Monday, June 29, 2009
Nike: The winged goddess has clipped her wings
During the past three months Nike’s profits have plunged. It has been reported the net income fell 30 percent to $341.4 million, or 70cents per share, for the fourth quarter of the fiscal year. Excluding $195 million in restructuring charges, net income increased 3 percent to $485.9 million, or 99 cents per share which is slightly higher than analysts predicted. Cost-cutting began last year, when Nike froze hiring, limited travel and slowed retail expansion. The company also laid off more then 1,750 employees (approx. 5 percent of Nike's global workforce). Apparently orders for the next several months are down sharply compared with last year and Nike executives are reported to realise "a heightened sense of caution" among individual shoppers as being at the root of sluggish U.S. sales. Combined with currency issues these have compounded the company’s poor performance. Nike executives predict a long, slow upswing in the financial year ahead but hope the changes made will help the winged goddess emerge from the recession stronger than ever.