Acting on a “Consumer Direct Acceleration” announcement it made last month, Nike last week reorganized its senior executive suite under President and CEO John Donahoe and disclosed an unspecified number of job cuts that will result in one-time employee termination costs of $200 million to $250 million.
While Nike didn’t disclose a timeline for the layoffs, an examination of Nike’s last two annual reports, including the latest filed July 24, reflects a 2.1 percent decline in global Swoosh employees to 75,400 worldwide at May 31 versus 77,000 on May 31, 2019.
In an official statement, Nike said that all personnel changes are part of an overall initiative to create a “more premium, consistent and seamless experience” across its owned and strategic partner ecosystem. Aside from aligning its segment platform into a simpler Men’s, Women’s and Kids structure, the Swoosh installed new senior management in all parts of the globe with the exception of North America and Greater China, where Ann Hebert and Angela Dong will continue to lead operations and report to Heidi O’Neill, Nike’s president of Consumer and Marketplace.
Two notable senior management additions at Nike are Craig A. Williams, named president of the Jordan Brand; and G. Scott Uzzell, named president and CEO of Converse Inc. Williams, a former Coca-Cola and Kraft Foods executive, joined the Swoosh in January of 2019 and Uzell, a consumer brands veteran, joined Nike from Coca-Cola in January of 2019.
In FY20 ended May 31, the Jordan Brand experienced 15 percent annual growth to more than $3.6 billion in wholesale revenues. It was the only one of six Nike business segments to post a year-over-year sales gain. Converse, meanwhile — which sources say is eying a new push into the basketball category — had essentially flat footwear revenues in FY20 at $1.64 billion and a 7 percent drop sales to wholesale customers, but a 9 percent increase in Direct-to-Consumer sales at $602 million. Impacted by a 25 percent dip in apparel sales to $89 million, Converse’s global sales declined 3 percent (-1 percent in constant currency) last year to nearly $1.85 billion.
Nike’s total advertising and promotion spend (what it calls "demand creation” expense) declined 4.3 percent in FY20 to $3,592 million from $3,753 million, likely pared back due to COVID-19 considerations and cancellations of professional and major sporting events and contests during the first five months of this year.
Other 10-K Tidbits:
The company’s three largest U.S. customers accounted for 24 percent of annual sales in the region in FY20… Nike ended the fiscal year with 212 Nike Brand factory and 98 Converse stores in the U.S… The company utilized 122 footwear factories across 12 countries with the largest accounting for 9 percent of Nike brand footwear production last FY. Contracted Vietnam factories produced 50 percent of unit volume, followed by Indonesia (24 percent) and China (22 percent)… Nike apparel was made across 329 factories in 38 countries in FY20 with Vietnam (28 percent), China (23 percent) and Cambodia (12 percent) producing the most.