Nike, one of the world’s leading sportswear brands, has announced that it will be laying off 2% of its corporate workforce due to weaker consumer spending. The decision comes as the company aims to focus on its biggest growth opportunities in the areas of sport, health, and wellness. CEO John Donahoe stated that the layoffs are necessary to “right-size” the organization and prioritize investments in high-priority areas such as running, women’s clothing, and the Jordan brand.
The layoffs will affect more than 1,600 positions starting Friday, with a second phase of cuts to be completed by the end of the quarter. However, employees in stores, distribution centers, and the innovation team are not expected to be affected. The company currently employs over 83,000 people worldwide.
In a memo seen by The Wall Street Journal, Donahoe acknowledged the challenges faced by Nike and took responsibility for the company’s performance. He emphasized the need to “edit, shift, and divest less critical work” in order to create greater focus and capacity for what matters most. The goal is to better compete with rivals and position Nike for long-term growth.
This decision is part of Nike’s ongoing plan to reinvest its savings and create capacity for future opportunities. It is not solely driven by short-term revenue concerns but rather a strategic move to fuel long-term growth. In December, the company announced a $2 billion cost savings plan in response to weak consumer spending. The plan includes simplifying the product assortment, increasing automation and technology usage, and streamlining the organization.
Nike’s cost-saving measures are expected to incur expenses of $400 million to $450 million, primarily due to severance expenditures. The company aims to streamline operations and optimize its resources to navigate a highly promotional marketplace with increased macro headwinds, especially in the digital space. As part of its cost-saving efforts, Nike has also revised its annual sales forecast to 1% for the year.
The sportswear giant is not alone in implementing layoffs, as many companies across various industries have been forced to make similar decisions. Layoffs have become increasingly common in sectors such as tech, media, and Wall Street. The challenging economic landscape and changing consumer behaviors have necessitated strategic adjustments to ensure sustainability and future growth.
Nike’s decision to lay off employees is undoubtedly a difficult one, but it reflects the company’s commitment to adapt and thrive in a rapidly evolving market. By focusing on its core strengths and investing in areas with the greatest potential, Nike aims to position itself as a leader in the sportswear industry. As the company navigates these changes, it remains dedicated to delivering innovative products and experiences that inspire athletes and fitness enthusiasts worldwide.