(DailyVantage.com) – Global athletic giant Nike is laying off 2% of its workforce in an attempt to streamline its operations and cut costs, saying that lower consumer spending has necessitated some belt-tightening measures.
The job cuts will affect roughly 1,600 workers and will run from February until May 2024. The sports brand has approximately 15,500 employees in Portland, Oregon, and the Southwestern Washington State area. Globally, its employees number around 83,000. The majority of the layoffs will be at the company’s headquarters in Oregon and will not affect employees who work at Nike’s stores and distribution centers. According to John Donahoe, Nike’s CEO, the company will be providing a comprehensive package that includes financial, health care, and outplacement support services for employees who have been and will be laid off.
Donahoe, who also serves as the CEO of online payments platform Paypal, says Nike’s decision to lay off employees is a “painful reality” the company has to face. Donahoe added that he and the rest of Nike’s leadership team take responsibility for the company’s less-than-stellar performance.
Nike said that poorer performance stems from the trend of retailers cutting down on wholesale orders due to higher rental rates as well as consumers reducing spending on higher-priced items due to the continued effects of inflation, such as high-interest rates.
The job cuts are ostensibly part of a $2 billion savings and restructuring plan the brand plans to implement over a period of three years. Other initiatives under the program will include tightening the supply of a number of its products through simplifying its assortment of offerings for consumers, as well as using more automation and other technology that cuts on manpower costs. The company also plans to trim down its management layers, and has lowered its sales targets.
The company estimates that it will spend $400 million to $450 million on employee severance and other related costs.
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