Nike's layoffs at its Beaverton, Oregon headquarters will affect hundreds of employees by June, per a WARN notice filed on Friday.
The "Second Phase of Impacts" for Nike's Transition
In the filing, 740 employees would be laid off in two rounds by June 28 after confirming a 2% workforce reduction in February. As early as November, some Nike employees shared on LinkedIn that they were laid off during a broader C-suite shakeup in the company's design and marketing leadership.
According to a notice by Nike Vice President Michele Adams, the sportswear giant plans to permanently reduce its workforce at its World Headquarters in a "second phase of impacts" starting by June 28, as reported by Reuters and Oregon Public Broadcasting.
READ ALSO: Nike Trims Expenses in December, Initiates Job Cuts to Enhance Automation and Save Costs
Nike's Cost-Cutting Initiatives to Save Upto $2B in Costs in The Next Three Years
Nike, as of May 31, 2023, had around 83,700 employees, and about two weeks ago, Nike CEO John Donahoe informed its employees about cutting over 1,600 jobs, approximately 2% of its workforce, through a memo reported by The Wall Street Journal. Claiming that the company is at its best when on the offense, Nike emphasizes that the actions being taken properly align the organization to pursue significant growth opportunities, given its strong interest in sports, health, and wellness, while also expressing gratitude for the contributions of all its affected teammates.
Nike hinted at upcoming layoffs when it mentioned the potential for employee severance costs while introducing a plan to streamline its organization in December. The company aims to save up to $2 billion over the next three years.
Nike's Backlash on Product Innovation Deficiencies and Remote Work Controversy
The company has also faced criticism for perceived deficiencies in innovation within its product pipeline. As a response, Nike unveiled a plan in December to establish a "multiyear cycle of innovation" to appeal to consumers better, which included optimizing the distribution of some key franchises to enhance brand appeal. Since then, Nike has introduced new products such as the Air Max DN, the Pegasus Premium, and the Pegasus 41.
Donahoe has also recently faced backlash for blaming remote work for the company's innovation lag. Analysts strongly attribute this lag to overreliance on best-sellers rather than developing new franchises, significant talent loss at the leadership level, and prioritization of financial objectives over brand equity.
Nike is focusing on cost reduction initiatives as it forecasts a "low single-digits" revenue decline for the first half of its 2025 fiscal year, which will commence on June 1, according to Nike's chief financial officer, Matt Friend, during the earnings call on March 21, is a navigation of its product portfolio through a period of transition.
Nike's shares increased by nearly 2% this past week but have declined by more than 11% since the beginning of the year and by over 23% over the past 12 months.
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