Nike announced late Thursday that it will cut 2% of its current workforce, equating to over 1,500 jobs, as part of a broader restructuring initiative.
The sneaker giant, headquartered in Beaverton, Oregon, expressed its intention to reallocate capital towards key growth areas such as running, women’s products, and the Jordan brand.
The layoffs will be implemented in two phases, with the first phase beginning this week and the second phase concluding by the end of Nike’s fiscal fourth quarter, typically ending in May.
However, cuts in Nike’s EMEA region will follow a different timeline due to local labor regulations. While the specific departments affected by the layoffs remain unclear, Nike assured that retail employees in its stores and warehouse workers will not be impacted.
This decision comes amidst a backdrop of consumer spending caution and an anticipated slowdown in demand within the retail industry, particularly for non-essential items like apparel and footwear—areas where Nike traditionally excels.
In December, Nike unveiled plans for a comprehensive restructuring aimed at reducing costs by approximately $2 billion over the next three years.
This included revising sales forecasts in anticipation of decreased demand and adjusting to shifts in online sales patterns and promotional strategies.
Part of the restructuring involves simplifying the product lineup, increasing automation and technological integration, streamlining organizational structures, and leveraging the company’s scale to enhance efficiency.
Reports from The Oregonian before the restructuring announcement indicated that Nike had already been discreetly laying off employees across various divisions in preparation for the broader restructuring. The extent of the total job cuts at Nike since December remains undisclosed.
Following the announcement, Oppenheimer downgraded Nike’s performance rating and adjusted its price target downward for the next 12 to 18 months, citing factors such as sluggish consumer demand, limited innovation in production, and heightened competition.
Nike CEO Donahoe assured that affected employees would receive comprehensive support packages encompassing financial assistance, healthcare benefits, and outplacement services.
