Ultra-woke sportswear giant Nike’s stock took a tumble of more than ten percent Friday after news broke that the company was looking to cut a whopping $2 billion from its budget and news of its weak sales outlook for the near future.
The company reported that it is footing the bill for $450 million in severance payments to employees who are taking buyouts or being otherwise cut from the company. The company’s Chief Financial Officer Matt Friend told investors Thursday that the costs will be sustained largely in the third quarter.
The costs are more than double its workforce cutback in 2020 when they paid out just over $200 million in severance payments.
Nike has not yet told investors what jobs are on the line, and workers have not been individually contacted about losing their jobs thus far.
But the announcements sent the company’s stock on a downward spiral. “Nike’s stock tumbled as much as 12%. At the time of writing, the Oregon-based company’s share price was down 11.3%, at $108.60,” the New York Post reported.
Nike also reported disappointing sales figures for the second quarter. The company reported sales of $1.86 billion, which was far short of the $1.95 billion analysts expected.
Sales reportedly fell short in China, Europe, the Middle East, and Africa. With strong U.S. and Asian sales, revenues were up but only about one percent year-over-year.
The numbers prompted the company to expect similarly low growth into 2024. This also factored into the stock tumble.
The pressures became the impetus to begin cutting costs in a big way. Nike has already been bringing lower-cost clothing lines for women to the market, and those lower-priced lines “fueled our fitness apparel growth in women’s for the quarter,” according to Nike CEO John Donahoe.