Companies and Brands

Nike Hit by Layoffs

Douglas A. McIntyre

Published: April 20, 2024 7:50 am

Last Updated: April 22, 2024 7:21 am

Nike Inc. (NYSE: NKE), apparently trying to streamline its corporate management structure, has laid off workers at its headquarters. The company suffers from a tepid market and harsh competition inside and outside the United States.

The layoffs included 740 people. The problem is more significant than it seems. Nike called this its “second round of layoffs.” Earlier in the year, Nike said it would cut 2% of its workforce.

Nike’s share price has collapsed this year. It is down 26%, while the S&P 500 is up 19%. Nike’s stock price prediction for 2030 tells a different story.

In the most recent quarter, revenue was flat at $12.4 billion, and net income was down 5% to $1.2 billion. Among the problems is that it describes itself first and foremost as a “growth company ” on its investor relations page.” That statement is not true. John Donahoe, President and CEO of Nike, commented, “We are making the necessary adjustments to drive Nike’s next chapter of growth.” So far, his plans have gone nowhere.

Another sign of trouble at Nike is that, based on earnings before interest and taxes, Nike’s numbers dropped in Europe, the Middle East, and Africa. They also dropped in the Asia-Pacific region.

Nike has considerable competition. Adidas is about half its size in revenue, and Puma and Lululemon Athletica Inc. (NASDAQ: LULU) are about 20% as large. Nike once was a “growth company,” but it isn’t anymore.

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