Nike is making significant changes to its workforce, announcing that it will be laying off 2% of its employees, which amounts to more than 1,500 jobs, as part of a broader restructuring plan. The sneaker giant, based in Beaverton, Oregon, is aiming to optimize its capital allocation by investing in its growth areas, including running, women’s products, and the Jordan brand.
CEO John Donahoe emphasized the need for these changes, stating, “This is how we will reignite our growth.” He acknowledged the challenges the company is facing, expressing accountability for the current performance.
The layoffs will be implemented in two phases, with the first round commencing this week, and the second phase scheduled to conclude by the end of Nike’s fiscal fourth quarter in May. However, the company noted that the timeline for job cuts in its EMEA region will be based on local labor laws.
It’s important to note that the restructuring will not impact retail employees at Nike’s stores or warehouse workers. The company did not specify which departments will be affected by the layoffs.
The decision comes amidst a cautious consumer spending environment and an anticipated slowdown in demand for discretionary items, such as apparel and footwear, which are core products for Nike. The company had previously announced a cost-cutting plan to reduce expenses by approximately $2 billion over the next three years, alongside a revised sales outlook to align with the changing market conditions.
As part of its cost-cutting strategy, Nike aims to simplify its product assortment, enhance automation and technology utilization, streamline its organizational structure, and leverage its scale to drive greater efficiency. These initiatives were introduced in response to the evolving retail landscape and the need to adapt to shifting consumer behaviors.
Prior to the official announcement of the restructuring plan, reports had emerged of discreet employee layoffs at Nike, signaling the company’s preparation for a broader transformation to address the challenges it is currently facing.
In conclusion, Nike’s workforce reduction and restructuring efforts reflect the company’s proactive approach to adapt to the changing market dynamics and position itself for sustainable growth in the future.
