Shares in sportswear giant Nike (NKE) slumped after it lowered its revenue outlook on weaker demand, in particular from China and Europe, and outlined plans for a $2 billion cost cutting programme.

It fell nearly 11% in after-hours trading as the market reacted to the results for the three-month period to 30 November.

The scale of the revenue downgrade was eye-catching with the company now expecting pretty negligible (1%) revenue growth for the 12 months to May against previous guidance of mid-single-digit growth.

A DETERIORATING OUTLOOK

It hints at a rapidly deteriorating outlook and a difficult Christmas given net income for the quarter just gone actually beat forecasts at $1.6 billion and revenue of $13.4 billion was bang in line with expectations.

The company’s ‘save to invest’ $2 billion cost savings plan is aimed at streamlining the business, creating a simplified range of products and boosting its use of automation.

Nike flagged $400-$500 million worth of restructuring costs for the current quarter.

In recent years a key plank of Nike’s strategy has been increasing its direct-to-consumer sales, particularly online but the most recent quarter saw better in-store sales.

Nike management also said they had seen strong sales associated with big consumer events like Black Friday in the US and China’s Singles Day but weak demand in between.

The downbeat update from Nike hit UK retailer JD Sports (JD.) which fell 5.4% to 164.6p in sympathy.

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