Level 1 — Absolute Beginner
Nike makes shoes and sports clothes. On Friday, Nike told people about its money for three months.
Nike sold less than last year. Sales fell by four percent. That is bad news for the company.
Nike also said it will cut some jobs. Sales in China fell a lot.
Many people sold Nike shares on Friday. The price went down.
- shoes
- things you wear on your feet
- clothes
- things you wear, like shirts
- sales
- the number of things a company sells
- fell
- went down
- cut
- to make smaller or remove
- job
- work that you do for money
- share
- a small part of a company that you can buy
- price
- how much something costs
Level 2 — Elementary
Nike reported its first quarter results on Thursday evening, and the news hurt the company on Friday. Revenue was 11.21 billion dollars, a fall of four percent from a year ago and a little below what analysts expected.
Nike also warned that sales will fall again next year, by a high single digit percentage. In China, sales dropped by 26 percent after taking out the effect of currency changes.
The company said it will lay off more workers starting in 2027, after cutting jobs twice this year. It also introduced a new plan called Pace that should save 2.5 billion dollars by 2031.
Nike shares have lost nearly half of their value since January. On Friday it was the weakest stock in the Dow Jones index, down 3.61 percent at the close.
- quarter
- a period of three months
- revenue
- the money a company earns from sales
- analyst
- an expert who studies companies and markets
- lay off
- to end someone's job because of cost, not performance
- currency
- the money used in a country
- plan
- a set of steps to reach a goal
- save
- to spend less money
- index
- a number that tracks the price of a group of stocks
Level 3 — Intermediate
Nike shares fell sharply on Friday after the sportswear giant reported a fiscal first quarter revenue of 11.21 billion dollars, down four percent from a year earlier and short of the 11.33 billion dollars analysts had expected.
The more worrying part was the outlook. Management said revenue should decline by a high single digit percentage in the fiscal year ahead, and that business in China remains weak, with sales there down 26 percent on a currency neutral basis.
The company announced a new operating model, Pace, designed to deliver 2.5 billion dollars in annual savings by 2031, and warned that more layoffs will come from 2027. It has already cut staff twice this year. Reports noted that profits beat expectations thanks to cost cutting, but investors focused on the shrinking sales line.
Nike has lost nearly 45 percent of its value this year, and on Friday it was the worst performer in the Dow, which still closed higher at 51,177 after the weaker jobs report eased fears of further interest rate rises.
- fiscal
- relating to a company's financial year
- outlook
- a forecast of future performance
- decline
- to become smaller or fewer
- currency neutral
- measured without the effect of exchange rate changes
- operating model
- the way a company organises how it works
- layoffs
- job cuts made by an employer
- beat expectations
- to do better than forecast
- restructuring
- a major change in how a business is organised
Level 4 — Advanced
Nike's fiscal first quarter was a lesson in how a cost cutting story can still disappoint. Revenue came in at 11.21 billion dollars, down four percent and under the 11.33 billion dollars forecast. Profit beat expectations, yet the shares sold off because the sales line keeps shrinking and management guided it lower again, to a decline in the high single digits for the fiscal year.
China is the sharpest wound. Currency neutral sales there fell 26 percent, which suggests that the problem is not simply a weak consumer but a loss of position to local and specialist rivals. A recovery in that market was central to the turnaround that investors were promised.
The company's answer is Pace, a new operating model targeting 2.5 billion dollars in savings by 2031, along with another round of layoffs from 2027 after two cuts this year. Savings of that kind can support margins for a while, but they cannot substitute for demand. With the stock down nearly 45 percent in 2026, the market is asking for evidence of growth, not just discipline.
The reaction also stood out against a buoyant tape. The Dow still rose roughly 0.5 percent to 51,177 on Friday as a soft jobs report cooled expectations of more rate hikes, which made Nike the weakest Dow stock in a strong session, down 3.61 percent.
- disappoint
- to fail to meet hopes or expectations
- guided lower
- told investors to expect weaker results
- turnaround
- a recovery from poor performance
- margins
- the share of sales that remains as profit
- substitute
- something used in place of another
- discipline
- control, especially over spending
- buoyant
- cheerful and rising, in a market sense
- tape
- the stream of market prices and trades
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