Nike cut its annual sales prediction on Thursday, blaming cautious consumer spending, and said it plans to save $2 billion in costs over the next three years. According to Reuters, the savings will be obtained by limiting the supply of certain products, decreasing managerial layers, and enhancing automation.
According to the article, Nike's wholesale business has been under strain due to fewer orders from retailers. The decline is also visible in online sales figures. In a post-earnings call, the company stated that revenue for the fiscal year ending May 2024 will be down by around 1%.
Nike reported total revenue of $13.39 billion for the quarter ending November 30, falling short of analyst expectations of $13.43 billion. Its earnings per share of $1.03 exceeded expectations of 85 cents. According to reports, this was attributed to decreasing freight costs and inventory.
According to the Financial Times (FT), the corporation is also concerned about headwinds in China, Europe, West Asia, and Africa's economy. Furthermore, the corporation has seen excellent results on major consumer holidays such as Black Friday, but sales are slower than expected on other days.
The corporation announced that it will "streamline" its operations in order to save money. Nike anticipates $400 million to $450 million in pre-tax restructuring expenses, mostly related to employee severance costs, in the third quarter as part of the exercise.
Nike shares plunged more than 11% in after-hours trade on Thursday following the announcement.
Nike, on the other hand, claimed that it will offer new styles in order to attract customers, building on the success of recent launches such as the Sabrina 1, LeBron 21, and Tatum 1 basketball shoes. According to Reuters, it will release GT Cut, Book 1, and Kobe in the following three months to boost sales.
