Nike To Reduce Workforce by 2%

Nike is set to reduce its workforce by 2%, equating to over 1,500 job cuts, in a comprehensive restructuring initiative, the company announced on Thursday.

The Oregon-based athletic footwear and apparel giant aims to optimize its capital allocation by focusing on key growth areas, including running, women's products, and the Jordan brand.

Nike's CEO, John Donahoe, emphasized the strategic importance of these changes, stating, "This is how we will reignite our growth."

He acknowledged the challenging nature of the decision, expressing accountability for the current performance of the company and its leadership team.

The layoffs will occur in two phases, with the first round commencing this week and the second concluding by the end of the fiscal fourth quarter in May. The timing of job cuts in Nike's EMEA region will align with local labor laws.

While the specific departments affected by the layoffs remain unspecified, Nike clarified that retail employees at its stores and warehouse workers will not be impacted.

The restructuring comes in response to shifting consumer behavior, with increased caution in spending and a broader anticipation of decreased demand for discretionary items like apparel and footwear.

Nike had previously outlined a comprehensive restructuring plan in December, with the aim of reducing costs by approximately $2 billion over the next three years.

The company adjusted its sales outlook to accommodate lower demand and wholesale orders, sluggish online sales, and an industry landscape increasingly reliant on promotional activities.

As part of its cost-cutting strategy, Nike intends to simplify its product assortment, enhance automation and technological integration, streamline organizational structures by reducing management layers, and leverage its scale for greater efficiency.