Additional Coverage:
- Hundreds of Nike employees to lose their jobs as it becomes latest to be hit by automation (marketrealist.com)
Nike to Lay Off Hundreds More as Automation and Restructuring Take Hold
MEMPHIS, TN – The economic landscape continues to be challenging for American workers, with rising prices outpacing salary increases and job uncertainty remaining a significant concern. Now, sports retail giant Nike is adding to the mix, announcing plans to lay off 775 employees as part of a broader strategy to boost profitability and accelerate automation.
These latest job cuts primarily affect distribution center positions in Tennessee and Mississippi, following a previous announcement of approximately 1,000 corporate job reductions. A Nike spokesperson confirmed the move to FOX Business, stating, “To power our Win Now actions, we’re taking steps to strengthen and streamline our operations so we can move faster, operate with greater discipline, and better serve athletes and consumers.”
The company elaborated on its rationale, asserting, “We are sharpening our supply chain footprint, accelerating the use of advanced technology and automation, and investing in the skills our teams need for the future. Our actions to consolidate our operations primarily impact our U.S. distribution operations.” These changes are designed to “reduce complexity, improve flexibility, and build a more responsive, resilient, responsible, and efficient operation and to support our path back to long-term, profitable growth, including contributing to improved EBIT margins over time.”
According to CNBC, these layoffs are a key component of CEO Elliott Hill’s strategy to revitalize the business amidst declining sales and profit margins. This strategic shift comes after a previous focus under former CEO John Donahoe, which prioritized direct-to-consumer sales over wholesale partnerships. However, the volume did not adequately support the growth of distribution centers and personnel, necessitating adjustments.
Despite Hill’s efforts to re-engage wholesale partners, reduce excess inventory, and foster innovation, Nike reported a 32% drop in net income during its fiscal second quarter. This decline was attributed to a combination of tariffs, turnaround costs, and a downturn in the Chinese market.
This wave of layoffs is not Nike’s first this year. The company had already revealed plans to cut less than 1% of its corporate staff to enhance business operations and announced a 2% employment reduction in February 2024, impacting over 1,600 workers.
KGW News previously reported that former CEO Donahoe acknowledged a significant sales slowdown last year, prompting the company’s goal to save $2 billion within three years. These earlier layoffs heavily impacted the Pacific Northwest, a region with strong community ties to Nike employees.
Jana Panopo, a former Nike employee, even founded the “6453 alumni group” to provide support and resources to those affected. The layoffs initiated in February continued through May.
In an interview with CNBC, Hill expressed his confidence in “returning to sports” as a core strategy, particularly after a staggering $28 billion was wiped from the company’s market capitalization in a single day. He emphasized a renewed focus on sports and innovation, aiming to compete effectively with emerging brands like On Running. Hill plans to reorganize Nike’s internal structure to enhance consumer engagement and product development, drawing insights from its Sports Research Lab.