Nike cuts annual sales forecast, seeks $2 billion in cost savings amid ‘softer’ outlook
Nike on Thursday cut its annual sales forecast amid weak online business trends and cautious consumer spending. The company also said it was looking for as much as $2 billion in cost savings.
The sportswear giant projected full-year revenue to rise 1%, down from its previous forecast of mid-single-digit percentage growth. Analysts had expected a 3.8% increase, according to LSEG data.
The company said it was seeking $2 billion in savings over the next three years through steps including tightening product supply, reducing management layers, increasing the use of automation and improving its supply chain, Reuters reported.
“We are seeing indications of more cautious consumer behavior around the world,” Nike CFO Matthew Friend said.
Despite traffic growth in stores, the company was still seeing higher levels of promotional activity in its digital business, he added.
In its statement, Nike said it expects to incur restructuring charges of $400 million to $450 million in the current quarter, “primarily associated with employee severance costs.” Friend said that the company is looking to eliminate layers.
The sneaker company is looking for savings by simplifying its product lines while increasing automation and boosting technology.
Nike’s total revenue in the second quarter was $13.39 billion, missing estimates of $13.43 billion.
Sales in Greater China rose 4% in the Q2, slowing slightly from the 5% increase seen in the previous quarter, signaling that demand was yet to stabilize in the market.
Nike shares fell 11% in late trading. The stock has gained 4.7% in 2023 through Thursday’s close, underperforming the S&P 500 Index’s 24% rally.
