Nike’s Winning Formula: Fire Workers, Boost Profits. Nike’s Shocking Cuts Send Waves of Fear Through Industry.

From ‘There is No Finish Line’ to ‘There is No Job Security. Nike Restructures, Resulting in Significant Job Losses.

Nike is a name known by everyone throughout the world. Everyone’s favorite sports brand, a global brand, as it turns out is not doing so well lately. 

Recently Nike announced its latest round of workforce reduction which affected around 40% of the senior positions including vice presidents (VPs) and or higher roles. The latest round of Nike layoffs was implemented as the company faced financial difficulties.  

Nike cut heavily from the top in its recent mass layoff. Right now, Nike is facing a significant financial difficulty which has led to a substantial reduction in its workforce. 

According to Oregonian a US newspaper, in their latest layoff announcement, Nike fired 732 senior positions, including 32 vice presidents, 112 senior directors, and 174 directors. This represents more than 40 percent of the total jobs cut. 

After last month, when the sportswear company laid off employees from European headquarters, this marks its latest round affecting more people. The Nike layoffs hit those working as vice presidents or higher positions. This year is not short of layoffs as many companies have adopted different strategies to reduce costs and restructuring by letting go of employees. As mentioned in the Latest LY. 

According to Nike’s latest corporate responsibility report for the fiscal year 2023, the company employed 423 individuals in vice president or higher positions. Senior Director sits beneath Vice Presidents in Nike’s corporate hierarchy. Directors sit below them. 

In addition to these layoffs, Nike’s financial struggles are evident in its stock performance. On Monday, its shares fell by $2.38 to $73.05, nearing a 52-week low of $73. This marks a significant decline compared to its peak of over $177 in November 2021. As ABP Live recently reported. 

Also, the company’s recent projections have added to its challenges. The company has anticipated a decline in sales for the upcoming year. Which would lead to a loss of more than 28 billion US dollars in shareholder value just a few days ago. 

As mentioned before Nike the sports giant, April, has laid off almost 740 positions at its global headquarters in Oregon. ABP Live also mentioned, that Michele Adams, Vice President for People Solutions at Nike, officially notified state authorities, as required by law, that the commencement of the “second phase of impacts” at the company’s headquarters is scheduled for June 28. In addition, back in February as well, the company announced its plans to cut approximately 2 percent of its total workforce, which translates to more than 1600 positions. 

As Matthew Kish has reported in Oregon, the sportswear giant in April said it would eliminate 740 Oregon jobs, part of a 2% reduction in its global workforce and an ongoing $2 billion cost-cutting effort. Nike has been losing ground against smaller, nimbler rivals and focusing on developing new products. 

As per the law, the company had to submit a list to the state’s Higher Education Coordinating Commission, and the list shows, that 732 jobs were eliminated this year. 

Oregon said that workers who even supported Nike’s executives also got laid off in bulk amounts. Twenty-two senior administrative assistants lost jobs, more than any other job title. Four executive assistants also lost their jobs. 

The list also shows it was a broad reduction, with finance, brand, footwear, and apparel among the functions that took double-digit hits. 

The filing does not cover positions Nike eliminated last year. In December Oregon Live / The Oregonian reported on rolling layoffs at the company that touched human resources, recruitment, sourcing, brand, engineering, digital products, and innovation. 

The company laid off 700 Oregon workers in 2020. With this kind of layoffs, many workers with decades of experience lost their jobs.  

This loss of employees increasingly became a talking point for the stock analysts. 

“The Nike talent today does not, in our view, hold a candle to the talent at Nike 7 years ago,” Williams Trading analyst Sam Poser wrote in a note to investors. 

As per The Oregonian, Nike employed 83,700, including 11,400 at its roughly 400-acre corporate headquarters campus near Beaverton, in May 2023, according to its last annual report. 

As ABP Live also mentioned, in previous weeks, Nike’s stock had its biggest one-day tumble since going public in 1980, falling nearly 20% after the company said it expects sales will decrease this fiscal year. 

On an earnings call with stock analysts previously, CEO John Donahoe said the layoffs are behind the company and Nike is focused on getting new products on store shelves, part of what he said in December would be a “multi-year product innovation cycle.” 

“Teams are focused on driving for the consumer innovation and execution,” Donahoe said last week, adding the company is “100% focused on driving the growth and innovation we’ve been talking about.” 

“This is a painful reality and not one that I take lightly. We are not currently performing at our best, and I ultimately hold myself and my leadership team accountable,” Nike’s Chief Executive, John Donahoe, also mentioned in a memo a few months back. 

In March of this year, Nike projected a low-single-digit percentage decline in revenues for the first half of fiscal 2025, citing a reduction in investment in specific product lines. Similarly, global counterparts like Adidas, Puma, and JD Sports reportedly cautioned about lower earnings expectations for the current year. As reported in the ABP Live. 

When the layoffs were first announced Nike in a statement to Retail Dive said, “Nike’s always at our best when we’re on the offense. The actions that we’re taking put us in the position to right-size our organization to get after our biggest growth opportunities as interest in sport, health, and wellness have never been stronger.” 

Now that the changes have been made Nike has mentioned that they are grateful for the contribution made by all Nike teammates. 

CFO Matt Friend has also mentioned that the brand had started streamlining support and operating functions, as well as cutting back on management layers. Instead, Nike is investing in different areas like design, product creation, and merchandising. 

The company is prioritizing bolder marketing, wholesale partnerships, and better product innovation moving forward. 

Even though the well-known global sports giant Nike has made all these changes and cut off so many of their employees it is time that would say how effective their strategies were.