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Sep 5, 2017
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Nike downsizing in India to narrow losses

Published
Sep 5, 2017

US sportswear major Nike is struggling to find a profitable formula for the Indian market and is planning to trim down its operations in the country to narrow losses.


To date, Nike has closed around 35% of its stores in IndiaPhoto: Nike - Nike


According to a report by consulting firm Euromonitor, the sportswear market is expected to touch $8 billion in terms of sales by 2020. However, top global firms like Adidas and Nike are finding it difficult to make profits in the otherwise lucrative Indian market. Even the German sportswear maker Puma reported losses in India last this financial year, after three years of profit making.
 
India is a booming market for sportswear, however, it is also very price sensitive and currently dominated by the domestic sports and athleisure brands like HRX, Zeven and YWC.

Nike was one of the early entrants in the Indian market in 2005 but has not managed to reap the benefits; incurring losses for the past few years in India.

Nike’s India sales plummeted to Rs 764 crore (approx $119.2 million) in FY16 from Rs 803 crore (approx $125.4 million) in FY15, and its losses widened too; from Rs 101 crore (approx $15.8 million) in 2014-15 to Rs 170 crore (approx $26.6 million) in 2015-16.

The company is now on a damage control mode and trying to minimise losses by trimming down its operational costs and cutting down on its sponsorship deals. According to a report in the Times of India, Nike has let go of 20% of its employees in the country.
 
When asked about the ongoing layoffs in India, a Nike India spokesperson said, "In June, we announced that as part of Nike's move to align the company against the Consumer Direct Offence, a strategy that allows us to serve our consumers faster and more personally, there would be workforce reductions, and that has been the case in India. Our headquarters in India remain in Bangalore with two other offices in Delhi and Mumbai."
 
Nike to date has closed around 35% of its stores in India and currently operates only 200 Nike stores across the country.

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