I can't see how our latest quarterly results, with worse results expected for Q4, will not lead to more layoffs and efforts to reduce costs. Buckle up.
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@jn+1j
you sound like that mo--n in finance who thinks cloud spend is tied to revenue.
@g4+1jpwj2cc7 don’t hold your breath waiting for that person to answer. He’s just making stuff up as he goes along, not thinking anyone would notice he doesn’t actually know what he’s talking about.
“Technically”.
@jn+1jpwj2cc7 Where did you find a breakdown of SG&A that segments out tech? That isn’t listed in the 10Q or 10K.
Skyrocketing tech spending as a percentage of SG&A would either have to mean SG&A itself goes higher (it really hasn’t) or some other aspect of SG&A has dramatically declined. And the only other breakdown we have of SG&A is demand creation, which has increased a great deal over the last year.
What is this higher percentage of tech spend as an aspect of SG&A compared to previous years and where did you find this figure?
@g9+1jpwj2cc7 agree with the logic but…
Tech spending skyrocketed over past 5 years and is a much higher percentage of SG&A. Other functions have been improving while Tech is burning OPEX faster and faster for a limited, questionable value
So our sg&a (and bottom line) could be better if not for that “technical” detail
It’s @g4+1jpwj2cc7 again. I should have added data to my prior post.
SG&A at Nike has remained remarkably stable over the last 10 years. As a percentage of revenue it was 32.2% in 2015 and is currently 32.8% on an annualized basis. In the last 10 years it hit a low of 28.8% and a high of 35.1%. So as I said, current SG&A isn’t a problem and is well inline with Nike’s past 10 years of results. Which is why I’m not at all following your claim of “exploding” SG&A.
@ex+1 you wrote “As long as our SG&A explodes upward, those high single digits of YoY revenue growth, are going to be low single digits.”
I’m not tracking that logic in various ways.
First, SG&A isn’t that much of a problem. In fact it declined 8% last quarter and is currently well within Nike’s historic range. What is the “exploding up” you’re referring to?
Second, I’m unaware of a direct relationship between SG&A movement and revenue movement. Especially within the context of Nike’s financial history where there hasn’t been any consistent relationship between the two. But you seem to believe otherwise. Why?
Third, even if someone wanted to argue the relationship can be found between demand creation expense (which is usually part of SG&A) and revenue, that relationship would be inverse to what you’re claiming. I.e., increased SG&A expense would lead to increased rather than decreased revenue.
I’m a finance guy myself and I’m sincerely not following what you wrote. Can you explain?
As long as our SG&A explodes upward, those high single digits of YoY revenue growth, are going to be low single digits. Too much spending. Too much inventory. Too many employees not providing value to their organization.
This is what happens long-term when ideology takes priority over merit, especially in talent management of your most important leadership roles. Obviously, many factors have led to Nike’s declining sales, but this is one that’s making a rebound even harder.
Layoffs are an unfortunate necessity. Nike is staffed for consistent annual growth rates in the high single digits. As of right now however there is almost no growth at all and no guarantee whatsoever that whatever growth Nike can muster up will even come close to prior levels. Nike had a really good and long run but just as with sports, even former champs eventually face that their better years are behind them.
More scary, we now know very well that layoffs have little to nothing to do with job performance. If you’re expensive or even just overpaid for your position (a situation that is far more common at Nike than most people understand) you’re fair game for the chopping block.
If you’re over 40 or, God forbid 50, you might as well just go to Best Buy this weekend to purchase a Jitterbug. Lord knows you won’t be needing a “smart phone” when you’re sitting on the couch at home wondering why no companies to which you’ve applied are calling you back.
It’s 2025, not 1995. Nowadays layoffs are a more normalized corporate strategy to help serve shareholders who expect consistent returns on equity. The fact that layoffs involve humans is a regrettable but entirely permissible mental reservation.
Just like Lynn Anderson never promised you a rose garden, Nike never promised you a comfy place from which you could eventually retire. As many thousands of our colleagues have discovered over the years.
It’s coming.
Of course there will be more layoffs, Nike isn’t cool anymore, sales are declining and the product is stale garbage.
We need to dump the consultants & contractors if we want to start saving money. We pay obscene amounts of money for people that can’t even do what they’re hired to do.
I don’t know about anyone else but in my neck of the woods directors are privately talking with the contracting firms then signing on people without even putting them through an interview.
EH will avoid layoffs and reduce costs in other ways. Not that I agree…. since there are far too many incompetent people who should be replaced.