Wednesday 28 February 2024

Nike is DOING IT: Sports shoes and apparel giant to cut roughly 1,700 jobs to reduce costs by $2B over the next 3 years

 Global sportswear giant Nike has announced plans to lay off roughly 1,700 employees, in a bid to cut costs by $2 billion over the next three years.

Last December, Nike revised its revenue forecast and revealed cost-cutting measures as the company faces challenges stemming from changing consumer behavior, increased competition from emerging brands and economic headwinds in key markets. Nike stated that it is "taking steps to streamline the organization," with the majority of the restructuring expenses – up to $450 million – allocated to employee severance packages.

The company warned that full-year sales were likely to rise by only one percent, revising its previous forecast of mid-single-digit percentage growth, further impacting its share price.

According to its annual financial report published last December, Nike only had a one percent increase in sales to $13.4 billion for the three months ending Nov. 30. The brand experienced growth in sales in China but faced a decline in Europe and the United States. Profit margins increased, which resulted in a 19 percent rise in earnings to $1.6 billion.

“The actions that we’re taking put us in the position to right-size our organization to get after our biggest growth opportunities. While these changes will impact approximately two percent of our total workforce, we are grateful for the contributions made by all Nike teammates," said a Nike spokesperson.

Nike joins the growing list of U.S. companies with major layoffs

This year, Nike joins the growing list of US companies making large layoffs as they adjust their strategies and reallocate resources.

Data from outplacement and career transition firm Challenger, Gray & Christmas has shown that companies have announced plans to cut an alarming 82,307 positions in January alone, marking a substantial 136 percent increase from December and the second-highest number of January layoffs since the 2009 financial crisis. The driving factors behind these cuts include a reassessment of workforce size following pandemic-induced over-hiring and a redirection of resources towards emerging technologies, particularly artificial intelligence (AI).

Several high-profile companies have already made significant workforce reductions.

For instance, Alphabet Inc.'s Google is downsizing its digital assistant, hardware and engineering teams to lower costs and focus more on artificial intelligence, amid increased competition from rivals like Microsoft Corp. and OpenAI. Inc. is implementing hundreds of layoffs in its healthcare division as part of cost-cutting measures after a period of rapid expansion during the pandemic. 

BlackRock Inc. is dismissing approximately 600 employees, Cisco Systems Inc. is planning to cut thousands of jobs due to a slowdown in tech spending, and Citigroup Inc. is eliminating 20,000 roles in a bid to decrease bureaucracy and enhance profitability.

Other notable layoffs include DocuSign Inc. reducing its workforce by six percent, eBay Inc. laying off nine percent of its staff and Estee Lauder Cosmetics cutting up to 3,000 positions to streamline operations. Microsoft Corp. is set to lay off 1,900 people across its video game divisions and Morgan Stanley is planning to eliminate several hundred jobs in its wealth-management business.

PayPal Holdings Inc. is cutting 2,500 positions and Snap Inc. is reducing its global workforce by roughly 10 percent to align with its highest priorities. Even United Parcel Service Inc. is not immune, with plans to cut 12,000 management jobs and explore the sale of its trucking brokerage business. Warner Music Group is also joining the trend, cutting 10 percent of its staff to redirect $200 million annually into new opportunities

Post a Comment

Start typing and press Enter to search