Sporting goods company Nike reported a significant drop in sales in the Olympic summer. In the first quarter, which ended at the end of August, revenue fell ten percent year over year to $11.6 billion. The bottom line is that profits fell by 28 percent to $1.05 billion (950 million euros). Nike wants to control the problems, among other things, by changing its president: in mid-October, former top manager Elliot Hill will come out of retirement to rival Adidas and take the top job.
His predecessor John Donahue’s strategy included relying more on direct sales. However, the downside was that the shelf space that Nike gave up in stores was filled with competitors’ products. This makes competitors more visible to consumers.
In the fourth quarter, Nike weakened in both sales channels. Direct sales fell 13 percent to $4.7 billion. The reason for this was a 20% decrease in online business, while there was a 1% increase in Nike stores. Wholesale sales fell eight percent to $6.4 billion.
Nike is currently undergoing an austerity program initiated by Donahoe aimed at cutting costs by about $2 billion. About two percent of jobs are affected.
