After laying off more than a thousand employees, the apparel giant announced another layoff...

Nike Announces Another Layoffs

According to “Reuters”, Nike will lay off 740 employees at its Oregon headquarters in the near future.

The common reason for layoffs is cost reduction and efficiency improvement .

Nike hopes to take some measures to control costs after being warned that revenue will decline in the first half of fiscal 2025.

The company’s shares have fallen nearly 13% this year.

Regarding cost savings, Nike announced a cost-saving plan of US$2 billion over the next three years in December.

In February this year, it said it would cut about 2% of its workforce, or more than 1,500 positions. As of May 31, 2023, the company had approximately 83,700 employees.

Nike said in March it was looking to downsize some franchises. Regarding the company’s next steps, Nike said:

The company plans to use the upcoming 2024 Summer Olympics in Paris as an exhibition to refresh some of its product lines, particularly in the track and field category.

Donahoe added: “We have done more to advance running over the past 50 years than any brand in the world, and we will continue to lead the evolution of elite runners. Innovation has always been the key to Nike’s success in running and beyond. features so we don’t just copy what everyone else is doing.”

    Trying to revive the brand’s shine
    Nike launches biggest ever Olympic marketing campaign
As competitors Hoka, ON and Lululemon continue to erode market share, Nike Inc. Nike Group is trying to use the upcoming Paris Olympics to launch the largest Olympic influence in history to boost the brand.
Heidi O’Neill, president of Nike consumer, product and brand, said that Nike will invest the largest media expenditure in this Olympics. The Paris Olympics will be Nike’s most invested and most important marketing moment in many years. She also said that marketing is the group’s first priority investment and will focus on “fewer, bigger” marketing models.
The U.S. giant’s marketing investment in the past four quarters has increased by US$4.3 billion year-on-year. Marketing rates are on par with China’s two giants Anta and Li Ning. It has lagged slightly behind in the past two years, but Anta and Li Ning’s business mainly focuses on China. market. In the past three quarters, the group’s marketing expenditures increased by 10% year-on-year to US$1 billion.
Craig Williams, global regional and market president of Nike Inc. Nike Group, said that the global consumer market is currently facing challenges, but the Olympic Games are still regarded as a microcosm of the entire sports industry, and consumers respond positively to this event.
Investment bank Wedbush analyst Tom Nikic believes that Nike currently does not have exciting innovative products. If Olympic athletes wearing Nike can break world records, it may help attract more consumers to buy the brand.

Previous report: Is the wave of layoffs unstoppable? Following H&M and Levi’s, another clothing giant announced major layoffs! “The painful reality…”

Recently, Nike CEO John Donahoe told employees in an email sent to the whole company that the company will lay off 2% of its employees . It is expected that the layoffs will not affect store employees, distribution center employees and its innovation team. staff.
As of the end of May 2023, Nike has a total of 83,700 employees, which means that more than 1,600 employees will be laid off. On February 19, the reporter contacted Nike China, but as of 0:00 on the 20th, no response was received.

Nike CEO calls layoffs a ‘painful reality’

CEO John Donahoe said that the company is using resources to increase investment in running, women’s clothing, and Jordan categories. Regarding the layoffs, John Donahoe said, “This is a painful reality that I cannot take lightly. We are not performing at our best at the moment, and ultimately I have to bear responsibility for myself and my leadership team.”
Higher rents and interest rates are causing customers to cut back on spending on big-ticket items, leading sportswear companies such as Nike and Adidas to warn retailers that they are reducing orders through wholesale channels.
In fact, in the earnings call on December 21 last year, Nike executives had already revealed plans to lay off employees. In the same day’s conference call for the second quarter financial report of fiscal year 2024, John Donahoe said that Nike is looking for opportunities to save up to $2 billion in cumulative costs over the next three years. Areas of potential cost savings include simplifying product classification and increasing automation. degree and use of technology, streamlining the organization, and leveraging company scale to drive efficiencies.
It seems that this round of Nike’s 2% layoffs is also part of the cost-saving plan. Nike also stated in the financial report that the company is taking measures to streamline the organization, which is expected to result in pre-tax restructuring charges of approximately US$400 million to US$450 million. Most of these costs will be recognized in the third quarter of fiscal year 2024, mainly employee severance costs.

Cumulative cost savings of $2 billion will be achieved over the next three years.
Categories such as women’s clothing and Jordans
are seen as ways to revive growth.

Nike’s second quarter financial report for fiscal year 2024 (2023.8.31-2023.11.30) shows that during the reporting period, Nike’s revenue was US$13.4 billion, a year-on-year increase of 1%, net profit was US$1.6 billion, a year-on-year increase of 19%, and its gross profit margin was 44.6 %, compared with 42.9% in the same period last year.
By region, revenue in Greater China increased by 4% year-on-year to US$1.863 billion, an increase of 8% year-on-year on a constant exchange rate basis. Greater China is also the region with the second fastest growth rate for Nike. Taking a closer look at Nike’s various businesses in Greater China, footwear revenue decreased by 1% year-on-year to US$1.361 billion, apparel increased by 19% year-on-year to US$469 million, and equipment increased by 32% year-on-year to US$33 million.
Nike China has also publicly stated that Greater China has grown for five consecutive quarters. John Donahoe said on the conference call that in Greater China, Nike physical store sales achieved double-digit growth during the National Day period, and NIKE once again surpassed the industry during the 11.11 period and became the number one sports brand on Tmall.
Based on the conference call and the layoff email issued by Nike, Nike will focus its resources on the development of its three major businesses: running series, women’s clothing and Jordan.
John Donahoe said in the conference call that Jordan Brand is becoming the second largest footwear brand in North America, the largest brand after Nike. Nike’s women’s clothing business is valued at about $9 billion. Over the past three years, its women’s clothing business has achieved high single-digit growth on average. He revealed that 40% of Nike’s members are female consumers . “They account for a larger proportion of new members, and the needs of members are growing faster. We have seen that by meeting consumers’ needs in performance and lifestyle There’s a huge opportunity to better serve that consumer.”