Nike to cut around 1,400 jobs as years-long sales slump continues

This is less a cost-cutting story than an admission that the operating model is still too fragmented to support a premium brand revival. The market should view the layoffs as a sign that management is trying to force a faster feedback loop between demand signals, product creation, and inventory allocation — but that only works if product cadence improves within the next 2-3 quarters. If not, the cuts simply remove overhead while leaving the core issue intact: Nike still has to buy time with promotions, which compresses gross margin and dilutes brand heat.

The second-order beneficiary is not just On or other direct athletic rivals; it is every retailer and wholesale partner that can allocate space to brands with clearer sell-through. Nike’s attempt to centralize technology and supply-chain decisioning may reduce internal friction, but it also raises execution risk in the near term because any transition misstep hits a company already operating with weak China demand and uneven innovation. In other words, the near-term setup is paradoxical: better organizational discipline could help over 12-18 months, but the process of getting there likely keeps revenue quality under pressure first.

The contrarian issue is that the market may be underestimating how much of the recovery is now dependent on a few hero products rather than broad-based brand momentum. One successful launch can temporarily mask structural weakness, but if the pipeline fails to produce repeated hits, the equity deserves a lower multiple because earnings become more promo-driven and less durable. The layoffs improve optionality, yet they also confirm that prior recovery expectations were too optimistic for the current demand backdrop.