Nike's Cost-Cutting Plan Aims to Save $2 Billion Amid Revenue Warning

Nike has announced plans to cut costs by $2 billion over the next three years, citing a "softer" revenue outlook for the second half of the year. The company aims to simplify its product assortment, increase automation and technology usage, streamline its organization, and leverage its scale for greater efficiency. The savings from these initiatives will be reinvested in fueling future growth, innovation, and long-term profitability. The cost-cutting plan will result in $400 million to $450 million in pre-tax restructuring charges, primarily related to employee severance costs. Nike's stock fell about 5% after the announcement. The company has been undergoing a strategy shift and has recently rekindled relationships with wholesalers. Despite challenges in the retail environment, Nike's gross margin increased by 1.7 percentage points to 44.6%. The company's performance in China will be closely watched as it emerges from the pandemic.