Nike says it will cut $2 billion in costs in a major warning for consumers
Nike, a global economic indicator, issued a cautionary statement, signaling a shift in consumer behavior. The company reduced its revenue forecast for the year, citing concerns about a worldwide slowdown in consumer spending. To counteract this, Nike aims to achieve $2 billion in cost savings over the next three years, including workforce reductions. This announcement led to a significant drop of up to 14% in Nike’s stock shares.
The change in consumer habits involves a preference for essential purchases and experiences like concerts and travel over discretionary items such as expensive sneakers and athletic wear. Nike faces intensified competition from emerging brands like Hoka and On Cloud. The company’s finance chief, Matt Friend, highlighted “indications of more cautious consumer behavior globally,” pointing to sluggish sales in China and regions like Europe, the Middle East, and Africa.
Soft demand during key events like back-to-school shopping and Black Friday, along with slowed e-commerce sales, contributed to the downward trend. Additionally, economic challenges in Europe and a slowdown in China, the second-largest global economy, further compound Nike’s concerns, reflecting broader issues in the world economy.
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