Sports Business : Nike to cut 700 jobs as the restructuring exercise begins

American sportswear giant Nike has announced that they are undertaking major restructuring exercise that it will lead to cut-down in 700 jobs at its headquarters in Beaverton, Oregon. Nike, which employs around 76,000 people globally, originally announced in July that it would make 500 layoffs, but has now said there will be a further 200 job cuts by 8th January. Other sportswear firms have also been forced into job cuts this year. Under Amour confirmed in September that it will lay off about 600 employees from its global workforce in a move that the company expects will see it incur US$550 million to US$600 million in charges.

While it is unclear how much the cutbacks will cost Nike, the company previously said that the layoffs will result in pre-tax, one-time employee termination costs of between US$200 million and US$250 million.

Nike to cut jobs, declares we are building ‘flatter and nimbler company’

The job cuts are not directly related to Covid-19, but come at a time when Nike continues to shift its focus towards digital direct-to-consumer sales, which has in part been accelerated by the pandemic.

‘We are building a flatter, nimbler company and transforming Nike faster to define the marketplace of the future,’ Nike said in a statement issued to The Oregonian.‘The changes are expected to lead to a net loss of jobs, which is always difficult. Through this process, we are leading with our values and are committed to acting with compassion and respect for our employees.’

Nike’s major restructuring announced in the summer included a senior leadership reshuffle which saw new regional heads installed in Europe, the Middle East and North Africa (MENA), Asia-Pacific and Latin America.

Jordan Brand president Craig Williams and G. Scott Uzzell, the chief executive of Converse Inc, also joined Nike’s executive leadership team, reporting to company president and chief executive John Donahoe.

Nike is referring to its broader digital transformation initiative as Consumer Direct Acceleration, through which it plans to ramp up investments in ecommerce and technology, as well as simplify its men’s, women’s and kids’ businesses.

Nike, however, has been bouncing back following the initial financial hit caused by the pandemic. The company announced in September that its first quarter revenues for fiscal 2021 were US$10.6 billion, down just one per cent on the prior year. Nike Brand digital sales increased 82 per cent, while Nike Direct sales were up 12 per cent to US$3.7 billion.