Nike is planning more job cuts and another restructuring as it deals with weaker sales and a difficult turnaround.

The company expects full year revenue to decline by a high single digit percentage in fiscal 2027, while sales in China fell 26 percent in its latest quarter.

Nike plans to reorganize its global operations into three regions and is targeting $2.5 billion in savings through fiscal 2031. 

The situation highlights a problem that affects businesses of every size.

When revenue slows, cutting expenses is often one of the first responses.

Reducing staff, closing locations, renegotiating contracts and limiting spending can help protect cash flow.

But if the underlying reason customers are leaving is not addressed, cost cutting only treats part of the problem.

A business can become smaller without becoming healthier.

If customers are leaving because the product is no longer attractive, the service is poor, competitors are offering better alternatives or the company has stopped understanding what customers want, reducing the workforce will not automatically solve the problem.

Nike itself is trying to address more than expenses. Its restructuring includes a renewed focus on key sports categories, wholesale relationships and product innovation.

Analysts have also pointed to concerns around the company’s ability to introduce enough compelling new products and its increased reliance on promotions and discounts.

For smaller businesses, the lesson is to diagnose before cutting.

A restaurant experiencing lower sales needs to know whether customers are leaving because of price, food quality, location, service or competition.

An online store needs to know whether the problem is traffic, product selection, delivery, pricing or poor customer experience.

Without that information, cost cutting becomes guesswork.

The better approach is to connect financial information with customer information.

Businesses should know which products generate revenue, which customers return, where leads stop responding, which marketing activities produce sales and where operational costs are rising.

These details make it easier to decide what should be protected, improved or removed.

Technology can make that process more manageable. Auxi Sherpa⁠ can help businesses organize sales information, customer enquiries, follow ups and business processes so owners have clearer information before making major decisions.

The goal is not simply to spend less.

It is to understand what is actually driving the business and put resources behind the areas that can create sustainable growth.

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