Nike Will Cut $2 Billion in CostsNike, the world’s largest supplier of sports shoes, will cut costs by $2 billion over the next three years. This will involve layoffs and more automation.
Sports footwear giant Nike is planning to take cost-cutting measures to save $2 billion over the next three years in response to escalating worries about a global slowdown in consumer spending.
The company intends to take streamlining steps which include laying off employees, simplifying its range of products, and increasing the use of automation. The stock market saw Nike shares dropping by as much as 14% after the announcement.
Why is Nike taking measures to save $2 billion in costs?
Nike has cut its revenue projections for the year as they foresee more cautious consumer behavior around the world. People have been changing their buying habits, and have been spending more on basic necessities and experiences like travel instead of non-essentials like sports wear and high-priced sneakers.
Nike’s online sales have been plummeting, especially in the Greater China market, which includes Hong Kong, Taiwan, and Macau. This indicates that consumers did not follow when the company moved some of its products to become available solely online.
Up-and-coming brands like California shoemaker Hoka and Swiss company On have also managed to chip away at Nike’s dominance of the footwear market, particularly in running shoes.
