Nike unveiled a $2 billion cost-savings plan that suggested significant layoffs are looming — and sent the athletic apparel giant’s share price tumbling more than 10%.
Nike plans to incur as much as $450 million in severance costs that “will be recognized largely in the third quarter,” Chief Financial Officer Matt Friend said on an earnings call with investors on Thursday.
For reference, when the company slashed its workforce by 700 in 2020, it incurred between $200 million and $250 million in severance costs.
The figure means Nike’s global workforce of roughly 83,700 are in for a bloodbath in the current quarter, which ends on Feb. 28, 2024.
It wasn’t immediately clear which jobs would be affected.
Nike’s stock closed down 12% at $108.04.
Nike announced the plan as part of its second-quarter earnings report also released Thursday, when it posted disappointing sales, particularly in China, which raked in $1.86 billion.
The figure was short of the $1.95 billion analysts expected, which was attributed to softer demand as the country emerges from the COVID-19 pandemic at a slower pace.
Sales also fell short of expectations in Europe, the Middle East and Africa. Though stronger demand in North America, Asia-Pacific and Latin America saved the three-month period, revenues were up a measly 1% year-over-year, to $13.4 billion.
Nike said that it now expects revenues its full-year fiscal 2024, which ends in May, to grow at a similar rate of 1%, down from a prior outlook of mid-single digits.
“Looking to the balance of the year, we expect Q3 reported revenue to be slightly negative as we again compare to double-digit growth in the prior year and Q4 reported revenue to be up low single digits, with full-year reported revenue now growing approximately 1%,” Friend said.
To achieve that figure, Nike’s aggressive “save-to-invest” program will also include “simplifying our product portfolio, increasing automation and the use of technology [and] streamlining our organization,” CEO John Donahoe said on the earnings call.
Friend added that Nike has plans to reduce the supply of some of its popular products in order to focus on newer launches moving forward.
Donahoe pointed to examples of demand for these new-product drops in the basketball category, such as the signature shoes Nike created in partnership with professional athletes like LeBron James of the Los Angeles Lakers, Boston Celtics’ Jayson Tatum and Luka Doncic of the Dallas Mavericks.
Similarly, Nike has experimented with offering its existing products at different price points, including its collection of women’s leggings and bras.
Donahoe said the price differentiation “fueled our fitness apparel growth in women’s for the quarter.”
Representatives for Nike did not immediately respond to The Post’s request for comment.
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