Nike Hit by Layoffs

By Douglas A. McIntyre Updated Apr 22, 7:21AM EDT · Published Apr 20, 7:50AM EDT

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Nike Inc. (NYSE: NKE | NKE Price Prediction), 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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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.