When Nike veteran Elliott Hill was tapped to take on the chief executive role two years ago, the corporate headlines largely revolved around a direct-to-consumer strategy that had gone too far. The aggressive pivot toward online and owned retail channels had left traditional wholesale partners feeling alienated and abandoned, while simultaneously allowing nimble competitors a golden chance to gain a stronger foothold across major retail floors.
Compounding the problem was an overly generous distribution strategy that had flooded the market with some of Nike’s most iconic core footwear franchises—namely the Air Force 1, Air Jordan, and Dunk. This ubiquity severely dented their elusive "cool factor" and devalued the brand cachet that had driven Nike’s dominance for decades.
At the time, Hill offered a straightforward diagnosis and an equally simple answer to these mounting problems: "Let’s see more of Nike being Nike." A genuine turnaround, he argued, required the sportswear giant to refocus its entire organization on core sport, dramatically accelerate product innovation, reset its bloated footwear franchises, and reignite its strained relationships with vital wholesale partners.
The company—which had already cut about 2% of its workforce earlier that year—announced additional layoffs in 2025, this time amounting to less than 1% of its corporate workforce, as Hill restructured the company around key sports versus consumer demographics. These targeted cuts were intended to set Nike "up to win," a company spokesperson maintained at the time.
Except that strategic adjustment was far from the end of the turmoil. Nike’s latest earnings report included yet another sweeping operational reset, which calls for an unspecified number of corporate layoffs in the new year. Furthermore, Nike’s corporate challenges have now grown to encompass far more than just direct-to-consumer missteps and oversupplied footwear franchises.
John Donahoe, the former CEO who led the retailer’s ill-fated direct-to-consumer push, had touted "strong growth" across Nike, Jordan, and Converse at the end of fiscal 2023. At the time, he assured investors that the Chinese consumer was "back" in a big way and that the Jordan brand was "well on its way to becoming the second largest footwear brand in North America."
Three years later, reality has painted a vastly different picture. Converse, the Greater China region, and the powerhouse Jordan brand are all experiencing double-digit sales declines. The core sportswear segment, which houses several of the brand’s main historical revenue-driving footwear franchises, is suffering a similar downward trajectory.
"Taken together, Sportswear, Jordan Brand and Greater China represent significant work ahead," Hill acknowledged on the company’s latest earnings call, "but we know what healthy looks like and we’re taking deliberate actions to get there."
While ongoing declines at Converse remain a significant concern in their own right, market observers are focusing closely on the three distinct areas Hill identified as critical for operational improvement as Nike embarks on yet another ambitious restructuring plan.
Nike Sportswear
Nike’s core sportswear segment, which encompasses some of its largest and historically most reliable footwear franchises, suffered a low double-digit revenue drop in the retailer’s most recent quarter. Even with the decline, the category represented a little under half of the total retailer’s revenue during the period.
"The decline reflected a combination of deliberate actions, product underperformance and broader marketplace pressure," Hill explained to analysts.
One of those deliberate, calculated actions was a sweeping reduction of Dunk revenue by nearly 50%, which intentionally excised $200 million from the division’s top-line performance in the first quarter. Additionally, some older footwear styles within the broader sportswear segment sold "below expectations," according to Hill. Future wholesale order books are taking a tangible hit as well, as Nike works closely with commercial partners to clear out lingering excess inventory.
"In the sportswear category in particular the company feels out of touch. At this point we are questioning whether Elliott Hill may be over his head when it comes to this category and how it needs to be approached," Jessica Ramírez, co-founder and managing director of The Consumer Collective, said in emailed commentary addressing the results. "At this rate we believe competitive sportswear brands and lifestyle brands with strong sneaker assortments—and that are growing their lifestyle offerings and image—will further dent Nike’s market share."
Despite the widespread headwinds, there are notable bright spots. The rollout of a new Studio Fleece collection has provided a welcome boost, emerging as the retailer’s best-performing apparel collection during the quarter. Meanwhile, the legendary Air Force 1 is now successfully "driving a stable full-price business," Hill noted, and other selected footwear franchises managed to grow by double digits during the quarter.
"Where we have introduced newness at scale, we’ve seen early success," he added.
Even with these positive signals, ongoing problems within the sportswear category will likely continue to pressure Nike’s sales numbers through its current fiscal year and well into the next one.
"Overall, there’s a lack of energy in the lifestyle space right now, which is impacting traffic," Hill admitted. "Yes, the consumer is cautious. But as the leader in the industry, it’s on us to bring more creativity to sportswear."
Greater China
After enduring consecutive revenue declines in both fiscal 2025 and fiscal 2026, the Greater China region kicked off Nike’s fiscal 2027 with yet another steep 22% drop in sales.
