Nike Announces Strategic Overhaul Amid Job Cuts and Financial Challenges

Nike is set to implement job cuts, affecting less than 1% of its corporate workforce, as part of CEO Elliott Hill's strategy to revamp operations. The company aims to re-center the brand around sports and sports culture, strengthen athlete and consumer connections, and foster innovation. Nike's financial health is mixed, with declining revenue growth, profitability margins, and revenue per share. The company's valuation metrics suggest a premium pricing relative to historical norms.

Nike, the global sportswear giant, is set to implement job cuts affecting less than 1% of its corporate workforce, as part of CEO Elliott Hill's strategy to revamp operations. The company aims to re-center the brand around sports and sports culture, strengthen athlete and consumer connections, and foster innovation. Nike's financial health is mixed, with declining revenue growth, profitability margins, and revenue per share. The company's valuation metrics suggest a premium pricing relative to historical norms.

The layoffs, announced by Nike, will impact approximately 780 employees and are part of a broader restructuring effort to reconnect with athletes and consumers. The company has realigned into cross-functional teams by sport, a strategy that contrasts with the previous model led by John Donahoe, which was criticized for steering the company away from its athletic roots [2].

Nike's previous layoffs in February 2024 saw the elimination of 2% of its global workforce, impacting over 1,600 positions. The newly announced cuts are more strategic in nature, linked to the implementation of a new corporate vision under Hill's leadership [3]. The company has also shifted its focus to premium pricing and innovation, aiming to counter brand value erosion from excessive discounting.

The restructuring effort includes realigning leadership to prioritize innovation and operational agility. Key appointments, such as Phil McCartney as Chief Innovation Officer and Amy Montagne as President of Nike, reflect a focus on product excellence and efficiency [3]. Nike has also made strategic partnerships with brands like Skims and experiential retail concepts with Urban Outfitters to engage Gen Z consumers and boost market share.

Nike's financial metrics show a mixed picture. Revenue fell 12% in Q4 2025, but the company reported a 120-basis-point improvement in gross margins, driven by higher discounts and inventory liquidation [3]. The company's gross margin of 42.7% remains above industry benchmarks, despite inflationary pressures and tariffs [3]. Analysts project a return to double-digit gross margins as Nike balances disciplined expense management with strategic investments in innovation [3].

Nike's market share in North America and Western Europe remains robust, outpacing competitors like Adidas and lululemon. However, its global sportswear market share dipped to 14.1% in 2024, reflecting intensified competition [3]. The company's reentry to Amazon as a sales platform in 2025 highlights its omnichannel strategy to regain visibility in key markets [3].

Investor sentiment is cautiously optimistic. JPMorgan upgraded Nike to "overweight" with a $93 price target, citing margin recovery and brand strength [3]. As of August 22, 2025, Nike's stock traded at $78, with a market cap of $112.5 billion [3].

In conclusion, Nike's restructuring efforts are a calculated blend of cost optimization and innovation-driven growth. While the short-term financial pain is undeniable, the company's focus on operational efficiency, premium pricing, and product innovation positions it for long-term success.

References:
[1] https://www.ainvest.com/news/nike-announces-layoffs-1-corporate-workforce-restructuring-efforts-ceo-elliott-hill-2508/
[2] https://www.merca20.com/nike-announces-corporate-layoffs-under-its-new-ceo-elliott-hills-strategy/
[3] https://www.ainvest.com/news/nike-strategic-turnaround-assessing-impact-workforce-restructuring-long-term-growth-investor-2508/