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Nike is cutting costs as demand falls in China and Europe. The sportswear brand announced a reorganisation that aims to save two billion dollars over three years.
“Save to invest”
Sales will grow by about 1 % this financial year (ending May 2024), far less than what the brand was previously counting on. However, sales of 13.4 billion dollars (12 billion euros) last quarter were in line with expectations and net profit of 1.6 billion dollars (nearly 1.5 billion euros) was even better than anticipated.
However, although Black Friday and Singles Day did very well, consumers bought less in the period in between. Consumers seem to be ever more promotion-oriented, CFO Matthew Friend told FT. Interestingly, this has also led to more physical shopping again, with digital sales slowing down. With increased macroeconomic headwinds in China and Europe, the Middle East and Africa, consumers’ budgets are increasingly under pressure.
Along with discounts, consumers also flock to novelties. Nike therefore plans to focus more on new launches – which customers do still want to pay full price for – and will reduce the range of some popular products. The company is therefore launching a “save-to-invest” programme, aimed at cutting two billion dollars in costs. The plan involves streamlining the organisation, simplifying the product offering and further automation. Nike will also be cutting a number of positions.
