Nike Global Layoffs 2%, Cautious Consumption Challenges Sports Consumer Brands
charlescmh
发表于 2024-2-18 13:13:12
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On February 15, 2024, local time in the United States, Nike, the world's largest sportswear group, announced that it will lay off employees.
In an email from Nike's global CEO John Donahoe, it was stated that Nike will lay off 2% of its workforce.
According to data from The Wall Street Journal, as of May 31, 2023, Nike had approximately 83700 employees worldwide, including retail and part-time employees. This means that this layoff will result in approximately 1600 positions being laid off by Nike.
According to the CEO's email, it was also clarified that this layoff does not involve innovative business, as well as the store and logistics business departments.
In the Greater China region, Nike completed a layoff in 2020, with a layoff rate of 20%, approximately 400 people. This also means that the global layoff of 2% has little impact on Nike Greater China, which has about 2000 employees.
Nike's latest financial report, released on December 22, 2023, covers the second quarter of the 2024 fiscal year from September to November 2023. The world's largest sports goods giant's global revenue was $13.4 billion (approximately RMB 95.664 billion), a year-on-year increase of 1%.
In the Greater China region, Nike has shown positive growth for the fifth consecutive quarter, with revenue of $1.863 billion, a year-on-year increase of about 6%.
Since February 2024, multiple companies in the United States have announced layoffs, including well-known ones such as Citibank and Deutsche Bank, with Citibank having a larger scale of layoffs, while layoffs have also been reported in the technology and retail industries.
After announcing the layoffs, Nike's stock price slightly declined on February 15th and 16th local time in the United States. Last week's closing price was $103.5, with a market value of $156.83 billion (approximately RMB 1128.17 billion).
According to a report released by McKinsey on January 30th titled "Sports Products 2024," top executives of 90% of sports equipment companies in the industry expect sales and profits to remain stable or increase. However, over 80% of industry executives still believe that inflation and inventory are a persistent challenge.
For the Chinese market, this report points out that the sports consumption sector in China will recover in 2023, but consumer caution is the trend in 2024. This viewpoint is consistent with Nike's global executives.
"The signs we see indicate that global consumer behavior is more cautious due to the macro environment," said Nike CFO Matthew Friend
In the five to ten years prior to 2020, international sports goods giants like Nike were able to maintain a year-on-year growth rate of over 10% in the Greater China region, but in recent years, there have been few international sports goods giants that have been able to maintain growth in the Chinese market.
Before 2020, Nike's biggest competitor in the Greater China region was Adidas. However, in the past three to four years, Lululemon has risen, with niche or single category sports brands such as HOKA and On emerging, as well as domestic sports brands led by Anta and Li Ning.
In the global market, Nike's proprietary and digital businesses are the drivers of growth. But in the Chinese market, the competition for digital services far exceeds that of the global average.
At the end of last year's "Double Eleven" shopping festival, Nike remained at the top of the Tmall sports brand sales list, while ANTA Group's ANTA and FILA brands closely followed American brands and ranked second and third. Li Ning ranks in the top five, with special steps and 361& Deg; Rising to 10th and 13th place, Hongxing Erke, Jordan, and Pick also made it to the top 20.
Before the Lunar New Year, Nike announced the launch of the Tiktok studio. What I am interested in is the important sales terminal of live streaming sales. According to the data released by Tiktok, the overall turnover of Tiktok e-commerce has increased by as much as 80% in the past year. This platform is also the platform with the longest cumulative viewing time for sports consumers.
Currently, in the Greater China region, Nike still takes pride in its membership business. During the Double Eleven period, the consumption per member of Nike's Tmall flagship store increased by over 30%. Among its more than 260 directly operated stores nationwide, it provides one-on-one personalized services to over 5.6 million consumers and enterprise followers every day. At the same time, over 850 top dealer stores nationwide have also completed Nike member co construction.
Nike China's exploration of fierce competition in digital and membership businesses may be an important experience for Nike's long-term growth in the global market.
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