Nike
has announced that it will reduce its total workforce by approximately 2%, which translates to more than 1,600 jobs. The decision comes as the sportswear giant aims to trim costs following a year of weaker profits.
Notably, Nike’s global counterparts—Adidas, Puma, and JD Sports—have also cautioned about lower earnings this year due to reduced consumer spending on non-essential items.
The Big savings plan
In December, Nike unveiled a $2 billion savings plan spanning the next three years. The plan involves measures such as streamlining product supply, optimizing the supply chain, reducing management layers, and increasing automation.
Employees that will not be impacted
The company's employees in stores, distribution centers, and the innovation team are not anticipated to be affected by these layoffs.
Severance money
Additionally, the company disclosed that it would bear severance costs for employees in the range of $400 million to $450 million during the third quarter.
As of May 31, 2023, Nike employed approximately 83,700 people, according to official filings.
The Wall Street Journal, which broke the news, reported that the workforce reductions are slated to commence on Friday, February 16, with a second phase expected to conclude by the end of the current quarter.
Nike CEO's memo to employees
Nike Chief Executive John Donahoe said the company is using its resources to increase investment in categories like running, women’s apparel and the Jordan brand, according to an employee memo reviewed by The Wall Street Journal.
“This is a painful reality and not one that I take lightly. We are not currently performing at our best, and I ultimately hold myself and my leadership team accountable,” Donahoe said in the memo.
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