Global Retailer Nike Slashes 1500 Jobs in Restructuring Effort

On Thursday, Nike announced that it will reduce its current workforce by 2%, or more than 1500 jobs, as part of a larger restructuring plan.

The giant sportswear company in Beaverton, Oregon, stated that they want to utilize their capital more effectively to invest in areas of growth, such as running, the women’s brand, and the Jordan brand.

In a memo obtained by CNBC, CEO John Donahoe said, “This is the way we will reignite our growth.”

He added: “This is a painful truth that I do not take lightly.”

He continued, “We are currently not delivering our best, and I take responsibility along with my leadership team in the end.”

Nike said, “The layoffs will be conducted in two phases. The company will begin the first round this week and finish the second round by the end of the fourth fiscal quarter, which typically ends at the end of May.”

The company added that “discounts in the Europe, Middle East, and Africa region of Nike will be based on different timelines according to local labor laws.”

The company stated that it is not clear which departments will experience layoffs, but it will not affect retail employees at Nike stores or warehouse workers.

In December, Nike unveiled a wide-ranging restructuring plan to cut costs by approximately two billion dollars over the next three years. The company lowered its sales expectations as it prepared for decreased demand and wholesale orders, as well as softer online sales and a market that relies more heavily on promotional offers.

As part of its cost-cutting plan, Nike said it aims to simplify its product range, increase automation and use of technology, simplify the organization by reducing management layers, and leverage its scale to increase efficiency.

Shortly before announcing the restructuring, the Oregonian newspaper reported that Nike had been quietly laying off employees in the past few weeks, indicating a broader restructuring plan. The newspaper mentioned that several departments had experienced cuts, including employment, resources, branding, engineering, human resources, and innovation.

On Friday morning, Oppenheimer downgraded the performance of Nike and lowered the target price for the next 12 to 18 months, citing slowing consumer demand and periods of stagnation in production innovation and competition.