Nike may cut over 1,600 positions globally

Recently, according to the Chinese website of The Wall Street Journal, Nike CEO John Donahoe stated in an email that the company will lay off 2% of its workforce. Nike has approximately 83,700 employees globally, so it is estimated that the company may cut over 1,600 positions.

In the Greater China region, Nike had previously carried out a layoff in 2020, with a reduction rate of 20%, which was around 400 employees. Currently, there are about 2,000 employees in the Greater China region.

John Donahoe also mentioned that the company will increase investments in running series, women's wear, and the Jordan brand. It is expected that this round of layoffs will not affect Nike's retail stores, distribution centers, or innovation teams.

The layoffs began on Feb 16 and will last for a week. Nike's third fiscal quarter will end on Feb 29, and further layoffs are expected at the end of this quarter and in the next quarter.

During the performance meeting in Dec 2023, Nike executives announced that the restructuring costs for the second half of the 2024 fiscal year could reach 400-450 million US dollars, mainly related to severance pay. Nike also reported revenue of $13.4 billion for the second quarter, with a net profit of $1.6 billion, meeting or exceeding analysts' expectations. However, sales performance varied, with strong sales during Black Friday and after Singles' Day, but demand outside of holidays fell below expectations. Economies in the Greater China region, Europe, the Middle East, and Africa faced pressure.

Last Dec, due to concerns about a slowing global consumption trend, Nike significantly lowered its revenue forecast and announced cost reductions. The company stated its goal to save up to $2 billion over the next three years.

Changes in consumer behavior have led customers to abandon expensive discretionary items like athletic shoes and apparel, opting to spend on essential goods and experiences such as concerts and travel. Nike also faces intense competition from emerging brands like Hoka and On Cloud.

Nike's CFO, Matt Friend, indicated in the latest financial report in Dec that the soft revenue outlook reflects "signs of more cautious global consumer behavior." The specific impact of Nike's global layoffs on Canada is currently unclear.