Key Takeaways
- Nike shares come into focus Monday after the company said it plans to lay off 740 employees by the end of June.
- The staff reductions form part of of a three-year cost-cutting plan to reduce expenses by $2 billion, which the company announced in December.
- Nike shares may find a floor of support near a double bottom chart pattern around $89, and resistance near a horizontal line at $104.
Shares in Nike (NKE) will be in focus Monday after the sports apparel and equipment maker revealed via a notice filed on Friday that it plans to lay off 740 employees at its Beaverton, Oregon headquarters by the end of June, as the company forges ahead with a multi-year cost-cutting strategy.
Nike vice president for people solutions Michele Adams said in a notice mandated by the Worker Adjustment and Retraining Notification Act on Friday that the company “will be permanently reducing its workforce at its World Headquarters” in a “second phase of impacts,” to take effect by June 28.
The sportwear giant’s headcount reduction forms part of a three-year cost-cutting plan announced in December to reduce expenses by $2 billion. The notice comes after the company said in February that it would slash 1,600 jobs, or around 2% of its total workforce, amid waning demand for its shoes and sneakers. Other cost-reduction measures outlined by the company at the time included product supply adjustments and management restructuring.
The company cautioned on its latest earnings call in March that it sees a low single-digits decline in revenue in the first half of its 2025 fiscal year. “We are taking our product portfolio through a period of transition,” Nike’s chief financial officer, Matt Friend, told analysts on the call.
Since the start of the year Nike’s stock has fallen 13% while the S&P 500 has added 4% as analysts have turned bearish on the sports gear giant, citing concerns over slowing innovation, an inventory backlog, and growing competition in the activewear market.
The Nike share price appears to be carving out a double bottom pattern, with the September and April swing lows potentially setting a floor of support around $89. During period of weakness, investors should watch if buyers can defend this important chart level.
Amid further upside, it’s worth keeping an eye on the $104 level, a region where the price may run into selling pressure near a key horizontal line connecting a range of price action over the past 10 months. A breakout above this area could see a test of higher resistance sitting around $115.
The stock closed Friday at $94.53.
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