Nike plans to kick back against resurgent rival Adidas

Athletic brand to cut workforce and revamp global operations after fall in sales and shares

Key to Nike’s 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. Photograph: Johannes Eisele/AFP/Getty Images

Key to Nike’s 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. Photograph: Johannes Eisele/AFP/Getty Images

 

Nike Inc is cutting about 2 per cent 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, chief executive Mark Parker said in a statement on Thursday. Nike had more than 70,000 jobs at the end of fiscal year 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 US, along with the expansion of Under Armour into new athletic gear categories.

Against that backdrop, Nike’s closely watched futures orders fell 1 per cent – the first drop since 2009. The slump has prodded Mr Parker to take more dramatic actions to regain Nike’s edge.

Most important cities

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 are expected to drive 80 per cent of the brand’s growth through 2020.

The shake-up didn’t impress investors, who sent the shares down as much as 2.8 per cent to $53.12. That was the biggest intra-day decline in almost a month.

Nike is also simplifying its regional organisation. It plans to concentrate on four regions – North America; greater China; Europe, Middle East and Africa (EMEA); and Asia Pacific and Latin America – down from six.

The Oregon-based company is trying to build a closer connection with shoppers. It’s calling the reorganisation its Consumer Direct Offence, and the effort will be headed up by Nike brand president Trevor Edwards.

– Bloomberg