Nike to cut 2% or 1600 jobs globally amid declining demand.
Nike, the renowned global sportswear giant, has announced intentions to reduce its workforce by about 2%, equivalent to over 1,600 jobs.
This strategic maneuver aims to streamline operations and cut expenses amidst challenges posed by declining demand for its iconic shoes and sneakers.
The sportswear industry is experiencing a notable decline in consumer spending on high-priced items, partly due to the impact of higher rental and interest rates.
Industry leaders like Nike and Adidas have issued warnings, noting a reduction in orders from retailers through wholesale channels.
In December, Nike unveiled a comprehensive $2 billion savings plan over the next three years to address the changing economic landscape.
This plan includes various initiatives, with an estimated $400 million to $450 million allocated for employee severance costs in the third quarter. As of May 31, 2023, Nike had around 83,700 employees.
GlobalData managing director Neil Saunders views these proactive job cuts as a strategic move by Nike to address concerns about potential further softening in demand.
Nike aims to navigate economic challenges while maintaining its competitive edge in the market. The company has faced additional competition, with emerging brands like Decker Outdoors’ Hoka and On Holding gaining retail shelf space.
These newer brands resonate with consumers seeking distinctive and innovative styles, prompting Nike to reassess its market strategy. According to Saunders, Nike aims to invest more in areas like running to gain market share, necessitating a balance between additional expenses and reductions elsewhere.
This strategic realignment underscores Nike’s commitment to staying ahead in a rapidly evolving industry. The Wall Street Journal reported that the job cuts are expected to begin on Friday, with a second phase scheduled for completion by the end of the current quarter.
Importantly, these layoffs will not affect employees in stores, distribution centers, or those involved in Nike’s innovation team. In response to the announcement, Nike shares experienced a marginal 1% decline in premarket trading on Friday.
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