Nike Restructures Its Organization, The Era of Greater China’s Independence Will Become History

Starting from fiscal year 2028, there will no longer be a separate Greater China region on Nike’s organizational chart.

On October 1, Nike disclosed its results for the first quarter of fiscal year 2027 ending in late August. During the period, the company achieved revenue of $11.213 billion, down 4% year-over-year—or 5% excluding currency effects; net profit was $712 million, down 2% year-over-year; gross margin improved by 0.6 percentage points year-over-year to 42.8%.

In this fiscal quarter, Nike’s revenue in Greater China was $1.18 billion, a decrease of 22% year-over-year, and a 26% decrease excluding currency effects; wholesale revenue in the region dropped by 28%, while Nike Direct declined by 13%. EBIT for Greater China further dropped by 34% to $248 million.

In contrast, revenue in North America has recovered with a 2% increase, and revenue in Asia Pacific and Latin America remained roughly flat at constant exchange rates.

Alongside this earnings report, Nike announced a new initiative called “Pace.”

Nike defines Pace as an “operational model transformation,” not as a new growth strategy. CEO Elliott Hill stated that over the past year, Sport Offense has demonstrated results in running, football and other performance sports categories, and Pace aims to scale this approach across the entire company.

The first layer of change relates to cost management and the supply chain.

Nike plans to make the supply chain model more flexible, moving away from a relatively fixed cost structure and improving responsiveness to demand fluctuations. The company expects that Pace will generate cumulative cost savings of about $2.5 billion by fiscal year 2031, while incurring an estimated $1 billion in pre-tax implementation costs. The main savings will be released between fiscal 2029 and 2030.

The second layer is the global capability redeployment. Nike will establish a new capability center in Bangalore, India, further centralizing certain scalable and shareable corporate functions and capabilities.

The third layer directly targets organizational structure. Nike will reduce management layers and allocate more resources to countries, regions, and cities, granting local teams greater operational responsibilities.

From fiscal year 2028, Nike’s existing four regions will be compressed into three: North America and Latin America will merge to become the Americas; Europe, Middle East and Africa will remain unchanged; Greater China will be merged with Asia Pacific to form APGC, with the regional leadership team based in Singapore.

This means that organizationally, the long-standing independent “Greater China” region is being downgraded.

When Consumer Direct Offense launched in 2017, Nike also consolidated its global regions significantly, but still retained the independent status of Greater China; later, Consumer Direct Acceleration further built up digital channels, direct sales, and global unification.

In recent years, the side effects of this system have gradually emerged: channels shifted toward direct-to-consumer, wholesale partnerships weakened, and products became increasingly reliant on a handful of global lifestyle blockbusters.

The Win Now and Sport Offense initiatives promoted by Hill since his appointment have started to reverse this direction. Nike has reorganized products, marketing, and channels around specific sports like running, basketball, and football, and has restored relationships with wholesalers.

In the latest quarter, Nike’s Performance business still achieved high single-digit growth, with several performance sport categories such as running and football reporting double-digit growth; however, the scale is not yet enough to offset the decline in Sportswear, Jordan, and the China market.

In some sense, Pace is correcting the organizational after-effects left by the last round of globalization and DTC reform. And China happens to be one of the markets where these problems are most clearly exposed.

According to Nike’s plan, Greater China will remain an independent business unit within the APGC framework, with operations focused on Chinese consumers and the local market unchanged.

In the China market, Nike is withdrawing from certain “unprofitable and brand-damaging” online distribution channels. Going forward, digital business will focus on official flagship stores on Tmall, JD.com, Douyin, as well as Nike.com and the Nike App, aiming to reduce deep discounts and restore a more complete brand experience and full-price sales.

In terms of offline channels, Hill revealed that most of the physical stores operated by Nike’s partners in Greater China have not been updated in the past seven years. The Shanghai House of Innovation, after refocusing on sport, product, and consumer experience, has achieved growth for ten consecutive months, and Nike views this as a sample of channel recovery.

Nike is also increasing its local product development capabilities in China. In the current quarter, the company appointed its first local Vice President of Product Innovation for Greater China and doubled the size of the local product innovation team, hoping to feed local insights more directly into the product development process.

Running has become one of the few business lines in China validating this approach: China’s running business has grown for six consecutive quarters, with the latest quarter continuing double-digit growth.

From channel cleanup, store refurbishments, to local product development, Nike’s main line in China is no longer simply to pursue scale recovery but to reestablish the relationship between product, price, and channels.

CFO Dave Denton stated in the earnings call that actively cleaning up channels will put further pressure on Greater China’s revenue performance for the remainder of this fiscal year compared to Q1.

Nike also expects that proactive adjustments involving China, Sportswear, and the Jordan Brand will continue to affect fiscal year 2027 performance, and partly extend into fiscal year 2028.

The integration of Greater China into Asia Pacific is thus not merely a regional consolidation. While Nike removes the independent regional level, it also expects the China team to become closer to products and consumers.

Although the China market is downgraded by one organizational level, Nike hopes this move will lead to faster operational speed.