Nike has officially confirmed its decision to lay off 2% of its workforce, culminating months of speculation regarding the athletic giant's restructuring plans. This move follows December's revelation of the company's intent to streamline operations, aiming to generate savings of up to $2 billion over the next three years.
In a statement to FN, a sister publication of WWD, Nike underscored its commitment to optimizing organizational efficiency to capitalize on burgeoning growth opportunities in sports, health, and wellness. John Donahoe, CEO of Nike, conveyed the news to employees via an internal memo, emphasizing the company's strategic realignment. While approximately 2% of Nike's total global workforce will be affected, the company expressed gratitude for the contributions of all its team members.
Nike, boasting around 83,000 employees worldwide according to Capital IQ, maintains a workforce of approximately 12,000 individuals at its Beaverton, Ore., headquarters. While specific details regarding the layoffs were not immediately disclosed, the December announcement outlined key focal points for future operations, including streamlining product assortments, enhancing automation and technological integration, and leveraging scale for heightened efficiency.
The company's December release hinted at impending layoffs, citing anticipated pre-tax restructuring charges of $400 million to $450 million related to employee severance costs, likely to manifest in fiscal Q3. This move follows reports on LinkedIn in November by several Nike employees revealing their layoffs amidst a broader shakeup across design and marketing divisions.
Moreover, Nike's executive vice president and CFO, Matthew Friend, acknowledged a subdued revenue outlook for the second half of the fiscal year in December. In its second-quarter earnings report, Nike recorded revenues of $13.39 billion, a 1% increase year-over-year, aligned with previously issued guidance. However, it slightly fell short of analyst estimates, with net income up 19% to $1.6 billion, surpassing EPS projections.
As Nike charts its future trajectory, the running category is poised to garner significant attention. Despite losing market share to niche running-focused brands like Hoka, Brooks, and On, Nike remains intent on revitalizing its running footwear business, with a strategic plan outlined for a comprehensive resurgence in this pivotal category.
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