Sometimes, a bit of aggression is necessary to destroy the competition.
Although Nike still ranks as the number one sportswear company in the U.S., it has faced financial struggles over the last few quarters, risking losing its spot to trendier, emerging activewear brands.
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It turns out that Nike's motto is “Just Do It” for good reason — it enacted a turnaround plan to prevent the competition from taking its title.
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Nonetheless, change doesn't happen overnight, and the athleticwear company is still struggling.
In its last reported earnings, Nike revealed it met expectations but was unsatisfied with the overall results. However, it claimed its teams are moving with “focus and urgency” to return the business to sustainable and profitable growth.
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Nike delivers unsatisfying results and continuous declines
The athleticwear brand revealed five actions to boost growth. These include strengthening the brand, creating distinction, accelerating its product portfolio, balancing wholesale partners and direct-to-consumer markets physically and digitally, and winning over specific markets.
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To achieve these goals, Nike (NKE) has been cutting costs in some areas of the business. It reduced investment in paid media to develop new products and has shifted to a full-priced business model for its digital channel.
Since January, the company has opted to sell at full price by reducing promotional days and discounts. Nike's U.S. digital channel went from having over 30 promotional days to zero in February.
However, the third quarter's total revenues declined 9% compared to the previous year, with Nike's digital revenues down 15%.
Sales fell by double digits from January through February, proving consumers remain cautious about spending and are incentivized to shop when offered value deals. However, Nike is sticking to its plan.
“Despite the global economic uncertainty, I believe our priority actions will continue to drive progress. The first action is to ignite our winning culture. As I mentioned, our teams are building the momentum. We're hustling and being opportunistic,” said Nike CEO Elliott Hill in an earnings call.
Nike confirms layoffs as it navigates a turnaround
Since becoming CEO in October, Hill has made multiple strategic changes in the company while navigating a turnaround plan.
During Nike's latest earnings call, Hill revealed that the company has been working closely with its wholesale partners to discuss ways they can contribute and create a better balance between wholesale and Nike Direct.
“On the wholesale side, we're making investments, and I talked about us needing to use the first half of fiscal year '26 in order to be able to clean up the marketplace,” said Hill.
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And…more changes came crashing down.
Nike revealed in its latest earnings call and has confirmed to Reuters that it will lay off some employees in its technology division as it aims to shift some of that work to third-party vendors.
No information has been revealed regarding the number of employees affected by the decision or how many people are currently employed at Nike's technology division.
Nonetheless, Nike is expected to undergo even more changes, whether it be layoffs or other restructuring moves, as the company has stated that these shifts will continue in fiscal 2026.
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