Nike shares tumble as it cuts costs amid 'softer' outlook

December 22, 2023 | 09:28

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Nike promised up to $2 billion in cost savings Thursday involving job cuts and greater use of automation as it eyes "softer" sales in the coming period.

The sports giant reported an uneven performance across major markets in the latest quarter, with revenues declining in North America but rising in China, the Asia Pacific and Latin America.

Nike shares tumble as it cuts costs amid 'softer' outlook, Photo: Ethan Miller/Getty Images/AFP

Shares fell heavily in after-hours trading as Chief Financial Officer Matthew Friend described the environment as "highly promotional" during a conference call with analysts.

"We are seeing indications of more cautious consumer behavior around the world in an uneven macro environment," Friend said.

Profits for the quarter ending November 30 jumped 19 percent to $1.6 billion, while revenues edged up one percent to $13.4 billion.

The sports giant's cost-cutting plan will simplify product offerings, increase automation and institute a "streamlining" of the company organization, Nike said in a news release.

The plan anticipates a one-time charge of $400 million to $450 million in the current quarter primarily to cover employee severance costs.

"We see an outstanding opportunity to drive long-term profitable growth," said Chief Executive John Donahoe. "Today we are embracing a company-wide journey to invest in our areas of greatest potential, increase the pace of our innovation, and accelerate our agility and responsiveness."

Friend expects "slightly negative" sales in the current quarter. Full-year revenues are projected to be up by about one percent, reflecting "increased macro headwinds, particularly in Greater China and India," he said.

Shares of Nike plunged more than 11 percent in after-hours trading.

Nike shares tumble as it reports lower profits

Nike reported lower quarterly profits Thursday on increased logistics spending and a hit from product markdowns, as it pivots in a fast-changing consumer market challenged by inflation.

PM applauds Nike’s contributions to Vietnamese economy

Prime Minister Pham Minh Chinh received Chief Operating Officer of Nike, Inc., Andy Campion in Hanoi on December 1, speaking highly of the firm’s contributions to Vietnam’s exports and job creation in the recent past.

By AFP

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