Sports apparel brand NIKE announced it will be laying off approximately 2% of its workforce, translating to over 1,600 jobs, to reduce expenses as the demand for its products faces challenges.
The move comes as higher rental and interest rates have led customers to cut back spending on high-priced goods, Reuters has reported.
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The US Wall Street Journal said that the decision was part of a broader restructure. The company plans to re-allocate its capital more effectively towards high-growth areas such as running, women’s apparel and the Jordan brand.
In a memo to employees, Nike CEO John Donahoe said: “This is how we will re-ignite our growth. This is a painful reality and not one that I take lightly.
“We are not currently performing at our best, and I ultimately hold myself and my leadership team accountable.”
The layoffs are set to occur in two stages, with the first round beginning in mid-February 2024 and the final phase expected to conclude at the end of May or by the end of Nike’s fiscal fourth quarter.
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By GlobalDataThe timeline for job cuts in Nike’s Europe, Middle East and Africa region will vary under local labour laws.
While specific departments affected by the layoffs have not been disclosed, Nike confirmed that retail employees in stores and warehouse workers would not be impacted.
The layoff announcement is part of the company’s $2bn savings plan announced in December 2023.
To be implemented over the three years to 2027, the savings plan includes measures such as tightening product supply and reducing layers of management.
As of 31 May 2023, Nike employed 83,700 individuals.
In its fiscal 2024 (FY24) second quarter result, NIKE reported net income of $1.6bn, up 19% from the same period in FY23.
