Nike Stock Sinks as Sales Pressure Mounts. Its $2.5 Billion Cost-Cutting Is Set To Bring More Layoffs.

Nike shares tumbled for a second consecutive session on Friday after the sportswear giant warned that revenue will fall sharply this year and unveiled another round of layoffs as part of a sweeping cost-cutting plan.

Shares of Nike fell more than 4% on Friday, extending losses after the company reported declining quarterly sales and laid out a weaker-than-expected outlook. The stock has now lost nearly 45% since the beginning of the year.

Nike said fiscal first-quarter revenue fell 4% from a year earlier to $11.2 billion, with weakness in Greater China weighing on results despite growth in North America. Net income slipped to $712 million from $727 million in the same period a year earlier.

"We have more work to do in NIKE Sportswear, Jordan Brand and Greater China, and we're taking deliberate actions to strengthen those businesses the right way for the long term," President and CEO Elliott Hill said when announcing the results.

At the center of that effort is "Pace," Nike's new operating model aimed at generating $2.5 billion in cost savings by 2031. The restructuring will include additional layoffs beginning in calendar 2027, although Nike has not disclosed how many positions will ultimately be eliminated.

Through Pace, Nike plans to modernize its global supply chain, reorganize operations around three geographic regions, establish a new campus in India and further streamline its corporate structure.

The latest cuts would follow two rounds of layoffs already carried out this year. Nike eliminated 775 positions across its U.S. distribution centers in January. In April, the company cut another 1,400 jobs, primarily in its technology organization. The upcoming reductions underscore how aggressively management is trying to lower expenses as sales remain under pressure.

Citi analysts said in a note seen by CNBC that they were maintaining a "neutral" rating on Nike, pointing to sales guidance that came in below market expectations. "Nike is turning into a cost-cutting story, announcing a $2.5bn cost savings program as management is adapting to the reality of significant pressure within Sportswear, Jordan, and China," the analysts wrote.

Investors may also have to wait before the restructuring produces substantial benefits. According to Citi, management is expected to provide more details about its five-year strategy at Nike's investor day, but the analysts said Pace may not begin to meaningfully affect the company's financial performance until 2029.

"It isn't out of the question that Nike can beat some of the guidance they just provided, but there really is no justification (in our view) for Nike to receive a premium multiple versus its growing peers," Citi analysts added.