Nike said on Thursday that it expects a sharp decline in full-year revenue and announced a fresh round of layoffs as it restructures its global business units.

Under the leadership of CEO Elliott Hill, the company is deepening its reorganization to confront increasingly severe difficulties in the Chinese market.

Thursday's weak outlook underscored that the challenges facing Nike are likely to persist for at least several more quarters, especially in China, where first-quarter sales plunged 26% on a constant-currency basis, amplifying investor worries about how quickly Hill can turn the business around.

As a result, Nike shares fell 8.5% in after-hours trading on Thursday.

In Hill's first two years at the helm, the company has focused on reviving growth by refocusing on core sports such as running and rebuilding relationships with wholesale retailers.

Analysts, however, point out that the company's troubles stem largely from its failure to launch enough compelling new products, which has led to more promotions and discounting.

First-quarter revenue also missed analyst estimates, and the company announced changes to its operating model, including job cuts and the reorganization of its four geographic regions into three: the Americas, Asia Pacific and Greater China, and EMEA (Europe, Middle East and Africa).

In addition, the company plans to build a new campus in India to leverage strong local capabilities and talent.

Nike said it has not yet determined the number of layoffs involved in the restructuring and will begin notifying affected employees in 2027.

The plan builds on previous rounds of job cuts, including one announced earlier this year, and is expected to deliver about $2.5 billion in cost savings by fiscal 2031, with most of the savings realized in fiscal 2029 and fiscal 2030.

Nike expects full-year fiscal 2027 revenue to decline by a high single-digit percentage. According to data compiled by LSEG, analysts on average had expected full-year revenue to fall about 2%.

Another Sharp Sales Drop in China

China has historically been Nike's profit growth engine, but its performance has been particularly weak in recent quarters, largely because international rivals and domestic sportswear companies are steadily expanding their market share.

Investors are closely watching for any signs of improvement, and analysts say that will depend heavily on the innovation performance of local products.

Nike's sales in China have now fallen for nine consecutive quarters, and the decline widened in the latest reporting period.

The region contributes about 15% of Nike's annual revenue, making it the third-largest market after North America and EMEA (Europe, Middle East and Africa).