Nike Drops After Announcing Plans To Cut 2% Of Global Workforce
Nike (NKE) is in focus this morning after the company announced a new business structure, which involves cutting 2% of its overall workforce.
REALIGNMENT: Nike announced a new alignment structure called the Consumer Direct Offense, which includes cutting its global workforce by approximately 2%. "Nike's leadership and organizational changes will streamline and speed up strategic execution," the company said in a statement. As a result of the new alignment, Nike will reduce its styles by 25% and attempt to cut product creation cycle times in half. Nike also said it will create the Nike Direct organization, which will be led by Heidi O'Neill, President of Nike Direct, and Adam Sussman, Chief Digital Officer.
WHAT'S NOTABLE: Piper Jaffray analyst Erinn Murphy said earlier this month that she believes Nike's innovation pipeline "has paused" while competition "remains fierce." Nike competes most directly in the space with Adidas (ADDYY) and Under Armour (UAA, UA). In April, Nike posted third quarter revenue slightly below consensus expectations and said worldwide futures orders were down 1%, excluding the impact of currency. The shoemaker, however, beat earnings per share estimates for the quarter. Nike is expected to report fourth quarter earnings on June 29.
PRICE ACTION: Nike shares are down 2.2% in early trading to $53.48.
Disclosure: None.