A massive shoe company now plans to cut a whopping $8bn in costs leading to talks of continued layoffs across the retail industry.
Nike has laid out a plan to cut up to $2 billion in costs over the next three years in a bid to “accelerate future growth while building a faster, more efficient” organization, executives shared during the company’s fiscal 2024 Q2 earnings call.
The company plans to trim expenses in ways including simplifying its product assortment, increasing automation and use of technology, and leveraging its scale to drive greater efficiencies across the business, although no details on the form these initiatives will take were shared, reports RetailTouchPoints.
“An organizational and fiscal restructuring is also in the cards.”
Specific details on workforce cuts were not shared, but earlier in December The Oregonian reported that Nike had already begun quietly laying off some employees, and executives did note that they expected to incur restructuring charges of approximately $400 million to $450 million in the company’s current quarter, primarily associated with employee severance costs.
A leadership revamp is also in the works, with new C-suite appointments in the company’s design, innovation, marketing and tech divisions announced in November 2023.
As part of these shifts, Nike cut its revenue outlook for fiscal 2024, saying that it now expects full-year revenue to grow approximately 1%, compared to a prior outlook of growth in the mid-single digits.
“This new outlook reflects increased macro headwinds, particularly in Greater China and EMEA,” explained EVP and CFO Matthew Friend said on the earnings call.
“Adjusted digital growth plans are 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.”
In the company’s second quarter, which ended Nov. 30, 2023, Nike saw total revenues increase 1% to $13.4 billion, but this reflects a decrease of 1% year-over-year when taken on a currency-neutral basis.
Direct sales revenues were up 4% on a currency-neutral basis to $5.7 billion, while digital sales increased 1% year-over-year (currency-neutral).
However, currency-neutral wholesale revenues were down 3% to $7.1 billion, reflecting the continued impact of Nike’s DTC pivot and subsequent reversal.
Also Read: A US Company Now Declares An Unexpected Bankruptcy
Other Economy News Today
Massive banks have now cut a whopping 62K positions according to the latest reports from Financial Times and Banking Dive.
20 of the world’s largest banks shed at least 61,905 jobs total in 2023, the Financial Times found last week, citing company disclosures and a tally of the outlet’s own reporting of large-scale reductions.
“There is no stability, no investment, no growth in most banks — and there are likely to be more job cuts,” Lee Thacker, owner of Silvermine Partners, a financial services headhunting firm, told the outlet.
Among the banks measured, UBS — perhaps unsurprisingly — made the deepest cuts: 13,000.
The Swiss government persuaded the bank to take over its flagging rival, Credit Suisse, in March.
Credit Suisse, by its own count, had already said it expected to cut 9,000 jobs in a wide-scale restructuring.
For his part, UBS Chair Colm Kelleher has said 2024 would be “the first year we don’t have the cover of the ‘easy’ costs,” a label he applies to headcount math.
Not far behind UBS among staff cuts in 2023, however, was Wells Fargo, at 12,000, the Financial Times reported.
The bank reportedly cut 7,000 jobs in the third quarter alone and spent $186 million on severance costs in that three-month span, according to the outlet.
But Wells appears headed for a far deeper cull, having set aside between $750 million and $1 billion in the quarter that just ended for “unanticipated” severance costs, CEO Charlie Scharf said last month.
“We have seen turnover come down,” Scharf said at Goldman Sachs’ U.S. Financial Services Conference.
“Unfortunately, we’re going to have to be more aggressive about our own internal actions.”
Also Read: Wells Fargo Now Warns of Massive Layoffs For 2024
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