To combat these persistent struggles, Nike has implemented multiple strategic initiatives to restore the vital region to growth. New regional leadership was installed in January, with longtime Nike veteran Cathy Sparks taking over overall supervision of the geography as vice president and general manager of Greater China. Furthermore, the leaders of Nike’s four global regions were formally integrated into Hill’s senior leadership team as of December.
Over the summer, Nike also announced a comprehensive plan to reset its online distribution model in China, which had previously become overly fragmented. Historically, the brand was sold across more than 1,000 distinct digital storefronts, many of which were operated by a crowded field of just 16 Nike partners. Beginning in January, Nike will streamline its digital footprint to sell directly through the official Nike app and website in China, alongside curated flagship experiences on major platforms like Tmall, JD.com, and Douyin.
The overarching effort is aimed at creating "a more premium brand presentation with clearer product stories and a more connected consumer journey," Hill explained.
In addition to digital cleanup, Nike is ramping up investments in local product creation tailored specifically to the Chinese market, with the first localized collection slated to launch this month.
"It will be a brick-and-mortar only launch purposely," Hill noted. "And then we will continue to deliver products over time, products and assortments that are locally designed, developed and even manufactured in China."
The retailer is also casting a critical eye on the physical brick-and-mortar retail experience across China, observing that many of its local franchise partners have failed to refresh or remodel their retail stores over the past seven years.
"In the near term, revenues and profitability in China will be impacted," Hill cautioned. "We expect our digital cleanup to take multiple seasons as we continue to take targeted actions with our partners to improve inventory levels."
Consequently, sales declines in Greater China are expected to be "even worse the remainder of the year," according to Needham analysts led by Tom Nikic. Much like the domestic sportswear category, the China market is projected to weigh down Nike’s financial performance deep into fiscal 2028.
Adding further complexity to the situation is an ongoing corporate plan to consolidate Nike’s four operating geographies into three. As part of the broader Pace restructuring program, Greater China will be merged into a larger operational group in fiscal 2028 that also encompasses Asia Pacific. BNP Paribas Equity Research analyst Laurent Vasilescu noted that this structural shift will inevitably provide outside analysts and investors with less visibility into localized trends in China, a market that remains "critically important" for understanding Nike’s long-term growth trajectory.
"While this change has already been known, we believe it is unfairly being done under the guise of restructuring when it is simply a way for Nike to create a new APGC segment and give investors less transparency in disaggregating China sales," Vasilescu wrote in a research note.
At the same time, Vasilescu pointed out that Nike has quietly stopped reporting comparable store sales figures by region—a metric the company had transparently shared since fiscal year 2011.
"Not only does the pulling of this disclosure make years of comp store sales data not useful for comparisons sake, but it reduces the transparency on if brick and mortar growth is being driven by like for like sales or simply unit expansion," Vasilescu added.
Jordan
The iconic Jordan Brand, which raked in an impressive $8.7 billion in fiscal 2024, was down roughly 20% from that peak benchmark by the end of fiscal 2026. In the most recent first quarter, revenue tumbled again, this time dropping by the mid-teens.
The Jordan division accounted for about 13% of Nike’s total business during the quarter, according to Hill. The fundamental issue, the chief executive acknowledged, is that Nike has chronically oversupplied its retro Jordan product lines.
Needham’s Nikic underscored this vulnerability in a recent sneaker industry report, revealing that six out of seven retro Jordan product launches in September were actively trading at a discount on the secondary resale market, "reflecting subdued demand for this struggling franchise."
To return the legendary brand to a path of sustainable growth, Nike plans to intentionally pull back on both the volume and the frequency of retro Jordan drops, mirroring the supply adjustments it has already had to implement for the Air Jordan 1.
"We’ve discussed it with our wholesale partners," Hill said. "Together, we will restore balance to the marketplace to create a foundation for more profitable and sustainable growth."
Until those market corrections take hold, North America is expected to bear the brunt of the financial pain. While the Jordan brand had presented localized challenges for Nike prior to the first quarter, financial analysts note that the headwinds have clearly intensified.
"From a product standpoint, Nike used to isolate the problems to Nike Sportswear and Jordan Streetwear," Vasilescu wrote. "Tonight, we heard that the Jordan brand, not just Jordan Streetwear, needs to be rightsized."
Despite these substantial roadblocks, certain segments of Nike’s expansive business continue to perform admirably. Company executives pointed to strong, steady growth within the athletic performance footwear and apparel categories, while revenues ticked up slightly in Nike’s largest geographic market of North America. However, taken together, the Jordan Brand and Nike Sportswear account for roughly 63% of the corporation’s overall revenues.
If a successful corporate turnaround is to materialize, tangible progress must be achieved in those core divisions first.
"When consumers see the Jumpman, it should feel special, it should feel earned," Hill concluded, reflecting on the enduring value of the company’s premier asset. "And every decision we’re making is designed to ensure the Jordan Brand remains as coveted a decade from now as it has been for the past several decades."