Nike Is Laying Off 2% of Workforce as Company Works to ‘Right-Size’ Organization
After months of speculation, Nike confirmed late Thursday that it is laying off 2 percent of its workforce.
The move comes after the athletic giant revealed in December that it was taking steps to “streamline” the organization and would look to save up to $2 billion in costs over the next three years.
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“Nike’s always at our best when we’re on the offense. The actions that we’re taking put us in the position to right-size our organization to get after our biggest growth opportunities as interest in sport, health and wellness have never been stronger,” Nike told FN in a statement Thursday after CEO John Donahoe sent an internal memo to employees announcing the news. “While these changes will impact approximately 2 percent of our total workforce, we are grateful for the contributions made by all Nike teammates.”
According to Capital IQ, Nike has about 83,000 team members globally. The Swoosh currently employees about 12,000 team members at its Beaverton, Ore. headquarters.
While further details were not immediately available, the company’s December announcement outlined the key areas of focus for the company going forward: simplifying the product assortment, increasing automation and use of technology and leveraging scale to drive efficiency.
In the same release, Nike appeared to confirm that layoffs were in the works when the company said it could see pre-tax restructuring charges of about $400 million to $450 million related to the costs of employee severance. This impact is likely to be seen in fiscal Q3.
Meanwhile, several Nike employees took to LinkedIn in November to share they were laid off from the company amid a broader C-suite shakeup across the design and marketing.
In December, Nike EVP and CFO Matthew Friend acknowledged that Nike would issue a “softer second-half revenue outlook.”
Nike reported second-quarter revenues of $13.39 billion, an increase of 1 percent compared to the prior year. This was in line with Nike’s previously issued guidance for Q2, which projected revenue growth to be up slightly compared to the prior year. It fell short of estimates from analysts surveyed by Yahoo, which expected sales of $13.43 billion. Nike’s net income was up 19 percent to $1.6 billion, with diluted earnings per share of $1.03, up 21 percent year-over-year. This beat estimates that projected EPS at 85 cents for Q2.
As NIke charts the path forward, running is one category that is sure to be in the spotlight.
The footwear giant has lost share to smaller, running-focused brands like Hoka — which just this week tapped former Nike executive Robin Green as its new president — Brooks and On, all three of which have found success with their niche performance offerings. After growing its running footwear business 10 percent in fiscal year 2023, Nike outlined a plan for a broad rebound in the crucial category.
— With contributions from Shoshy Ciment
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