Nike Unveils $2 Billion in Cost Cuts, Shares Fall

Nike on Thursday unveiled plans to cut costs by about $2 billion over the next three years as it lowered its sales outlook.

The stock fell about 10% after hours. Nike shares were up 4.7% so far this year through Thursday’s close, lagging far behind the S&P 500′s gains for the year. 

Nike now expects full-year reported revenue to grow approximately 1%, compared to a prior outlook of up mid-single digits. In the current quarter, which includes the second half of the holiday shopping season, Nike expects reported revenue to be slightly negative as it laps tough prior year comparisons, and sales to be up low single digits in the fourth quarter.

The planned cuts reflect the challenges Nike faces in key markets, particularly Greater China and EMEA, where market conditions have been less favorable. Moreover, the impact of a stronger U.S. dollar has further complicated revenue prospects.

In response to these challenges, Nike is undertaking a comprehensive streamlining of its operations. The focus will be on simplifying the product assortment, enhancing automation processes, and improving overall management efficiency. 

Despite the scaled-back growth forecast and the cost-cutting measures, Nike remains committed to expanding its gross margin. The company emphasizes disciplined cost management while continuing to reinvest in areas critical for growth and innovation.

This strategic pivot reflects Nike's adaptability in a rapidly changing global market, underlining the company's commitment to maintaining a strong position in the industry despite prevailing economic headwinds.