Nike (NKE) earnings Q2 2024

Nike on Thursday unveiled plans to cut costs by about $2 billion over the next three years as it lowered its sales outlook.

The stock fell about 10% after hours. Nike shares were up 4.7% so far this year through Thursday’s close, lagging far behind the S&P 500’s gains for the year. Retailer Foot Locker, which has leaned heavily on Nike products, fell 4% after hours.

Nike now expects full-year reported revenue to grow approximately 1%, compared to a prior outlook of up mid-single digits. In the current quarter, it expects reported revenue to be slightly negative as it laps tough prior year comparisons, and sales to be up low single digits in the fourth quarter.

“This new outlook reflects increased macro headwinds, particularly in Greater China and EMEA, adjusted digital growth plans based on recent digital traffic softness and higher marketplace promotions, lifecycle management of key product franchises and a stronger U.S. dollar that has negatively impacted second half reported revenue versus 90 days ago,” finance chief Matthew Friend said on a call with analysts.

The company still expects gross margins to expand between 1.4 to 1.6 percentage points. Excluding restructuring charges, it expects to deliver on its full-year earnings outlook.

Nike plans to simplify its product assortment, increase automation and its use of technology, streamline the overall organization and leverage its scale “to drive greater efficiency,” the company said in a news release when announcing fiscal second quarter earnings.

It plans to reinvest the savings it gets from those initiatives into fueling future growth, accelerating innovation and driving long-term profitability.

“As we look ahead to a softer second-half revenue outlook, we remain focused on strong gross margin execution and disciplined cost management,” Friend said in a press release.

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