Nike Announces $2 Billion Severance Plan, Possibly Linked to Converse Sale

Recently, the sportswear giant Nike Group has filed its latest report with the U.S. Securities and Exchange Commission (SEC). In this 8-K filing, it stated that it expects to incur approximately $300 million (about RMB 2 billion) in pre-tax expenses, primarily to be recorded in the third quarter of the 2026 fiscal year (ending February 28, 2026). This expense arises from severance costs for employees incurred over the first nine months of the fiscal year.

And recently, Converse has sent an internal memo to its employees, requiring them to work from home starting from now, in order to cooperate with the upcoming strategic and organizational adjustments.

The document states: "Nike's management has been evaluating opportunities to achieve more efficient and profitable operations through cost restructuring, while also investing to reaccelerate growth. On February 27, the company's management approved a plan to implement specific organizational restructuring, combined with previously approved initiatives, which is expected to result in approximately $300 million in pre-tax charges over the nine months ended February 28, 2026, primarily related to employee separation costs, with nearly all of it recorded in fiscal year 2026's third quarter."

The above estimated pre-tax expenses are estimates and subject to various assumptions, including local legal requirements in each jurisdiction.

In January this year, Nike Group laid off about 775 people to integrate its distribution center operations in Tennessee and Mississippi. At the same time, Converse is launching a new round of restructuring. Converse CEO Aaron Cain has sent an internal memo to employees, asking them to work from home starting immediately to support upcoming strategic and organizational adjustments. These measures are expected to involve job reassignments and team structure changes, along with layoffs.

Nike’s latest earnings report has fueled further market speculation about its potential sale of the Converse brand, though Nike did not specify the number of employees to be laid off.

Laurent Vasilescu, Senior Analyst at BNP Paribas’ Equity Research Department, released a new research report further reaffirming his view that Nike may be preparing to sell Converse. “We note that the 8-K filing begins with ‘Item 2.05 – Costs Associated with Exit or Disposal Activities,’ indicating that Nike is exiting a business. Could this be the exit or disposal of Converse referenced in Nike’s January 10-Q filing? We believe this is highly likely.” The January report suggested that Nike is considering selling Converse—indicating that the brand’s “potential health” is “more precarious than initially anticipated.”

According to previous reports, Nike Group’s Q2 FY2026 financial results, ending November 30, 2025, showed group revenue increasing 1% year-on-year to USD 12.43 billion, while net profit declined 32% year-on-year to USD 792 million. Converse brand revenue totaled approximately USD 300 million, down 31% year-on-year. Converse’s revenue has declined for multiple consecutive quarters, with the decline widening progressively—from double-digit drops of -14% in FY2024 and -16% in FY2025 to a single-quarter decline of -30% in FY2026—reflecting significant challenges facing the brand. Nike Group’s Q3 FY2026 financial results are expected to be released in late March.

If Converse is indeed sold, Nike will complete the final divestiture of all its acquired brands. Previously, the group has gradually sold off brands such as Cole Haan, Umbro, Starter, and Hurley, and by the end of 2024, it will also sell its virtual sneaker subsidiary RTFKT, repeatedly achieving strategic focus through the divestiture of non-core assets. Converse, since its debut, has been positioned as a leisure and trendy lifestyle brand, a positioning that has not changed until today. This is clearly at odds with Nike's current full-throttle push for a "return to sports" theme. Moreover, compared to Converse, which can cost several hundred to a thousand yuan, domestic casual shoes offer better value for money. The pioneer of "match with everything" canvas shoes will finally become "tears of the era."