Heaptalk, Jakarta — United States sports brand Nike announced to cut about 1,500 employees, approximately 2% of its workforce.
The company was forced to carry out layoffs to reduce operational expenses after encountering a decline in its profits. This sports brand is also prepared to experience a decrease in demand for necessities, such as clothing and shoes because consumers are more careful when shopping. However, Nike refused to explain the affected departments of this restructuring move.
In response to this determination, the CEO of Nike, John Donahoe, revealed, “This decision is a harsh reality that we cannot take lightly. We perform this job-cutting to ensure Nike can continue to innovate and develop in the future.
Previously, Nike had arranged a savings plan of US$2 billion over the next three years through strategic steps in December, starting with tightening the supply of several products, improving the supply chain, reducing management layers, and increasing automation. Reuters reported that the brand’s cost diminishment would also cover around US$400 million to US$450 million in employee severance pay in the third quarter.
The company explained several factors influenced the business decline, including:
- Global demand for sports shoes and clothing diminishment
- Raw material and logistics cost enhancement
- Stiff competition from other companies
Impacting a layoff, In February 2023, Nike posted revenues of US$12.4 billion, equivalent to Rp188 trillion, an increase of 14% compared to the same period the previous year. However, regarding net profit, Nike posted US$1.2 billion in 2023, a decrease compared to the equivalent period of US$1.4 billion in 2022.
According to the Wall Street Journal, Nike will perform restructuring steps in two stages. The first stage will start next week in the US, and the second round will be completed at the end of the first quarter 2024.
“The action we’re taking put us in a great position to right-size our organization to capture the greatest growth opportunities as interest in sports, health, and fitness has never been stronger before,” Nike said in an official statement.
