Nike Inc. said revenues inched forward 1 percent to USD 13.4 billion for the second quarter, as the U.S. sportswear giant revealed a USD 2-billion cost saving plan over the next three years, including staff layoffs.
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The Portland, Oregon-based Nike said Asia Pacific Latin America (APLA) sales soared 13 percent to USD 1.8 billion for the three months ending November 30, including an 18 percent increase in footwear sales in the region, and a 16 percent increase in equipment sales, partially offset by flat growth in apparel sales.
In Greater China, revenues increased 4 percent to USD 1.9 billion, including a 32 percent uptick in equipment sales in the region, and a 19 percent gain in apparel sales, partially offset by a 1 percent decline in footwear sales.
Global revenues for the Nike brand were USD 12.9 billion, up 1 percent, compared to the prior year, as currency-neutral growth in APLA and Greater China was offset by declines in North America and Europe the Middle East and Africa. Revenues for Converse were USD 519 million, down 11 percent, due to declines in North America and Europe, partially offset by growth in Asia.
Net income was USD 1.6 billion, up 19 percent, and diluted earnings per share were USD 1.03, increasing 21 percent.
Despite the double-digit increase in earnings for the three months, the company revealed plans for USD 2 billion in cumulative cost savings over the next three years. Areas of potential savings include simplifying product assortment, increasing automation and use of technology, and leveraging scale to drive greater efficiency.
Nike said a majority of the savings will be invested to fuel future growth, accelerating innovation at speed and scale, and driving greater long-term profitability.
As part of this commitment, the company is taking steps to streamline the organisation, which is expected to result in pre-tax restructuring charges of approximately USD 400 million to USD 450 million that will largely be recognised in the third quarter, primarily associated with employee severance costs.
“We see an outstanding opportunity to drive long-term profitable growth,” said John Donahoe, president and CEO, Nike Inc.
“Today we are embracing a company-wide journey to invest in our areas of greatest potential, increase the pace of our innovation, and accelerate our agility and responsiveness.”