Nike to cut about 1,600 jobs
Nike (NKE) said late Thursday it’s sacking about 2% of its workforce, or 1,600 people.
The House of Jordan — but no longer Tiger Woods, who launched his own apparel line dubbed Sun Day Red this week (check out his shank in his return round at the Genesis Invitational yesterday, which he blamed on back spasms in the post-round presser) — had about 83,700 employees ahead of this pink slip round.
CEO John Donahoe blamed the need to free up investments in running, women’s apparel, and the aforementioned Jordan brand. This is part of the company’s fresh $2 billion restructuring plan over the next three years. In other words, more layoffs are likely coming from Nike this year, next year, and in 2026.
It’s interesting to see Nike’s investors yawn at this potentially margin-boosting cost cutting. The stock is down 2.3% year to date versus the 5.5% gain for the S&P 500. (It’s down a modest 1% in premarket trading.) I think that says volumes about the real investor concern with Nike right now: the top-line growth outlook, especially in the important China market. Just look at the landscape!
Results from Restaurant Brands-owned (QSR) Burger King China underwhelmed this week, and the company is pulling back a touch on investing in the country until things improve. That fits with what we have heard in recent weeks on China from other consumer companies, such as Levi’s (LEVI).
According to a Stifel note I got this morning, one of their analysts met with P&G CEO Jon Moeller yesterday and discussed China weakness through P&G’s higher-end SKII skincare product line. Nike gets about 15% of its annual sales from China. If the country isn’t working well in terms of sales, rest assured there is blowback on US shores.
And it looks like Nike’s US workers will have to pay the price for their execs not getting the forecasting job correct.
