Hundreds of Nike employees to lose their jobs as it becomes latest to be hit by automation
Americans are already battered by salary hikes failing to keep up with rising prices, and layoffs continue to make things worse by adding uncertainty to the mix. Sports retail giant Nike is joining the bandwagon with plans to lay off 775 employees to improve profitability and enhance automation. This follows a previous announcement about 1,000 corporate job cuts and mainly affects distribution center positions in Tennessee and Mississippi. "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," a Nike spokesperson told FOX Business.
"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," the company asserted. "These actions 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," it added.
CNBC reported that Nike's layoffs are a part of CEO Elliott Hill's strategy to turn around the business in the face of diminishing sales and profit margins, which followed a change under former CEO John Donahoe to prioritize direct sales over wholesale partnerships. Strategic adjustments were necessary since there was insufficient volume to support the growth of distribution centers and personnel. Nike reported a 32% decline in net income in its fiscal second quarter due to tariffs, turnaround costs, and a downturn in China, despite Hill's strategy of re-engaging wholesale partners, cutting excess inventory, and encouraging innovation.
Under Hill, the company revealed plans to cut less than 1% of its corporate staff in order to enhance business operations. It had already announced a 2% employment reduction in February 2024, which affected more than 1,600 workers. KGW News reported that last year, Donahoe, the former CEO, acknowledged a significant slowdown in sales and the company's need to save $2 billion within three years. This decision heavily impacted the Pacific Northwest, where many employees had close ties to the community. Jana Panopo, a former Nike employee who founded the 6453 alumni group, aimed to support those laid off by connecting them with resources and opportunities. The layoffs that began in February continued till May.
In an interview with CNBC, Hill stated that he is betting on "returning to sports" after $28 billion of market cap was wiped out in a single day. He emphasized a renewed focus on sports and innovation, targeting competition from brands like On Running. He plans to reorganize Nike's internal structure by aiming to enhance consumer engagement and product development through insights from its Sports Research Lab.
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