Nike Launching Corporate Overhaul Three Years In The Making
Nike is preparing to "put into motion a corporate overhaul three years in the making," according to Laura Oppenheimer of the Portland OREGONIAN. Nike has "organized its business by athlete types, on the theory that runners or basketball players, for example, have more in common with one another than with any old shoe buyer." The company in March "redrew its world map to create a half-dozen regions, including separate spheres for China, Japan and emerging markets." It then "completed its reorganization in May by laying off" 5% of its staff. Nike Dir of Corporate Communications Erin Dobson said that the company "spent the summer re-engaging workers ... from transition training to global webcasts to pep talks about the purpose of the reorganization." Nike officials also "began to sketch details for the new structure." Designing and selling gear by sport "appeals to recreational athletes' sense of community," and new regions "show where the company expects to grow." Dobson said that expanding from four to six regions "allows Nike to zoom in on geography-specific fads and cultures." Oppenheimer reports the FIFA World Cup next summer "will be huge next year in the new Western Europe and Eastern/Central Europe territories -- which used to be lumped together, along with the Middle East and Africa." On the "heels of the layoffs, Nike released its first downward-trending financial news after seeming to coast above the fray of the recession." SportsOneSource analyst Matt Powell said that Nike's "slowed growth is likely to continue for the next few quarters," and it would not be surprising if, "in the short term, the reorganization played a role." Oppenheimer notes the next "several months also mark the one-year anniversary of Summer Olympics sales, which will be tough to match." Susquehanna Financial Group analyst Christopher Svezia said that with "all this in mind, Nike's financial performance is likely to be modest for the next year" (Portland OREGONIAN, 8/31).
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