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1485020cookie-checkNike Begins Layoffs Following Going Broke
30 June 2020

Nike Begins Layoffs Following Going Broke

There is a reason I call the coronavirus the “time-traveling beer virus.” Simply put, companies and the media continue to use it as an excuse for trends that were already underway before any of the power-creeping countermeasures were implemented across the world. The only way for Covid-19 to be responsible for these issues is for it to have time traveled, and we are experiencing a timeline that merged with some weird effects, but not the causes of another timeline.

Nike, according to the media (such as WWD for example), has emerged as the latest victim of Covid-19. Following a posted loss of $790 million for the 4th quarter in their 2020 (2019) fiscal statement concluding in June. There is a singular, massive problem facing the media’s reporting on the cause of the loss. Nike themselves in both their financial statement and comments to the press continue to state Covid-19 and the lockdowns only partially caused the loss.

According to their financial statement, only 50% of decreased sales volume is attributed to Covid-19. Of the 4% in decreased yearly revenue, only 2% (half) is attributable to the pandemic. During the pandemic, Nike took on 2 billion more in debt obligations to increase its cash reserves. With the company turning $2.5 Billion in profit for the entire last fiscal year. Debt obligations taken on during the fiscal period are not countered towards yearly performance.

Nike has announced the company will begin layoffs following the posted loss, but the loss itself is not the driving factor. Instead, they are shifting operations to streamline the company and focus more on their growing direct to consumer distribution efforts—a sector the company sees as their future.

That is technically a half-truth. Technically speaking, what Nike is saying is they are not laying off staff as a direct result of the posted loss, but are instead carrying out layoffs as a result of restructuring that’s importance was driven by the posted loss. To the layman, that is the same difference.

With only half the sales volume lost because of the pandemic, the only other direct issue is the continued blowback from the Kaepernick advertisement. While many outlets attempt to portray the advertisement as a net positive for the company, the reality of the situation is far different.

Following the anti-American advertisement campaign, several states and colleges terminated contracts with the company. In 2019 Arizona removed financial incentives the company was receiving, citing the Kaepernick controversy. Though the company saw an initial surge in sales following the advertisement by 2019, sales were on the decline, as reported by CNBC. Though their 2018 fiscal report showed strong sales, the hardships for the company from the blowback had fully begun to set in by 2019.

A lot of people laugh and deride boycotts against companies, but the reality is most of them are not operating with massive profit margins. A minor 4% decrease in sales volume resulted in Nike losing $790 million in a single quarter. 2% of that sales decline as not caused by Covid-19 will continue, so either expect Nike to continue posting losses or expect them to become highly pro-America suddenly. Especially as the company reports tariffs on their Chinese slave labor manufactured products are hurting them.

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