Nike warned investors on Thursday that its sales revenue could decline as it cuts classic shoes and focuses on innovating new products.
According to Reuters, the company expects revenue to decline by a low-single-digit percentage in the first half of the fiscal year, starting in June. Nike CFO Matthew Friend told investors in a post-earnings call on Thursday that the company plans to produce fewer of its classics, such as the Air Force 1 and Pegasus running shoes, in favor of new products.
“We know Nike is not living up to our potential,” CEO John Donahoe said on a conference call, according to Bloomberg. “It’s clear we need to make some major adjustments.”
Nike shoes in a Macy’s store on March 21, 2024 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)
Donahoe told investors that new running shoes were coming this year, including shoes aimed at “everyday runners” with Nike Air cushion support.
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Back in December, Donahoe told investors about a $2 billion savings plan to reduce costs over the next three years. In February, the company said the plan would involve cutting 2% of its global workforce of 83,700 employees.
According to Statista, Nike is the largest sportswear retailer in the world, surpassing competitors like Adidas and Puma in footwear revenues by at least $15 billion in 2022. According to the same source, footwear makes up the majority of Nike’s profits, equal to 68%.
According to a Reuters report, the retail giant has recently faced challenges due to shifting consumer demand for the look and feel of shoes and industry competitors such as Hoka and On.
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