A man wearing a face mask passes a Nike store in the Central Business District, Beijing, China on February 17, 2020.
Andrea Verdelli | Getty Images
Nike’s shares are falling on Friday after the company reported mixed third-quarter earnings on Thursday and confirmed it was laying off employees.
The shares fell nearly 4% at noon. The shares gained more than 95% last year and have a market value of $ 217 billion.
Nike did not disclose job cuts in its earnings report on Thursday or call investors. The layoffs were first reported by The Oregonian, which covers the Portland-based tennis company.
Nike said the cuts follow the layoffs that started last summer. As of May 31, 2020, Nike employed approximately 75,400 employees worldwide, according to a registry by the Securities and Exchange Commission.
In a prepared statement, Nike was “focused on transferring resources and building capacity to reinvest in our areas of greatest growth potential”.
“We are building a flatter and more agile company and transforming Nike more quickly to define the market of the future,” the document said.
On Thursday, the sportswear retailer said its revenue fell 10% year-over-year in North America during the third fiscal quarter ended on February 28, as ports in the portfolio delayed shipments. This caused goods to arrive weeks late at their own stores and those of their wholesale partners, such as department stores and sporting goods stores, and increased the risk of ending up at the checkout counter.
Nike said sales at its stores in Europe, the Middle East and Africa fell during the quarter due to pandemic-related closings and restrictions.
“The good news here is that supply chain problems are expected to ease in the coming quarters, while Europe will recover in time as the vaccine is launched,” said Jefferies analyst Randal Konik in a research note. Konik values Nike’s stock as a retention, with a target price of $ 140.
Nike highlighted positive points, such as the growth of its direct-to-consumer business, the momentum in China and strong online sales. The company said it reached the first quarter with $ 1 billion in online sales in North America, as consumers bought new sneakers and gym clothes while they were at home. Sales increased 51% in Greater China. And the company said it expects a similar resurgence in sales as other countries recover from the pandemic.