New York (AFP) – Nike plans to cut an undetermined number of jobs and establish a new campus in India as it seeks to accelerate a turnaround following another downcast quarter. The sports giant unveiled the plan as it reported a modest decline in quarterly profits on lower sales. The company projected sales in the current fiscal year would fall by “high-single digits,” according to an earnings statement.
“We’re building Nike for the long term,” Chief Executive Elliot Hill said during a conference call in which he touted the company’s burgeoning relationship with women’s basketball star Caitlin Clark. Nike reported a two percent drop in quarterly profits to $712 million. Revenues fell four percent to $11.2 billion for the quarter ending August 31, the first quarter of Nike’s fiscal 2027. Other than North America, where revenues grew two percent, Nike saw declines in every other region. The sports giant suffered an especially big drop in Greater China, a badly slumping area. In that geography, revenues fell 22 percent to $1.2 billion.
Hill also cited the need for improvement in sportswear and the Jordan brand. Hill rejoined Nike as CEO in October 2024 as the company sought a pivot due to problems that included an oversupply of too many items that sold poorly and an ill-conceived shift to direct sales that left the company underrepresented with key retailers. Hill told analysts the company has made progress since his return, but that deeper changes were needed following a comprehensive review.
Nike “must make changes to become a more agile, efficient and athlete-focused company,” Hill said in a message to employees. These shifts “will result in fewer roles across Nike, and I want to acknowledge that news like this creates uncertainty,” said Hill, who promised “transparency” as the plans become clearer. “Decisions about impacted roles related to this work will begin in calendar year 2027 and beyond,” Hill said.
Nike plans a new campus in Bengaluru, India, which will represent “a long-term investment in new capabilities and talent to strengthen how we serve athletes around the world, including in India,” Hill said in the message. Neil Saunders, managing director of GlobalData, said the latest results show “Nike’s brand heat continues to fade and it isn’t powerful enough to punch back against more nimble competitors.” The company’s forecast for a further decline in revenues was particularly troubling, said Saunders, who called the outlook “shabby.” Shares of Nike tumbled 7.1 percent in after-hours trading.
© 2024 AFP
