Nike is initiating dramatic cost-saving measures with plans to lay off approximately 1,600 employees globally. The athleticwear giant aims to save $2 billion over the next three years through this workforce reduction targeting nearly 2% of its total employees.
The job cuts have already started, impacting “multiple senior leaders across technology and marketing” (Vogue Business). This includes senior directors in Nike’s Innovation Technology office. A second wave of layoffs is expected in May across the company.
Nike’s share prices have dropped 13% over the last year. Additionally, its sales forecast does appear promising due to various economic factors squeezing consumer spending.
For one, smaller athletic wear brands have erupted in popularity, competing directly with Nike for market share. Startups like Allbirds, Gymshark, and On Running have resonated with certain demographics. Nike also has to contend with enduring juggernauts like Adidas and relative newcomers like Lululemon in an increasingly crowded retail space.
Moreover, the soaring cost of living around the world has led consumers to tighten their budgets. Apparel is often one flexible category households scale back on when inflation rises. With its premium brand positioning, Nike also risks pricing out some buyers facing economic pressures.
Nike Strives For Agile Innovation
In an internal memo obtained by Vogue Business, Nike leadership framed the job cuts as a way to “rightsize” the organization. The sportswear titans see major opportunities to capture growth by realigning resources around key strategic initiatives.
A company spokesperson’s statement to Vogue Business said, “Nike’s always аt our best when we’re on the offense. The асtions thаt we’re tаking рut us in the рosition to rightsize our orgаnizаtion to get аfter our biggest growth oррortunities.”
Nike plans to retrench around styles and storytelling that set it apart in the marketplace. There are also plans to invest heavily in gaming and virtual experiences to attract younger, digital-native consumers.
While the job cuts will impact many employees’ livelihoods, Nike’s memo expresses gratitude towards all departing team members. Only 2% of its global workforce is impacted, leaving most of its over 79,000 employees unaffected.
Bracing For Economic Challenges
Nike’s restructuring underscores how even leading brands cannot rest on legacy success. As consumer shifts and startup challengers reshape markets, agility and innovation are imperative.
With cautious households worldwide and market competition intensifying, Nike is betting on a leaner, more responsive organizational structure. Though workforce downsizings are often painful, Nike aims for this one to pay dividends over the long-term.
The company predicts its consumer base will continue growing as interest in health and wellness initiatives expands globally. If Nike can capture this demand through creative apparrel, bold marketing, and digital engagement, it may regain earnings momentum. But executing this vision will now fall onto fewer Nike teammates.
