Nike to realign operations, cut workforce

Athletic-shoe maker Nike plans to reorgainse its Nike Brand into a new model consisting of six geographical areas across the globe, with an increased focus on the core category business. Previously, the marketing of the brand was organised between just four regions globally.

As per the new plan, Nike would now operate in six regions of North America, Western Europe, Eastern / Central Europe, Greater China, Japan and Emerging Markets. The prior marketing model of Nike was based on four regions, that included US, Asia Pacific, Europe and Middle East & Africa.

The move, according to Nike, is an effort to make the brand more competitive by sharpening its focus on consumers, with reduced management layers. The realignment, however, may also result in an overall reduction of up to 4 per cent of company workforce, affecting around 1,400 positions. Nike employs nearly 35,000 people worldwide.

During the third quarter of 2008, Nike's US sales increased 3 per cent to $1.6 billion, while that from EMEA region dropped 14 per cent to $1.2 billion from the same period a year ago. The Asia Pacific region reported an 8 per cent increase in revenues to $806.9 million, while that of Americas decreased 5 per cent to $245.4 million from the year-earlier quarter.

However, future orders of US were down 1 per cent, EMEA dropped 25 per cent, Asia Pacific declined 1 per cent and Americas were down 4 per cent.

Speaking about the realignment plans, Charlie Denson, president of Nike said that the new model will sharpen the company's consumer focus and will allow to make faster decisions, with fewer management layers.

Beaverton, Oregon-based Nike's other brands include Converse, Cole Haan and Hurley. Nike also acquired Umbrio brand in December 2007.