By Nike, the renowned manufacturer of Air Jordan basketball shoes, has announced plans to reduce its workforce by more than 1,600 employees, which accounts for approximately 2% of its total staff. In a memo by Chief Executive Officer John Donahoe, it was highlighted that this move aims to allocate resources towards strategic areas such as running, women’s apparel, and the Air Jordan brand.
Notably, these job cuts will not impact employees working in stores, distribution centers, or the innovation team. The Wall Street Journal reported on this development, but Nike is yet to provide an official comment on the matter.
This news has had a negative impact on Nike’s stock performance, with shares falling by 0.6% in premarket trading to $105.45. Although the stock had experienced a 5% increase in the last month, it remains 15% lower compared to a year ago.
Nike’s decision to downsize its workforce comes as no surprise, as the company has been cautioning about shifting consumer behavior and economic challenges in regions like Europe and China. Additionally, tough competition and a shift in consumer spending patterns towards experiences rather than material goods have further prompted Nike to take action.
As early as December, Nike had already hinted at the possibility of job cuts. At that time, the company revised its revenue projection downward and revealed intentions to reduce expenses by $2 billion over the next three years.
Furthermore, the recently released U.S. retail sales report for January only emphasized the obstacles faced by Nike, as it demonstrated a larger-than-expected decline in sales.
It’s worth noting that Nike is not the only prominent sports-clothing brand grappling with difficulties. Adidas surprised the market earlier this month by lowering its guidance, resulting in a 7% decline in shares. Similarly, Under Armour shares have slipped by 4%, while Lululemon shares have dropped by 10%. Puma has experienced the most significant decline, with shares plunging by 19% since the start of the year.
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