Nike announces 1600 job cuts in response to sluggish shoe demand. Nike, the renowned global sportswear powerhouse, has announced plans to trim its workforce by 2%, signaling more than 1,600 job reductions, according to a report by Reuters.
This strategic move comes as the company grapples with a discernible downturn in demand for its iconic footwear and sneakers.
The sportswear industry at large is witnessing a notable slump in consumer expenditure, particularly on premium-priced items, largely attributed to the impact of escalating rental and interest rates.
Key industry players, including Nike and Adidas, are raising alarms over a decrease in orders from retailers via wholesale channels.
Also read: A family paid over $400 for Nike shoes that lasted 10 weeks
In response to these challenges, Nike had previously unveiled a comprehensive $2 billion savings strategy in December, spanning the next three years, aimed at addressing the shifting economic landscape.
As part of its cost-cutting initiatives, Nike is implementing various measures, with an estimated $400 million to $450 million earmarked for employee severance costs in the third quarter alone. As of May 31, 2023, Nike boasted a workforce of approximately 83,700 individuals.
Neil Saunders, the managing director of GlobalData, interprets these proactive job cuts as a strategic maneuver by Nike to proactively tackle concerns regarding potential further softening in demand.
The company remains focused on navigating economic headwinds while steadfastly preserving its competitive edge in the market.
Notably, Nike faces heightened competition and is witnessing a loss of retail shelf space to emerging brands like Decker Outdoors’ Hoka and On Holding.
As Nike announces 1600 job cuts in response to sluggish shoe demand, these workforce reductions underscore Nike’s commitment to adapting to market dynamics and positioning itself for sustained success in an ever-evolving industry landscape.
