Nike, the global sportswear giant, has announced plans to trim its workforce by about 2%, amounting to over 1,600 job cuts.
The decision comes as the company aims to reduce expenses amidst a challenging economic landscape.
According to a statement released late Thursday, Nike cites dwindling demand for its shoes and sneakers as a key factor behind the move. “We’re adapting to shifts in consumer behavior and market conditions,” remarked a Nike spokesperson.
The sportswear industry, including competitors like Adidas, is grappling with reduced consumer spending on high-priced items due to factors such as escalating rental and interest rates.
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This has prompted retailers to scale back orders through wholesale channels, putting pressure on companies like Nike to streamline operations.
In December, Nike unveiled a cost-saving initiative totaling $2 billion over the next three years. This plan includes strategies like tightening product supply and restructuring management. “We’re taking proactive measures to navigate potential challenges ahead,” stated the company’s CEO.
Neil Saunders, managing director at GlobalData, commented on Nike’s decision, stating, “These job cuts signal Nike’s proactive approach to address concerns about potential further declines in demand.”
Nike’s restructuring efforts also reflect a desire to stay competitive in an evolving market. The company faces increasing competition from newer brands like Hoka and On Holding, particularly in the running shoe segment where innovative styles have captured consumer interest.
The Wall Street Journal reported that the job cuts are set to commence promptly, with a second phase scheduled for completion by the end of the current quarter. However, these layoffs are not anticipated to affect employees working in Nike’s retail stores, distribution centers, or innovation divisions.
Following the announcement, Nike’s stock experienced a 4% decline, prompted by concerns over consumer demand in the coming quarters.
Brokerage firm Oppenheimer downgraded the stock rating to “perform” and adjusted the price target downwards in response to perceived uncertainties in the market.
Nike’s decision to streamline its workforce underscores the company’s proactive approach to navigating economic challenges and maintaining its position in the competitive sportswear industry.