Nike announces $300 million severance package, "may have to sell Converse"

American sports giant Nike has recently submitted its latest report to the U.S. Securities and Exchange Commission (SEC). In this 8K filing, it states that it expects to incur approximately $300 million (about 2 billion RMB) in pre-tax expenses, mainly recorded in the third quarter of fiscal year 2026 (ending February 28, 2026). This expense stems from employee severance costs incurred during the first nine months of this fiscal year. Recently, Converse has sent an internal memo to employees, requiring brand staff to work from home starting immediately to facilitate upcoming strategic and organizational adjustments.

The document states: “Nike management has been evaluating opportunities to achieve more efficient and profitable operations through cost restructuring, while also investing to reignite growth. On February 27, the company’s management approved a plan to implement specific organizational restructuring. Combined with previously approved initiatives, it is estimated that in the nine months ending February 28, 2026, approximately $300 million in pre-tax expenses will be incurred, mainly related to employee severance costs, almost entirely recorded in the third quarter of fiscal year 2026. The estimated pre-tax expense is a projection and is subject to multiple assumptions, including local legal requirements in various jurisdictions.”

In January this year, Nike cut approximately 775 jobs to consolidate its distribution center operations in Tennessee and Mississippi. Meanwhile, Converse is launching a new round of restructuring. CEO Aaron Cain has sent an internal memo to employees, requiring brand staff to work from home immediately to support upcoming strategic and organizational changes. The measures are expected to involve job reassignments and team restructuring, along with layoffs. Nike’s latest report has sparked further market speculation about its plans to sell the Converse brand, though Nike did not specify the number of layoffs.

Senior analyst Laurent Vasilescu from BNP Paribas Securities Research issued a new report reaffirming his view that Nike may be paving the way to sell Converse. “We notice that the beginning of this 8K filing mentions ‘Item 2.05 and costs related to exit or disposal activities,’ which indicates Nike is exiting a business. Could this be the exit or disposal of Converse mentioned in our January 10-Q report? We believe it is very likely.” The January report hinted that Nike was considering selling Converse—suggesting that the brand’s “potential health” is more precarious than initially thought.

According to previous reports by Southern Metropolis Daily, Nike’s fiscal second-quarter financials as of November 30, 2025, for FY2026 showed revenue increased by 1% year-over-year to $12.43 billion, while net profit decreased by 32% to $792 million. Converse’s revenue was about $300 million, down 31% year-over-year. Converse’s revenue has declined for several consecutive quarters, with the decline widening—from double digits in FY2024 and FY2025 (-14%, -16%) to a 30% drop in a single quarter in FY2026, reflecting significant challenges for the brand. Nike’s FY2026 third-quarter financial report is expected to be released in late March.

If Converse is truly sold, Nike will complete the final divestment of all its acquired brands. The company has previously sold brands such as Cole Haan, Umbro, Starter, Hurley, and plans to sell the virtual sneaker company RTFKT by the end of 2024, repeatedly focusing its strategy through divestment of non-core assets. Since its inception, Converse has positioned itself as a casual, trendy lifestyle brand, a stance that has not changed. This is clearly at odds with Nike’s current push for a “return to sports” theme. Moreover, compared to Converse’s hundreds or thousands of yuan for a pair of sneakers, domestic casual shoes offer better cost performance. The iconic canvas sneakers, known as the “father of all versatile shoes,” are finally becoming a “tear of the times.”

Nandu Daily (nddaily) Report

Nandu Video reporter Wang Xin