Nike announces 1,600 job cuts in response to sluggish shoe demand

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Web Desk
People visit the Nike store at 5th Avenue during the holiday season in New York City, US, December 9, 2022. —Reuters
People visit the Nike store at 5th Avenue during the holiday season in New York City, US, December 9, 2022. —Reuters

Global sportswear giant Nike is set to reduce its workforce by 2%, translating to more than 1,600 job cuts as the company grapples with a notable decline in demand for its iconic shoes and sneakers, Reuters reported.

The sportswear industry is witnessing a dip in consumer spending on high-priced items, primarily attributed to the impact of elevated rental and interest rates.

Industry leaders, including Nike and Adidas, are sounding alarms, citing a reduction in orders from retailers through wholesale channels. In December, Nike had already unveiled a comprehensive $2 billion savings plan spanning the next three years, aiming to address the evolving economic landscape. 

Part of these cost-cutting measures involves a range of initiatives, with an estimated $400 million to $450 million allocated for employee severance costs in the third quarter. As of May 31, 2023, Nike employed approximately 83,700 individuals.

GlobalData managing director Neil Saunders views these proactive job cuts as a strategic move by Nike to pre-emptively address concerns about potential further softening in demand. 

The company strives to navigate economic challenges while steadfastly maintaining its competitive edge in the market. Notably, Nike faces additional competition, losing retail shelf space to emerging brands like Decker Outdoors' Hoka and On Holding. 

These job cuts underscore Nike's commitment to adapt to market dynamics and position itself for sustained success amidst a changing industry landscape.