Please ensure Javascript is enabled for purposes of website accessibility

Nike Is Putting the Finishing Touches on a Restructuring Plan

By Demitri Kalogeropoulos - Updated Jun 26, 2020 at 12:58PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The move, which reportedly will include layoffs, might be aimed at making the organization more nimble as demand shifts online.

Nike (NKE 1.73%) is preparing to lay off a significant number of employees as part of a new restructuring plan. That's according to an email that CEO John Donahoe sent employees on Thursday. The email was first reported by Complex Magazine and then CNBC.

Donahoe reportedly said Nike will soon have difficult choices to make that include layoffs occurring in two rounds, with the first starting in late July. "These decisions are exceptionally difficult," he said, "because they impact friends and colleagues at Nike."

A jogger laces up his shoes.

Image source: Getty Images.

The footwear and apparel giant recently announced weak fiscal fourth-quarter results that were headlined by a 36% sales decline and a $790 million loss during three months that were impacted by the COVID-19 pandemic. Rival lululemon athletica, in contrast, announced a 17% sales drop and managed a modest profit in its most recent quarter.

It's not clear how aggressive Nike's restructuring plan will be, but it is apparently aimed at adding flexibility rather than simply cutting costs. The move will likely reflect the increasing importance of e-commerce to its business, given that its digital sales channel accounted for 30% of sales last quarter. More details should emerge on the restructuring plan after Nike unveils it to employees early next week.

Demitrios Kalogeropoulos owns shares of Nike. The Motley Fool owns shares of and recommends Lululemon Athletica and Nike. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NIKE, Inc. Stock Quote
NIKE, Inc.
NKE
$116.07 (1.73%) $1.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.