Beaverton, Ore. sportswear giant Nike Inc. said Thursday it will look to cut as much as $2 billion in costs over a three-year timeframe by trimming its workforce and relying on more automation.

Many of the layoffs are expected to be implemented in the current quarter.

The cuts come as the company looks to reinvest those savings into more consumer-focused activities in future years under a plan called “Save to Invest.” The strategy is expected to help drive momentum around the key growth areas of women’s, the Jordan Brand, and running.

The cost cuts also come as Nike works through an operating environment that’s seen heavy discounting and softening demand in the digital channel.

“When we think about the Save to Invest plan, the value it will create and the capacity it will create for us to be able to invest in the biggest growth opportunities, we don’t envision that as being (reinvestment in) people,” said Executive Vice President and CFO Matthew Friend during Thursday’s call with analysts. “We envision that as being consumer-facing investment, bringing product innovation to marketing, and having maximum impact with the consumer.”

Executives stressed on Thursday’s call that the company’s focused on newness as it waits out the broader market challenges, with President and CEO John Donahoe saying the remaining two quarters of the company’s fiscal year marks the start of a “multi-year product innovation cycle” that includes new franchises and concepts.

“Today, we know we must be faster, increasing the pace of innovation, increasing the pace of market-to-consumer, and increasing our agility and responsiveness,” Donahoe said.

Lowering Near-Term Outlook

The company’s revising its guidance for the remainder of the year based on what it’s seeing in the macroeconomic environment and level of markdowns.

“The marketplace is highly promotional and we’re seeing that especially on digital,” Friend said. “So, in the near term, the promotional nature of the marketplace is holding us back.”

The guidance takes into account the fact that Nike won’t “chase” that same level of markdowns used by other companies, Friend went on to say.

“That’s not who Nike is,” he added. “We’re going to focus on innovation and newness and building a strong business in the marketplace….”

Revenue in the current quarter is expected to be slightly negative, while the final quarter of the fiscal year is projected to be up in the low single digits.

The company’s guiding revenue for the full year to rise 1%.

Nike’s quarterly update sent its shares down as much as 11% in after-hours trading Thursday.

Organizational Changes

The company didn’t elaborate on the number of positions it intends to cut except to say the workforce restructure will eliminate excess layers of management among other positions.

The cuts are likely to result in charges of $400 million to $450 million mostly attributable to severance pay and likely to be reflected in Nike’s current quarter results.

The past several months have seen several executives changes, beginning in May when Nike said Heidi O’Neill and Craig Williams would become co-presidents in an effort to drive focus around product innovation.

Last month Nike made changes to its C-suite, appointing John Hoke chief innovation officer, Martin Lotti chief design officer, Muge Erdirik Dogan as chief technology officer, and Nicole Hubbard Graham as CMO. Graham is set to officially join Nike next year.

Q2 Financials

The cost-cutting measures were delivered with the company’s results for its fiscal second quarter ended Nov. 30.

Companywide revenue fell 1% in constant currency to $13.4 billion, amid a decline in the wholesale channel and pressures in the North America and EMEA markets.

Nike Inc. net income for the quarter rose 19% to $1.6 billion.

Converse Sales Drop Double Digits

The company’s Converse business saw revenue fall 13%, excluding the impact of exchange rates, to $519 million in the November quarter. Although Converse saw its business in Asia growth during the quarter, it was not enough to offset the challenges it saw in North America and Europe.

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