Late Thursday, Nike announced plans to reduce its current workforce by 2%, equating to over 1,500 jobs, as part of a broader restructuring initiative. The Oregon-based athletic wear giant aims to optimize its capital allocation to bolster investments in key growth segments such as running, women’s apparel, and the Jordan brand.
“This is how we will reignite our growth,” stated CEO John Donahoe in a memo, acknowledging the necessity of the move while expressing the associated difficulty. “We are not currently performing at our best, and I ultimately hold myself and my leadership team accountable.”
Nike outlined that the layoffs will occur in two phases, commencing this week and concluding by the end of its fiscal fourth quarter, typically ending in May. Layoffs in Nike’s EMEA (Europe, Middle East, and Africa) region will follow a different timeline, adhering to local labor regulations.
While specific departments affected by the layoffs remain undisclosed, the company assured that retail staff at Nike stores and warehouse employees would not be impacted.
These measures coincide with a backdrop of shifting consumer spending habits and a retail sector anticipating a slowdown in demand for discretionary items, including apparel and footwear, which constitute Nike’s core products.
In December, Nike revealed a comprehensive restructuring plan aimed at reducing costs by approximately $2 billion over the next three years. The company adjusted its sales outlook in anticipation of decreased demand, particularly in wholesale orders, online sales, and a promotional-heavy marketplace.
Among its cost-cutting strategies, Nike highlighted simplifying its product portfolio, enhancing automation and technological integration, streamlining organizational structures, and leveraging its scale for enhanced efficiency.
Reports emerged prior to the restructuring announcement indicating Nike’s discreet layoffs across various divisions, including recruitment, sourcing, branding, engineering, human resources, and innovation.
Despite these measures, the total number of jobs cut by Nike since December remains unspecified. On Friday, Oppenheimer downgraded Nike to perform and revised its 12- to 18-month price target downward, citing sluggish consumer demand, innovation lags, and increased competition.
Donahoe emphasized that laid-off employees would receive comprehensive support packages encompassing financial assistance, healthcare benefits, and outplacement services, expressing confidence that the restructuring would fortify the company’s resilience and commitment to its core mission of serving athletes and advancing the future of sports.
