Wen Yongliu Business.After announcing a $2 billion cost-cutting plan, Nike came up with a list of layoffs.
On Feb. 15, Nike's chief executive, John Donahoe, told employees in an email that the company would lay off 2 percent of its workforce. Nike has approximately 83,700 employees (as of 2023.)5.31), based on this estimate, the company may cut more than 1,600 jobs.
Despite the good growth, Nike wants to cut costs due to poor margins. According to CEO Tang Ruoxiu's email, the layoffs will not affect stores, distribution centers, and innovation teams.
The layoffs began on February 16 and lasted for a week. Nike's fiscal third quarter ends on Feb. 29, and further layoffs are expected at the end of the fiscal quarter and next. At the December 2023 earnings conference, Nike executives announced restructuring charges of up to 4-4$500 million, mainly related to severance payments.
Nike is not the first industry company to announce layoffs, after Levi's Strauss &Co announced plans to cut 10%-15% of positions globally. The industry is cautious, with Adidas and Puma warning of weaker earnings this year as consumers become more cautious and cut back on non-essential spending.
Throttling: Prudent spending was revealed in the email, Tang Ruoxiu wrote: "This is a painful reality, and I can't take it lightly. We're not doing well at the moment and I'm ultimately responsible for myself and the leadership team. ”
This is a more cautious and pessimistic statement than earlier. In December 2023, Nike announced revenue of $13.4 billion and net profit of $1.6 billion for the fiscal second quarter, which met and exceeded analysts' expectations, respectively. However, sales are diverging, with strong sales around Black Friday and Singles' Day, and lower-than-expected demand outside of the holidays. By market, the macroeconomic environment in Greater China, Europe, the Middle East and Africa is under pressure.
In announcing the results, Nike lowered its sales forecast for fiscal 2024 and expects full-year revenue growth of about 1%, which is lower than the previous** mid-single-digit growth; The company observed that consumers were spending cautiously, and a weak online presence and a high level of activity were impacting profits.
The downward revision of annual sales** made the atmosphere tense, and the company's stock price was followed by **11%; European peers Adidas and Puma shares were also affected, each down 595% and 458%。
Matthew Friend, Nike's chief financial officer, said: "We are seeing signs that global consumers are acting more cautiously in an unbalanced macro environment.
Total retail sales across the market were lower than we expected as demand was weak except for key spending moments. While Nike store footfall continues to grow, we're seeing weaker online footfall and higher levels of activity across the market. As a result, we are adjusting our channel growth plans for the remainder of the year. ”
Nike announced a $2 billion cost reduction plan for the next three years, including simplifying product classification, improving the efficiency of the ** chain, leveraging scale, increasing automation, simplifying organizational structure, and enhancing procurement capabilities. It also marked a shift in the company's strategy to focus on profitability rather than sales growth after the high inventory problem was resolved.
CFO Flender told investors that Nike's gross margin will expand this year, in part by strategic*** The company expects gross margin to increase by 140-160 basis points in fiscal 2024. Nike is reducing some of the popular products** to the dealer channel in order to focus on new product launches.
Open source: Yoga pants plan Nike needs a new growth point of more quality, and 799 yuan yoga pants appeared in the store.
For example, CEO Tang Ruoxiu said at the performance meeting that he would increase resources to run series products and the Jordan Jordan brand.
Over the past three years, our women's products business has achieved average high-single-digit growth. We are encouraged by this progress, and we have seen ...... best plan to accelerate the growth of women's productsAbout 40% of members are women, who make up a larger percentage of new members, and the demand for each member is growing faster. ”
We are focused on innovating for her and creating new opportunities that have not been served before. We've now built up a collection of bras and leggings at different price points, and the statement leggings from Zenvy, Go, and Universa are all over $100, which is a price point we didn't have before. ”
Skinny yoga pants over $100 are what rival lululemon excels at, and the Canadian brand has created high growth by winning over female consumers from male-dominated brands such as Nike, Adidas, and Under Armour. In the new round of exchanges, lululemon sold men's shoes, and Nike sold women's yoga pants.
Not only lululemon, but also a number of new brands share the share of giant food, such as Federer-backed Swiss ON Ang Running, and the more detailed performance division of running shoes Hoka. Footwear is the largest contributor to Nike's revenue, with more than 60% of its revenue coming from footwear, and it can be said that the company's overall performance largely depends on the brand's performance in the footwear market. Nike has tackled the slowdown in the running shoe category with new products such as the Invincible 3, Infinity4 and Vomero 5.
When the running shoe business reopened, Nike encountered some unexpected situations.
Kenyan genius Kelvin Kiptum broke the marathon world record wearing Nike's alphafly 3, which not only drove the $362 superrunning shoe to sell out within two minutes of launch, but also the biggest highlight of Nike's commercial cooperation with athletes that season. Sadly, 24-year-old Kiptum died in a car accident in February.
In early January, Nike also ended a 27-year partnership with golfer Tiger Woods, who signed with Nike when he was 20 years old and has been competing in Nike products ever since. This contract is also one of the most successful commercial contracts in sports in recent years. Woods has announced a partnership with golf product manufacturer Taylormade to launch a new range of golf products called "Sun Day Red".