency for investors trying to track localized trends in China, a market vital to understanding the company’s long-term trajectory.
Analysts point out that this reduction in financial visibility coincides with Nike’s decision to stop reporting comparable store sales by region—a metric the company had disclosed consistently since fiscal 2011. Market watchers argue that removing these disclosures limits the utility of historical comparison data and obscures whether physical retail growth is being driven by healthy, like-for-like sales or simply aggressive unit expansion.
Jordan
The Jordan Brand, which pulled in an impressive $8.7 billion in revenue during fiscal 2024, has experienced a sharp contraction, dropping roughly 20% from that peak by the close of fiscal 2026. This downward trend persisted into the first quarter of the new fiscal year, with revenues falling by the mid-teens.
During the quarter, the Jordan division accounted for approximately 13% of Nike’s overall business. The root of the problem, according to executive leadership, lies in persistent oversupply, particularly concerning retro Jordan product lines.
Recent industry analysis by Needham’s Tom Nikic underscored this vulnerability, revealing that six out of seven retro Jordan product launches in September were actively trading at a discount on the secondary resale market, signaling subdued consumer demand for the struggling franchise.
To nurse the iconic brand back to health, Nike intends to deliberately pull back on both the volume and the frequency of retro Jordan product drops, mirroring the supply-side corrections already applied to the Air Jordan 1. Hill emphasized that leadership has consulted extensively with wholesale partners on the strategy, stressing that together they must restore equilibrium to the marketplace to build a sustainable foundation for profitable growth.
Until these corrections take full effect, North America is expected to bear the brunt of the financial adjustment. While Jordan had presented intermittent challenges prior to the first quarter, analysts note that the brand’s current struggles require a much deeper, structural rightsizing than previously anticipated.
Financial observers noted that while Nike previously isolated performance issues to specific categories like sportswear and streetwear, leadership has now made it clear that the entire Jordan brand requires a fundamental recalibration.
Even as these major segments undergo painful readjustments, pockets of the business continue to thrive. Executives highlighted robust growth within the performance footwear and apparel divisions, while the critical North American home market posted slight revenue gains. However, because Jordan and Nike Sportswear jointly account for roughly 63% of the company’s total revenue, meaningful progress in these core areas remains an absolute prerequisite for any successful enterprise-wide turnaround.
Summing up the strategic vision for the brand’s secondary crown jewel, Hill reaffirmed the long-term commitment to preserving the cultural equity of the Jumpman logo. When consumers encounter the brand, he concluded, the experience should always feel earned and exclusive, ensuring that the Jordan Brand remains just as coveted a decade from now as it has been for generations.
