Athletic apparel giant Nike plans to reduce costs by roughly $2 billion over the next three years.
As a result, the sneaker giant has lowered its sales outlook, with reported revenue growth projected at around only 1% in the year ahead compared to a previous mid-single digits estimate.
The company also expects sales to be up only low single digits in the fourth quarter.
These projections have contributed to a 12% fall in pre-market trading shares. The lowered outlook is attributed to increasing macro headwinds, particularly in China and EMEA.
As part of Nike’s new cost-cutting plan, it will simplify its product range, scale up automation and technology, streamline the organization by reducing management layers, and use its size for greater efficiency.
The company plans to invest the money saved from these changes into fuelling future growth, accelerating innovation, and driving long-term profit. While gross margins are expected to expand between 1.4 and 1.6 percentage points, restructuring charges will cost between $400m and $450m in pre-tax.
The plan will impact current quarter revenue negatively as it laps tough previous year comparisons.