Nike shares have lost nearly half their value this year, closing at $33.96 on October 5 — about 47% below the 2025 year-end close and down almost 55% over the past 12 months. The selloff has made the sportswear giant the worst performer in the Dow, a position it held by mid-September. The latest quarter brought more bad news: revenue fell 4% to $11.2 billion, and management guided to a high-single-digit drop for the full fiscal year.
Cost cuts replace growth
Nike now plans layoffs beginning in 2027, a move that follows a steady erosion of sales across key categories. Sportswear revenue dropped by a low-double-digit percentage, and Greater China sales plunged 26% excluding currency swings. CEO Elliott Hill acknowledged the problem in plain terms: performance products remain too small to offset losses elsewhere. Citi analysts summed up the shift in a Friday note, writing that "Nike is turning into a cost-cutting story."
The company had already started selling inside Google's Gemini chatbot and AI Mode search from June, according to a May report by ConsumerGoods. That move puts Nike in front of shoppers who use AI assistants to discover products — but it also exposes the brand to a new kind of competition.
AI agents could reroute shoe shoppers
Retail CEO Jan Kniffen, appearing on CNBC's Power Lunch, argued that AI agents will soon pick and buy products on behalf of consumers. A shopper who asks for running shoes — not Nike specifically — might never see the brand first. Rivals such as Hoka or On could win on fit and price. CNBC hosts pushed back, noting that a wrong pick means a return and extra hassle for the shopper. Kniffen conceded that inertia still shields brands because many people ask for Nike by name. But he pointed to history: big players eventually win, as Amazon and Walmart did after the internet boom. He called Walmart the best AI operator in America, citing its use of the technology across supply chain, stores, and warehouses.
Winners and losers pull apart
The split is already visible. Best Buy, Target, and Victoria's Secret have performed well this year, while Nike has stumbled. AI agents could widen that gap, Kniffen said, by steering shoppers toward retailers with better data and fulfillment — not necessarily the most familiar logo. For Nike, the challenge is twofold: fix the core business while adapting to a shopping interface that doesn't care about brand heritage.
The layoffs starting in 2027 are meant to buy time and cut costs. But the revenue trajectory — down 4% last quarter with a steeper decline expected — suggests the company hasn't yet found a floor. Hill's comment that performance products are too small to offset losses elsewhere leaves open the question of what, exactly, will replace that lost volume.
Nike's next earnings report will be the first real test of whether cost cuts are stabilizing the business or simply masking further deterioration. Until then, the stock sits near a multi-year low, and the AI shopping shift Kniffen describes is still mostly a theory — one that Nike has already started hedging against.
