Nike plans to cut jobs and forecast a revenue decline in the coming year as sales stall across key markets including the US and China. The company expects sales in the current fiscal year, which began in June, to fall by billions of dollars. Nike will reduce its 73,000-employee headcount as part of a $2.5bn cost-cutting initiative called Pace, aimed at saving $2.5bn over five years. The company will also open a new campus in Bengaluru, India, and consolidate its geographic divisions from four to three. "The future will belong to companies that can move faster, serve athletes and consumers more locally, and invest more aggressively in innovation," said CEO Elliott Hill. Shares fell 6.6% to their lowest since 2013 in after-market trading.
Revenue for the first quarter ending in August totaled $11.2bn, down 4% year-over-year and below estimates. Net income declined 2% to $712mn. Sales in China plunged 22% as local competitors squeezed market share. The Jordan brand also struggled due to oversupply of retro products. Hill, nearing two years leading a turnaround effort, emphasized redirecting investment toward innovation, brand storytelling, and consumer connection.
"These decisions are about redirecting investment toward the areas most critical to winning," Hill said in a note to employees.
Source: Financial Times Companies · Summarized by HeadlinesBriefing