Michelle ThompsonNike is set to lay off nearly 1,700 employees, which amounts to about 2% of its workforce, as part of its efforts to reduce costs by up to $2 billion. A spokesperson from Nike stated that these measures are aimed at optimizing the organization to pursue significant growth opportunities. Despite the impact on a small portion of its workforce, the company expressed gratitude for the contributions of all its employees.
As of May 31, 2023, Nike had approximately 83,700 employees globally, according to its latest annual report. The decision to cut costs follows a previous announcement in December, where Nike revised its revenue forecast downward and announced plans for cost reductions amidst concerns about slowing consumer spending worldwide. The shift in consumer behavior towards prioritizing basic necessities and experiences like concerts and travel has affected sales of discretionary items such as high-end sneakers and athletic wear.
Additionally, Nike faces stiff competition from emerging brands like Hoka and On Cloud. During the presentation of its latest financial results, Nike’s finance chief mentioned the company’s revised outlook, attributing it to cautious consumer behavior globally and increased challenges in key markets like China and Europe. China, the second-largest economy globally, is grappling with various issues, including subdued consumer sentiment, a downturn in real estate, and weakened exports.
In Europe, the economy narrowly avoided a recession in the final quarter of 2023, with economic growth stagnating, as confirmed by official data. Germany, the largest economy in the region, experienced contraction for the first time since the onset of the Covid-19 pandemic last year.
