Nike, the renowned sneaker giant, has unveiled its plans to implement a cost-cutting strategy aimed at saving approximately $2 billion over the next three years. The announcement comes as the company warns of a "softer" revenue outlook for the second half of the year.

The plan, which was revealed in Nike's fiscal second quarter earnings report, includes several key initiatives to streamline operations and drive greater efficiency. This will involve simplifying the product assortment, increasing automation and technology integration, and optimizing the overall organizational structure.

Nike's Chief Financial Officer, Matthew Friend, highlighted the company's focus on strong gross margin execution and disciplined cost management in light of the projected revenue challenges.

The cost-cutting measures are expected to result in pre-tax restructuring charges of $400 million to $450 million, primarily related to employee severance costs. The majority of these charges are set to materialize in Nike's current quarter.

Following the announcement, Nike's stock experienced a drop of approximately 5% in after-hours trading. However, despite this setback, Nike shares have shown a 4.7% increase so far this year, lagging behind the gains of the S&P 500.

Earlier this month, it was reported that Nike had been quietly laying off employees across various divisions, including recruitment, sourcing, brand, engineering, human resources, and innovation. The company did not immediately respond to requests for comment regarding these reports.

Nike's profits have been under pressure recently, prompting the company to embark on a strategy shift. As part of this shift, Nike has been reestablishing partnerships with wholesalers like Macy's and Designer Brands, the parent company of DSW.

One positive development for Nike is the improvement in its gross margin, which increased by 1.7 percentage points to 44.6% in the most recent quarter. This surpassed estimates and is a positive change from the declining gross margins recorded in the past six quarters.

However, the retail environment as a whole has been characterized by heavy promotions and discounts as retailers strive to entice consumers facing inflation concerns. Finance Chief Matthew Friend noted the company's cautious approach to markdown improvements given the overall promotional environment.

Investors are eagerly anticipating Nike's expectations for the crucial holiday shopping season. As one of the last retailers to report earnings before December, Nike's outlook will provide valuable insights into consumer sentiment.

China also remains a significant part of Nike's strategic focus. While the country's retail sales saw an increase of 10.1% in November, signaling economic recovery, there are mixed opinions on the sustainability of growth. Experts note that the growth was largely driven by car sales and restaurants, and further analysis will provide valuable information about Chinese consumer behavior and its impact on Nike's long-term strategy.

Analyzing Nike's performance and approach in both the short and long terms will be essential for investors and industry observers alike. With ongoing updates and developments, this is a story that will continue to unfold.