Nike to brim 2% jobs to lower costs as demand weakens
Higher rental and interest rates have led customers to cut spending on high-priced goods, resulting in sportswear companies such as Nike and Adidas warning that retailers are lowering their orders
In a bid to lower expenses, Nike will cut about 2% of its workforce or over 1,600 jobs, the sportswear giant said late Thursday, as demand for its shoes and sneakers comes under pressure
Higher rental and interest rates have led customers to cut spending on high-priced goods, resulting in sportswear companies such as Nike and Adidas warning that retailers are lowering their orders through wholesale channels.
In December, Nike outlined a $2 billion savings plan over the next three years, which included tightening the supply of some products and reducing management layers.
The cost cuts would include about $400 million to $450 million in employee severance costs in the third quarter, it had said.
Nike had about 83,700 employees as of May 31, 2023.
The job cuts are Nike getting out in front of the fear that demand “could soften still further,” said GlobalData managing director Neil Saunders.
Nike has also lost some retail shelf space to newer brands like Decker Outdoors’ Hoka and On Holding, as their running shoes resonate with customers looking for catchy and innovative styles.
“Nike also wants to invest more in areas like running to gain market share; to do that, it needs to balance the additional expenses with some reductions elsewhere,” Saunders said.
The Wall Street Journal, first on the news, said the cuts were expected to start on Friday, and a second phase would be completed by the end of the current quarter.
Source: Reuters
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