There were no famous athletes at Nike’s annual shareholder’s meeting Thursday, no fashion models, little of the customary glitz and glamour, perhaps befitting a new era of austerity and resurgent competitors.
“This was a particularly challenging, difficult time,” Mark Parker, Nike chief executive, president and chair, said of the company’s fiscal year. “Having to let some teammates go” was particularly painful, he said.
Nike announced in June it would lay off 2 percent of its workforce, about 1,400. Just over half those employees came from the company’s Oregon operations. Most were informed of their pending termination in September.
This week brought more bad news: Hard-charging Adidas overtook Nike’s Jordan division as the second-largest brand in the U.S. sneaker market. The development illustrated Adidas’ tremendous resurgence and also the weakness of the basketball shoe market, a traditional strength for both Nike and Jordan.
Stock analysts in increasing number are backing away from Nike. Two more downgraded Nike’s stock this week.
Nike remains by far and away the industry’s dominant brand. Even in its supposedly weakened state, the largest company based in Oregon enjoyed 6 percent annual revenue growth to $34.4 billion and earnings-per-share growth of 16 percent.
But it’s undeniable that Nike is no longer the unchallenged titan of the industry. The heady days of 2015, when Parker confidently predicted Nike would reach $50 billion in sales by 2020, seem like a long time ago.
The company’s stock closed Thursday at $53.19, virtually unchanged from the beginning of the year.
In response, Parker and his senior executives have launched an extensive restructuring known internally as the “consumer-direct offense.” The aim is to double the speed of product development, halve the time it takes to get those products to consumers and double the number of consumer interactions.
With the traditional retail sector faltering, much is riding on Nike’s success in building its direct-to-consumer business. Those are frightening words to retailers who have traditionally looked at Nike as a vital supplier and partner, not a competitor.
“We’re doing all this for one reason: The consumer demands it,” Parker said. “Our entire team is sprinting toward this new opportunity.”
A small group of shareholders attended the meeting, sitting mostly stone-faced through the 40-minute event. The only enthusiasm they showed was tepid applause at the introduction of John Thompson, former Georgetown University basketball coach and a longtime Nike director.
Nike releases its first-quarter earnings next week.