Nike shares tumble after combined earnings stories, layoff information
A man wearing a face mask walks past a Nike store in the Central Business District, Beijing, China on Feb.17, 2020.
Andrea Verdelli | Getty Images
Nike shares fell Friday after the company reported mixed earnings for the third quarter late Thursday and confirmed it was laying off employees.
Shares fell nearly 4% at noon. The stock is up more than 95% over the past year and has a market value of $ 217 billion.
Nike didn’t announce the downsizing in its earnings report on Thursday or speak to investors. The layoffs were first reported by The Oregonian, which covers the Portland-based sneaker company.
Nike said the cuts follow layoffs that began last summer. As of May 31, 2020, Nike had approximately 75,400 employees worldwide, according to a report with the Securities and Exchange Commission.
In a prepared statement, Nike focused on “shifting resources and building capacity to invest in our growth areas with the highest potential”.
“We’re building a flatter, nippier company and transforming Nike faster to define the marketplace of the future,” it said.
On Thursday, the sportswear retailer announced that its sales in North America were down 10% year over year for the third fiscal quarter ending February 28, as lagging ports delayed shipments. This resulted in goods arriving late for weeks in their own stores and at wholesale partners such as department stores and sports stores, and increased the risk of them ending up on the clearance shelf.
Sales at its stores in Europe, the Middle East and Africa also fell during the quarter due to closings and restrictions related to pandemics, Nike said.
“The good news here is that supply chain problems will subside over the next few quarters, while Europe will open up in time if the vaccine continues to roll out,” Jefferies analyst Randal Konik said in a research report. Konik rates Nike shares with a price target of $ 140.
Nike pointed to bright spots like the growth of its direct customer business, momentum in China and strong online sales. The company announced that it had reached its first quarter of $ 1 billion in online sales in North America as consumers bought new gym shoes and workout clothing while they were at home. In Greater China, sales rose 51%. And the company expects a similar revival in sales as other countries rebound from the pandemic.