Nike, a prominent figure in the sneaker and sportswear sector, has announced plans to cut its worldwide staff by 2%, which amounts to more than 1,600 jobs, due to a drop in demand. The athletic apparel company has unveiled this cost-saving initiative in light of waning interest in its shoe offerings.
The Wall Street Journal reported that the layoffs were expected to start soon, with a second phase set to finish by the end of the current quarter. The article also mentioned that the job cuts are not expected to impact retail store and distribution center employees, or those in the innovation team.
Nike had previously warned that its sales of sports shoes and athletic apparel were declining due to reduced orders from retailers. The company also mentioned that it is still experiencing the impact of the economic slowdown in China, its second-largest market. Rising rental and interest rates have led consumers to cut back on spending, particularly on high-priced items, prompting sportswear leaders like Nike and Adidas to indicate that retailers are reducing their large orders, as reported by Reuters.
Nike faces competition from new brands like Hoka running shoes from Decker Outdoors. Due to disappointing profits, Nike has revealed a $2 billion cost-cutting strategy in the U.S. over three years, involving job cuts and severance costs of around $450 million.
With 83,700 employees last summer, the company's stock has dropped by 15% in the past year, currently valued at $106.0.5 per share in the U.S.
(With Inputs From Reuters)
