Nike Plans More Job Cuts After Weak Forecast

The announcement extends a difficult period for a brand whose share price has fallen by roughly 75% over five years, according to the BBC. Retail adviser Matt Powell argues that the company made several strategic errors, including cutting ties with many retailers in favour of selling directly to customers online and making once-exclusive limited-edition shoes widely available. He told the BBC that Nike also shifted research spending away from new products towards digital operations, weakening its pipeline of innovative designs. That shortage of compelling products has, in turn, forced heavy discounting. China has been a particular concern: sales there fell 26% in the quarter, the ninth consecutive quarterly decline, as local and international rivals gain ground.

Chief executive Elliott Hill, a company veteran who came out of retirement two years ago to lead the turnaround, has tried to revive growth by refocusing on key sports such as running and rebuilding relationships with retailers, but he acknowledged that Nike has "more work to do". There are some encouraging signs: the company's gross margin, the share of sales kept as profit after production costs, rose to 42.8%, helped by lower warehousing costs. However, the brand has also suffered high-profile losses, with football star Kylian Mbappé leaving after 20 years to join the Swiss rival On, and Lamine Yamal moving to Adidas. In September, Nike was also removed from the S&P 100, an index of leading US companies, after 18 years. Powell expects the turnaround plan, called "Sport Offense", to show positive results next year, but believes Nike is unlikely to regain the dominance it once enjoyed.