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Friday, June 21, 2024

Nike plans to cut 2% of employees to mitigate costs

Nike has reduced its global workforce by approximately 2% to streamline operations and mitigate costs.

Nike Announcement

According to Willamette Week, in an email to employees, John Donahoe, President and CEO of Nike, conveyed the decision. The announcement shows the company’s current performance issues and the need for adjustments. Donahoe’s message was clear: the decision, though tough, is necessary for the company’s long-term sustainability and growth. Over 1,600 jobs are expected to be cut, with approximately 83,000 individuals under its global employment. The planned layoffs signal a significant shift for the sportswear giant, particularly affecting its headquarters in Beaverton, Oregon.

The Layoff Process

The rollout of the layoffs is structured in two phases, with the initial wave commencing shortly after the announcement and expected to continue through the following week. A subsequent round is slated for completion by the end of May. Importantly, Donahoe emphasized that the cutbacks would primarily affect corporate positions, sparing store employees, managers, and distribution center workers from the layoffs. This decision reflects Nike’s intention to preserve its retail and distribution integrity while changing its corporate structure.

In December, Nike preemptively indicated the necessity to slash $2 billion in costs over three years, due to a cautious consumer spending trend on non-essentials. This financial sense among consumers has been worsened by broader economic uncertainties, prompting Nike to reevaluate its cost structures and operations.

Workforce reduction is an important component of Nike’s broader strategy to enhance operational efficiency and manage costs more effectively. By streamlining its workforce, Nike aims to create a more agile and responsive organizational structure capable of adapting to market changes more swiftly. This downsizing is anticipated to generate significant cost savings, improving the company’s financial health and enabling reinvestments in growth areas.

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Publisher and editor of LJLNews. I am a Stock Market enthusiast, with an interest for politics. I hope you enjoy reading the articles! Contact me at: Lazaruslucas@ljlnews.com

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