Nike Inc. is cutting about 2% of its workforce as the athletic brand revamps global operations, part of a bid to move faster and ward off competition from Adidas AG and Under Armour Inc.
The overhaul is an attempt to speed up product development and refocus on key markets, CEO Mark Parker said on June 15. Nike had more than 70,000 jobs at the end of fiscal 2016, suggesting that the cuts could affect about 1,400 workers.
The cutbacks follow disappointing sales in its most recently reported quarter, a sign that competitors are making inroads. Nike faces a resurgent Adidas, which has regained its cachet in the U.S., along with the expansion of Under Armour into new athletic-gear categories. Against that backdrop, Nike’s closely watched futures orders fell 1% -- the first drop since 2009.
The slump has prodded Parker to take more dramatic actions to regain Nike’s edge. Key to the strategy is focusing on its 12 most important cities: New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul and Milan. They’re expected to drive 80% of the brand’s growth through 2020.
The shake-up didn’t impress investors, who sent the shares down as much as 2.8% to $53.12. That was the biggest intraday decline in almost a month.
Nike also simplifying its regional organization. It plans to concentrate on four regions -- North America; greater China; Europe, Middle East and Africa; and Asia Pacific and Latin America -- down from six.
The Beaverton, Ore.-based company is trying to build a closer connection with shoppers. It’s calling the reorganization its Consumer Direct Offense, and the effort will be headed up by Nike brand President Trevor Edwards.
To get products to customers faster, executive Michael Spillane will take on new role of president of categories and product. The company also is creating a group called Nike Direct organization that will be led by Heidi O’Neill, serving as president, and Adam Sussman, chief digital officer. The idea is to unite the website, direct-to-consumer stores and Nike’s digital products under a single vision.
“This new structure aligns all of our teams toward our ultimate goal -- to deliver innovation, at speed, through more direct connections,” Edwards said.
By Nick Turner