Nike, one of the world’s largest manufacturers of sportswear and footwear, has officially confirmed staff reductions. As part of a global plan to optimize work processes, management announced the dismissal of approximately 1,400 employees. This was reported by Reuters.
Chief Operating Officer Venkatesh Alagirisamy said in an internal memo that the reductions would affect just under 2% of the company’s total workforce. The most significant impact of this decision will be on Nike’s technology divisions in North America, Europe and Asia.
This is not the first reduction in the company in the past year. In January, Nike already eliminated hundreds of positions, explaining this by the need to implement automation more quickly. Nike’s financial situation remains difficult due to a prolonged decline in sales. The company’s shares have more than halved in price over the past three years.
While the brand tried to cope with internal problems, younger and more dynamic competitors, including On, Hoka and Anta, began to actively strengthen their positions in stores. Investors are watching Nike as it tries to regain its footing, but the company’s recovery is taking longer than expected.
Nike shares rose just 0.5% after the new layoffs were announced, reflecting muted optimism in the market. Elliott Gill, who will take over as Nike CEO in 2024, has promised a major overhaul of the company’s strategy. His plan includes returning the brand to its roots and focusing on key sports, including running and soccer. Nike also plans to bring innovative footwear to market more quickly.
At the same time, these plans are not easy to implement. The company’s profits remain low as Nike is forced to make deep discounts to sell old inventory. Attempts to interest buyers with new “hit” sneaker models have so far yielded inconsistent results.
One of the most problematic markets for Nike remains China. The company expects sales in this important region to decline by 20% in the current quarter. In general, Nike predicts a 2-4% drop in revenue worldwide.
