REUTERS - Nike Inc said on Thursday it would cut about 2 percent of its global workforce and eliminate a quarter of its shoe styles as it looks to become nimbler in the face of intensifying competition and fast-changing consumer trends.
Nike said it would reduce the number of its business segments to four from six as part of the initiative, being rolled out at a time the company is battling for market share in North America with a resurgent Adidas AG and a fast-growing Under Armour Inc.
Shares of the world’s No.1 shoemaker were down 2.7 percent at $53.59 in early trading, making them the biggest percentage loser on the Dow Jones Industrial Average.
Under the plan, called “Consumer Direct Offense”, Nike will concentrate on 12 key cities in 10 countries, which are expected to represent over 80 percent of its projected growth through 2020. These cities include New York, Berlin, Paris and Barcelona.
The company also said it would focus on newer styles, such as ZoomX, Air VaporMax and Nike React, and on categories with high growth potential, including running, basketball and soccer.
While Nike still holds a 50 percent share of the U.S. market, Adidas’ retro Superstar shoes toppled Nike last year to become the top-selling sneakers in the United States. Nike’s shoes had held the position for more than a decade.
To double the speed of its innovations, the sporstwear company also laid out plans to cut the time it takes to create products by half.
Trevor Edwards, the president of the Nike brand, will lead the initiative, which also involves making several changes to its leadership structure, the company said.
Starting in fiscal 2018, Nike will report results based on four new operating segments: North America, Europe, Middle East and Africa, Greater China, and Asia Pacific and Latin America.
Previously the company reported results for six units that included Western Europe, Central & Eastern Europe, and Japan and emerging markets as separate units.
As part of the organizational changes, about 1,400 employees are expected to lose their jobs. Nike had 70,700 employees as of May 31, 2016.
Reporting by Siddharth Cavale in Bengaluru; Editing by Sai Sachin Ravikumar and Saumyadeb Chakrabarty