A respected Nike analyst stated in a new report that the company could lay off 7% to 10% of its staff – as many as 7,500 people -- in coming months.
Nike declined to comment on the projection. It divulged it would downsize in July. But it has declined to put a number to its plans. Later, Nike informed the state it will lay off at least 500 in Oregon.
The company currently employs about 75,400 globally, according to its SEC filings. More than 12,000 of those work at the company’s headquarters complex in Washington County.
Sam Poser, who analyzes sporting apparel stocks, Nike among them, issued an enthusiastic report titled “Nike Inc.: Consumer Direct Offense on Steroids.” Sales could exceed $50 billion by 2023, he said. Poser, of the Susquehanna Fiinancial Group, also forecast that Nike’s stock could surpass $150 a share. Shares closed Wednesday at just over $108.
The company’s near-term prospects will be aided by “cost savings associated from upcoming layoffs of 7% to 10% of its workforce, Poser said in his report.
“On July 22, in tandem with the company’s announcement of leadership restructuring, NKE announced that it would incur a one-time $200M-$250M (pre-tax) charge related to employee termination costs likely to be taken in 1Q21,” Poser said in the report. “Based on proprietary checks, we believe that NKE plans to eliminate 7%-10% of its workforce by the end of October.”
Poser went on to say that Nike has learned through the Coronavirus crisis that it can do much of its work virtually. “The cuts, which we estimate will save NKE $800M to $900M annually across salaries, travel, entertainment, and other discretionary expenses, come as the company streamlines to focus on DTC and Digital,” he said.
“The future is virtual sales and product meetings; gone are the days of Nike flying dozens of merchants and planners from wholesale accounts to Portland for product-line presentations and planning.”
Nike officials would not comment about the accuracy of Poser’s report or the downsizing other than to say, as it did in July, that “the process and the related time frame will vary in certain markets based on local labor law, but we aren’t specifying impact by locations.”
Poser’s report led to all sorts of speculation among employees about whether that means 7-10% of all employees worldwide or just domestically or whether some groups of employees will be protected.
While employees suffer through the uncertainty, Poser said the company’s future is bright.
“Nike has accelerated plans to morph into a more digitally centric company spurred by Mr. Donahoe’s Consumer Direct Acceleration strategy that augments Nike’s Consumer Direct Offense,” Poser said in his report. “We expect digital growth in FY21 to remain exceptionally strong as Nike continues to invest heavily in its digital infrastructure.”
Yahoo Finance was among the first to report the story.
The Link LonkAugust 20, 2020 at 08:43AM
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Nike could lay off 10% of staff: stock analyst - oregonlive.com
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