While "knowledgeable sources" say that Nike could lay
off 1,500 of its employees, "the company said it hadn't
determined how many people would be let go or where,"
according to Jeff Manning of the Portland OREGONIAN. The
report comes as Nike lowered its earning estimates and
announced a global restructuring. Manning added that Nike's
"change in fortune has set off a stormy internal debate at
the company about what cuts to make. The athletic footwear
business is buzzing with talks that senior Nike executives
will leave, either because they will be victims of the
cutbacks or because they will choose to leave." Nike Dir of
Communications Lee Weinstein: "Everything's on the table.
We're looking at every nook and cranny" (OREGONIAN, 2/25).
CANCELLED ORDERS: In N.Y., Sharon King reports that as
Asia's economies "falter, bloated inventories have indeed
stunted growth in what Nike has long described as one of its
most burgeoning markets. But far worse, retailers there
have began cancelling orders" (N.Y. TIMES, 2/26).
CHALLENGES: In N.Y., Morgan Stanley, Dean Witter
analyst Josie Esquivel, who at one time expected annual
earnings growth of 30% at Nike, is now forecasting "zero
growth over a three-year period." Esquivel: "Nike's biggest
challenge is itself. They need to come up with another
identity that they can still say, 'This is Nike,' but it's
something beyond the swoosh" (N.Y. TIMES, 2/26). More
Esquivel, on Nike's three main problems: "The oversaturation
of the marketplace, the overswooshing secondly, and then
lastly, the pricing." CNBC's Mike Hegedus: "Nike no longer
stands out. Too much swoosh, too much promotion, too many
commercials. It all runs together. All sneakers become
Nikes, whether they are or not. ... Nike has been pushing
their prices up, but if the luster of owning Nikes is gone,
owning them no longer means anything." Hegedus: "Nike, it
may have met the enemy and it's wearing a swoosh" ("Business
Center," 2/25). CNN's Terry Keenan reported that Nike "must
cut" jobs and "bloated" inventory. Keenan: "Analysts say
it's just the beginning of a painful transition to a more
mature company" ("Moneyline," CNN, 2/25).
