Sportswear titan, Nike Inc., has plans in the pipeline to downsize its global workforce by approximately 2%. This move, reported via a memo, is part of the company's strategy to streamline operations, curb costs, and navigate a softer revenue forecast and intensifying competition.
The workforce reduction is likely to affect over 1,600 employees, based on the company's 83,700 global employees.
The job trims are divided into two phases. The first round will commence on Friday, with the second phase set to conclude by the end of the company's fourth quarter.
The company made a statement, explaining that "the actions being taken are intended to properly align our organization to tackle our most substantial growth opportunities as the interest in health, sport, and wellness has never been more pronounced."
The planned workforce reduction is reportedly part of Nike's cost-saving strategy aiming to save up to $2 billion over the next three years. This strategy was unveiled in December alongside the company's Q2 results.
The company stated that it aims to simplify its organization and discover opportunities for cost savings. Potential savings areas could involve streamlining the product range, implementing automation and technology more broadly, structuring the organization more effectively, and capitalizing on scale to enhance efficiency. The majority of these savings will be redirected to fuel future growth, spur innovation, and increase long term profits.
Nike also made a prior announcement stating expected pre-tax restructuring costs from approximately $400 million to $450 million, predominantly due to employee severance costs.
Matthew Friend, Executive Vice President & Chief Financial Officer at NIKE stated: "Given a softer revenue forecast for the second half, we remain committed to strong gross margin performance and disciplined cost management… We view this as a tremendous opportunity to drive long-term, profitable growth."
In the recent second quarter, the company saw a 19% increase in earnings from the previous year. Revenue experienced a slight 1% uptick based on a reported basis but declined 1% on a currency-neutral basis due to lessened consumer demand for non-essential items.
