UPDATE: Nike Runs Into Rough Financial Road
March 20, 2009: One day after disclosing that its Q3 revenues declined 2% and that it expected to see revenue below prior-year levels in the first two quarters of fiscal 2010, Nike, Inc. unveiled a new organizational plan with "reduced management layers." According to Nike, the new global structure consists of "six geographies with reduced management layers and an increased focus on core category business areas, driving greater efficiencies and stronger consumer connections." The globe will be organized into six geographies: North America, Western Europe, Eastern/Central Europe, Greater China, Japan and Emerging Markets. The Nike Brand was previously organized by four regions: U.S., Asia Pacific, Americas and EMEA (Europe, Middle East and Africa). Under its new management structure, North America: Craig Cheek, who has been vp and general manager of the U.S. region, will head up the North America territory; and Roland Wolfram, who has been vp and general manager of the Asia Pacific region, becomes head of global sales. Cheek, Wolfram and the other heads of geographical regions all report to Gary DeStefano, president global operations. The organizational change is part of a wider company restructuring that may result in an overall reduction of up to 4% of the company's workforce. Nike, Inc. said it employs nearly 35,000 worldwide. "This new model sharpens our consumer focus and will allow us to make faster decisions, with fewer management layers," Charlie Denson, president of the Nike Brand, said in a statement. The company's latest financial report, released March 18, indicates cost reductions may expand as Nike's revenue decreased 2% for the fiscal 2009 third quarter, which ended Feb. 28. According to Nike, revenue decreased to $4.4 billion, compared to $4.5 billion for the same period last year. And while U.S. footwear revenues increased 8% to $1.2 billion, apparel revenues decreased 9% to $370.4 million and equipment revenues decreased 2% to $74.4 million. Nike also predicted it would see revenue below prior-year levels in the first two quarters of fiscal 2010, which starts in June, but hoped to see revenue growth in the second half. "Going forward we'll continue to stay close to the consumer, drive innovation into the marketplace, and operate with financial discipline by making the right decisions to restructure our organization for the future," Mark Parker, president and CEO of Nike, Inc., said in a statement. "I feel very good about our performance and our potential. The Nike, Inc. portfolio of brands is a diverse and competitive asset. We'll continue to leverage all aspects of it to deliver consistent, long-term shareholder value." Back to Home Page
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