Global sportswear giant Nike has announced plans to reduce its workforce by about 2%, affecting more than 1,600 jobs, as part of a broader strategy to streamline operations and cut costs. This move comes in response to weaker-than-expected profits, echoing similar warnings from industry peers like Adidas, Puma, and JD Sports.
In December, Nike unveiled a comprehensive $2 billion savings plan over the next three years, aiming to bolster profitability through various measures. These include tightening the supply of certain products, optimizing the supply chain, reducing management layers, and leveraging automation to enhance efficiency.
As part of this cost-saving initiative, Nike had previously disclosed its intention to incur approximately $400 million to $450 million in employee severance costs in the third quarter. With this latest announcement, the company is taking concrete steps to implement workforce reductions to align with its strategic objectives.
According to a company filing, Nike employed approximately 83,700 individuals as of May 31, 2023. The reduction in workforce is expected to begin imminently, with a phased approach aimed at completion by the end of the current quarter. However, it’s worth noting that employees in stores, distribution centers, and the innovation team are not anticipated to be affected by these layoffs.
The decision to downsize the workforce underscores Nike’s commitment to adapting to evolving market dynamics and optimizing its operations for sustained growth. The company aims to navigate challenging economic conditions while maintaining its competitive edge in the sportswear industry by streamlining processes, reducing overheads, and reallocating resources.
While these workforce reductions may present short-term challenges for affected employees, Nike remains dedicated to supporting its workforce and fostering a culture of innovation and excellence. As the company continues implementing its cost-saving measures, it remains focused on delivering exceptional products and experiences to consumers worldwide.
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