Nike plans to reduce its workforce by approximately 2%. This will affect nearly 1,700 employees, as part of efforts to trim expenses by up to $2 billion.
"The actions that we’re taking put us in the position to right-size our organization to get after our biggest growth opportunities. While these changes will impact approximately 2% of our total workforce, we are grateful for the contributions made by all Nike teammates." - Nike
As of May 31, 2023, Nike's latest annual report indicated a global workforce of approximately 83,700 employees.
In December, Nike reduced its revenue projection and revealed plans for cost reductions amidst mounting worries over a slowdown in consumer spending worldwide. The company aimed to achieve savings of up to $2 billion over the following three years.
Consumers are shifting their spending habits. They are opting for essentials and experiences like concerts and travel, but not discretionary purchases such as pricey sneakers and athletic apparel.
Nike is also encountering fierce competition from emerging brands such as Hoka, On Cloud, adidas and others.
During the presentation of the company's recent financial results in December, Nike's finance chief Matt Friend cited "indications of more cautious consumer behavior globally" and highlighted "increased macroeconomic challenges in China and Europe."
As the second-largest economy globally, China grapples with significant challenges, including subdued consumer sentiment, a downturn in real estate, and declining exports.
Meanwhile, Europe narrowly avoided a recession in the final quarter of 2023, with its economy stagnating, according to official data released on Wednesday. Germany, the largest economy in the region, contracted for the first time since the beginning of the Covid-19 pandemic last year.