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Nike reveals plans to reduce its workforce by approximately 2%, equating to over 1,600 jobs, in response to declining profits observed this year.
Industry Trends and Peer Performance:
Following suit with global counterparts such as Adidas, Puma, and JD Sports, Nike acknowledges weaker earnings projections as consumer spending on non-essential items declines.
In December, Nike unveiled a $2 billion savings initiative spanning three years. Key strategies include optimizing product supply, enhancing supply chain efficiency, organizational restructuring, and increased automation.
Severance Cost Projections:
The company anticipates incurring $400 million to $450 million in severance costs during the third quarter as part of its workforce reduction efforts.
As of May 31, 2023, Nike boasted approximately 83,700 employees, according to company filings, underscoring the significant impact of the impending workforce reduction.
Implementation Details:
According to reports from The Wall Street Journal, the layoffs are set to commence on Friday, with a second phase slated for completion by the end of the current quarter.
Employees in retail stores, distribution centers, and the innovation team are expected to be unaffected by the layoffs, ensuring continuity in key operational areas.
