Nike’s share price has plunged after it unveiled plans to make $2bn worth of cost savings in the next three years and lowered its sales outlook.
Shares plummeted more than 11% in after-hours trading yesterday, as the sportswear retailer unveiled a restructuring plan.
As part of this, it expects to a pre-tax charge of between $400m and $450m during the current quarter, largely down to severance costs.
The business revealed the plans as it warned of weakening customer demand, particularly across Europe and China.
Nike executives said they saw a “bifurcation” in the company’s performance in its latest quarter ending 30 November, as sales were strong around big holidays like Black Friday in North America and Singles Day in China, but weaker than expected for periods in between.
The sportswear giant’s CFO Matthew Friend said: “We know that in an environment like this where the consumer is under pressure and there is a stronger promotional environment, it is newness that causes the consumer to act.”
Friend also highlighted “increased macroeconomic headwinds” across greater China and Europe, the Middle East and Africa.
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The CFO said Nike would streamline its business, simplify its product offer and increase automation in its $2bn “save-to-invest” programme.
However, he cautioned the changes could take a while to achieve at scale.
Friend also noted the business would cut its supply of some of its popular items to focus on new product launches.
Nike expects full-year sales growth of “approximately 1%” for its fiscal 2024 ending in May, below its previous outlook of mid-single-digit growth.
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