📈 Taking a kicking.

Nike is cutting costs amid a weak sales forecast

December 22, 2023

Nike exec 1: We have to find $2 billion of cost cuts. Shall we lay off a load of people?

Nike exec 2: I dunno man, we’d have to consult on it, pay out a fortune in severance payments, and get approval from our bosses.

Nike exec 1: Or we could… just do it?

The lowdown

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Nike seeks $2 billion in cost savings amid weaker outlook

Nike is trying to cut costs by up to $2 billion as it expects weak sales ahead. The sportswear maker now sees full-year revenue rising by about 1%, down from its previous forecast of mid-single-digit percentage growth.

Savings will come from a number of areas, including restricting the supply of some products, improving its supply chain, cutting out layers of management, and automating more processes. Nike expects the cutbacks alone to cost $400-450 million in Q3, mainly through severance costs.

Nike’s wholesale business has been under pressure as retailers place fewer orders. The company is also seeing reduced demand online, which has forced it to boost promotions. On top of that, China sales have been weaker as the country’s economy has struggled.

Shares slumped 11% in late trading, sending Adidas and Puma lower in the European session. The stock has risen less than 5% this year, underperforming the S&P 500’s 24% rally and Adidas’s 52.5% gain.

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