Nike renames market segments for more accurate financial reporting
Nike is in the midst of a reorganization that is designed to improve the time it takes to get product to market. In addition to 1,400 layoffs, Nike has officially renamed market segments for better financial reporting.
The new geographies are North America; Europe, Middle East & Africa (EMEA); Greater China; and Asia Pacific & Latin America (APLA). Nike will report financials based on these new regions starting in fiscal year 2018.
When Nike announced its reorganization in June, it introduced a Consumer Direct Offense plan. The plan eliminated certain geographic market segments and restructured the global business into these four geographies.
The plan is overwhelmingly designed to improve operational efficiency and speed to market so consumers get the product they want more quickly and so that Nike can in turn respond to consumer preferences more rapidly. Along with the plan, the company announced it would lay off 2% of its global workforce, a figure which amounts to 1,400 employees.
In an effort to move forward, Nike has recast certain historical data to reflect the new geographic segmentation. The company formerly relied on Futures Orders as an integral part of its financial reporting. It has not recast Futures Orders into these segments.
According to an official statement, "Futures Orders have become an increasingly less reliable indicator of Nike, Inc.’s future performance." Hence, they will be phased out of all of Nike's financial reporting beginning FY18.
Converse and Nike Direct will operate within these new geographic structures as well.
Time will tell whether the reorg helps improve speed to market. For now, investors can expect to see positive results for the brand from the changes it has made to its market segmentation.
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