Nike is reducing supply across Sportswear, Jordan Brand and Greater China even though its growing Performance portfolio is not yet large enough to replace the lost revenue. The reset places cleaner inventory and stronger full-price selling ahead of near-term volume.
In Brief
- Nike expects fiscal 2027 revenue to decline by a high single-digit percentage as it reduces supply and narrows distribution.
- Dunk revenue fell nearly 50% in the first quarter, while selected Jordan Retro launches will become less frequent and carry lower volumes.
- Performance products are growing, but Nike expects the supply correction to weigh on results into fiscal 2028, before most Pace savings arrive.
Nike Is Reducing Its Largest Volume Drivers
Nike’s supply correction is concentrated in some of its largest businesses.
Sportswear represented just under half of first-quarter revenue and declined by a low double-digit percentage. Dunk revenue fell nearly 50%, creating an estimated $200 million headwind, while several aged, high-volume footwear products sold more slowly than planned.
That unsold inventory has affected future wholesale orders. Nike is working with partners to clear existing stock while reducing new supply intended for the same marketplace.
Jordan Brand presents a similar problem. The business accounted for 13% of Nike’s global revenue and declined by a mid-teen percentage during the quarter. Management said selected Retro products had been oversupplied and would be released in lower volumes and less frequently.
These decisions are intended to restore scarcity and support full-price selling. They will also remove revenue before newer products are large enough to compensate.
Nike expects fiscal 2027 revenue to decline by a high single-digit percentage, with pressure continuing into fiscal 2028. Lower sales will weaken fixed-cost absorption, while discounts needed to clear older inventory will continue weighing on gross margin.
The cost of correcting oversupply therefore appears in two places. Nike must absorb the immediate reduction in incoming volume while still working through products already in the marketplace.
China Adds a Distribution Reset
Greater China combines an inventory correction with a narrower distribution model.
Revenue in the region declined 26% during the first quarter. Nike expects the decline to deepen during the remainder of fiscal 2027 as it removes digital channels that do not meet its marketplace requirements.
Future digital distribution will center on Nike’s official storefronts on Tmall, JD and Douyin, together with Nike.com and the Nike app. The company is also working with wholesale partners to improve inventory levels and concentrate investment in selected physical stores.
Removing outlets can reduce uncontrolled discounting and improve how products are presented. It also reduces the number of channels available to absorb inventory. Nike must manage the withdrawal carefully enough to avoid transferring excess stock from departing sellers into the remaining network.
The company expects the digital cleanup to take several seasons. That schedule shows why channel rationalization cannot be treated as an immediate fix. Existing inventory must be cleared, future orders adjusted and demand rebuilt through the retained accounts.
Nike has reported encouraging results where product and retail execution are more closely coordinated. Its Shanghai House of Innovation has delivered 10 consecutive months of growth, while China Running recorded its sixth consecutive quarter of growth.
Those examples show that demand remains available in parts of the market. They do not remove the revenue cost of closing weaker channels and correcting excess inventory elsewhere.
Performance Is Growing From a Smaller Base
Nike’s Performance portfolio provides the strongest source of growth during the reset.
The business generated $16 billion in fiscal 2026 and grew by a high single-digit percentage during the first quarter. Running, Global Football, Basketball, Tennis and Golf all contributed, with several sports delivering double-digit growth.
Nike has been more precise in matching products with specific uses and customers within these categories. Four recent running products addressed different distances, training needs and runner profiles. The Caitlin 1 basketball shoe launched through 5,000 stores, twice the average distribution of a Nike Basketball signature shoe.
Nike plans to bring a similar approach to Sportswear by dividing the business into smaller areas based on distinct customer needs and style preferences. The aim is to reduce dependence on a few franchises carrying large volumes across many channels.
A broader group of successful products could make Nike less vulnerable to the decline of any single franchise. It also requires greater discipline over how much inventory is placed behind each product and where it is sold.
Management has acknowledged that Performance is not yet large enough to offset the declines in Sportswear, Jordan Brand and Greater China. Its growth supports the reset, but it cannot prevent the planned contraction in company revenue.
Pace Savings Arrive Later Than the Supply Cuts
Nike’s Pace program is intended to support faster decisions, a more flexible supply chain and a lower cost base. The program includes a new capability center in Bengaluru, consolidation from four geographic structures to three and greater authority for country and local teams.
Nike expects Pace to produce approximately $2.5 billion in savings. Implementation is expected to cost about $1 billion, in addition to roughly $300 million of severance costs recorded in fiscal 2026.
Some supply chain and sourcing actions are already contributing to gross margin. First-quarter gross margin increased 60 basis points to 42.8%, although discounting and channel mix offset part of the benefit.
Most Pace savings are expected in fiscal 2029 and fiscal 2030. The supply reductions, channel exits and wholesale order pressure are happening earlier.
That timing leaves Nike managing a difficult interval. It is taking volume out of the market before its Performance portfolio can replace it and before the redesigned cost base delivers most of its expected benefit.
Nike’s progress will depend on whether lower supply produces cleaner inventories, stronger partner orders and better full-price selling. Revenue growth alone will not show whether the correction has worked. The earlier evidence will appear in the quality of the inventory and demand left behind.
