Nike will lay off workers as part of $2-billion cost-cutting plan

Caption

People shop for Nike shoes at a store in New York. / AP

Nike plans cost-cutting measures to save up to $2 billion over the next three years, including layoffs and more automation.

The company also slashed its annual sales forecast to only 1%. This sent its own stock price down, along with shares of rivals Adidas, Puma and Lululemon.

The sportswear giant partly blamed slumping online sales, particularly in the key market of Greater China. which includes Hong Kong, Taiwan and Macau. Chief Financial Officer Matt Friend reported store sales in the region grew 16%, though Nike Digital sales fell 22% in the quarter that ended November 30.

"We are seeing indications of more cautious consumer behavior around the world," Friend told analysts on Thursday.

He did not specify the scale of job cuts or other changes needed to achieve the $2-billion cost-cutting plan, but said the restructuring will include "reducing management layers" as well as "simplifying our product assortment."

"We know in an environment like this, when the consumer is under pressure and the promotional activity is higher, it's newness and it's innovation which causes the consumer to act," Friend said.

Bank of America analyst Lorraine Hutchinson said in a note that the impact is likely to hit in the 2025 fiscal year, with areas for growth in women's and running products as well as the Jordan brand.

Copyright 2023 NPR. To see more, visit https://www.npr.org.