Nike to layoff more than 1,500 employees to reignite its growth, CEO blames himself

American footwear giant Nike has now joined the layoffs trend, which is primarily dominated by technology companies like Meta and Google.

The company has announced that it will be laying off approximately 2% of its employees, which translates to around 1,600 to 1,700 employees as part of a broader strategy to streamline operations and focus on key growth areas. 

"This is a painful reality and not one that I take lightly," said John Donahoe, president and CEO, in the email. "We are not currently performing at our best, and I ultimately hold myself and my leadership team accountable."

View this post on Instagram

A post shared by Indian Startup News (@indianstartupnews)

Cutting down the costs

The layoffs are a component of Nike's ambitious plan to cut costs by about $2 billion over the next three years. According to the company, the reorganization aims to optimize the company's structure and invest more efficiently in high-growth segments such as running, women's products, and the Jordan brand.

This is also a response to changing consumer behaviors and the competitive landscape, with a focus on enhancing product assortment, increasing automation, and leveraging technology for greater efficiency.

What will be the impact on the workforce?

The job cuts will occur in two phases, starting immediately and concluding by the end of May, with the first round beginning this week. It's important to note that retail employees, store managers, and distribution center workers will not be affected by these layoffs. Donahoe assured that laid-off employees would receive comprehensive support, including financial, healthcare, and outplacement services, to aid in their transition.

Grappling with economic challenges

Nike's restructuring comes amid a challenging economic environment, with consumers worldwide becoming more cautious about their spending. The company has faced pressures from a slowdown in discretionary purchases and intense competition from emerging brands.

Additionally, macroeconomic headwinds in key markets like China and Europe have prompted a more cautious outlook for the company.