Nike Inc. is set to report its fourth quarter earnings in the next few days, just weeks after making an announcement that a major reorganization that includes a plan to downsize its workforce by 2% and a focus on enhancing its direct-to-consumer sales.
The company’s new approach will be focused on 12 cities, which includes New York, London and Shanghai, which are expected to represent 80% of the Company’s growth all through 2020.
Nike discussed this new approach in the third quarter earning call, and explained that three-quarters of the company’s sales are responsible for 99% of sales.
The plan for the new approach is to have a goal of connecting with customers more closely, said Jared Wiesel, partner at Revenue Analytics.
Nike is following in the strategies of other brands that are pulling away from third-party retailers. Coach and Michael Kors Holdings Ltd. are two examples of companies that have said they’re downsizing their presence in department stores. Retailers will have to change their strategies as well.
Major retailers for Nike, like Foot Locker Inc. and Dick’s Sporting Goods Inc. might have more eggs in the basket, while department stores are trying to get more wear on their floors.
In an interview, the Nike’s Chief executive, Mark Parker stated that “By editing out 25% and amplifying the productivity of both new innovations and the products consumer already love, we’re driving more growth and choice from fewer styles”