Nike to cut 2% of workforce, over 1,600 jobs, in cost-cutting move

Nike is set to reduce its total workforce by around 2%, equating to more than 1,600 jobs, as part of a cost-cutting strategy in response to a year of weakened profits. This decision aligns with cautionary statements from global sportswear counterparts Adidas, Puma, and JD Sports, all anticipating lower earnings due to reduced consumer spending on nonessential items.

In December, Nike unveiled a $2 billion savings plan spanning the next three years. The comprehensive plan involves measures such as streamlining product supply, optimizing the supply chain, reducing management layers, and increasing automation.

Notably, employees in stores, distribution centers, and the innovation team are expected to remain unaffected by these workforce reductions. Nike has disclosed that it will bear severance costs for impacted employees, ranging from $400 million to $450 million during the third quarter.

As of May 31, 2023, Nike’s official filings indicate an employee count of approximately 83,700. The layoffs are slated to commence on Friday, February 16, with a second phase expected to conclude by the end of the current quarter, as reported by The Wall Street Journal.

Nike’s Chief Executive, John Donahoe, conveyed in an employee memo that the company plans to redirect resources toward increasing investment in categories such as running, women’s apparel, and the Jordan brand. Donahoe acknowledged the challenging reality in the memo, stating, “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.”

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