Recently, according to the Wall Street Journal Chinese website reported that Nike CEO John Donahoe said in an email that the company would cut 2% of its workforce. Nike employs about 83,700 people worldwide, and estimates that the company could cut more than 1,600 jobs.

In Greater China, Nike has completed a layoff in 2020, the proportion of layoffs is 20%, about 400 people, and there are about 2,000 employees in Greater China.

Tang Ruoxiu also said that the company will use resources to increase investment in categories such as running series, women’s clothing and Jordan brand. This round of layoffs is not expected to affect employees in Nike stores and distribution centers, nor will it affect employees in Nike’s innovation team.

It is reported that the layoffs began on February 16 and lasted for a week. Nike’s fiscal third quarter ends on Feb. 29, and further layoffs are expected at the end of this quarter and next.

At the December 2023 results meeting, Nike executives had announced restructuring charges of up to $400-450 million for the second half of the fiscal year 2024, mainly related to severance pay. At the same time, Nike announced second-quarter revenue of $13.4 billion and net profit of $1.6 billion, which respectively met and exceeded analyst expectations.

However, the sales situation is divided, on the one hand, Black Friday and double Eleven promotion, sales are strong, and demand outside the holiday is lower than expected. In terms of sub-markets, the macroeconomic environment in Greater China, Europe, the Middle East and Africa is under pressure.

Announcing the results, Nike lowered its fiscal 2024 sales forecast and expects full-year revenue to grow about 1%, down from its previous forecast of mid-single digit growth. The company observed that cautious consumer spending, weak online business and heavy promotional activity impacted profits.

Nike has a $2 billion cost reduction plan in the next three years, including simplifying product classification, improving supply chain efficiency, leveraging scale, increasing automation, simplifying organizational structure, and enhancing procurement capabilities. It also marks a shift in the company’s strategy – to focus on profitability rather than sales growth after high inventory issues are resolved.

Sources: Textile Printing and Finishing, The Wall Street Journal