Nike Forecasts Layoffs Following $790M Net Loss In Q4

  • June 30, 2020 at 11:26 AM EDT
  • By Adam Blair
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Nike is planning phased job cuts that are expected to begin in late July and last through the fall, but there are few specifics about how many people the retailer plans to let go in total. The prospective layoffs were revealed in a companywide email first seen by Complex and later confirmed to Business Insider. The email from Nike CEO John Donahoe indicated that the cuts were not likely to take place in Nike’s retail stores, distribution centers or manufacturing facilities.

The job cuts come just after Nike revealed its Q4 results. For the three-month period ending May 31, 2020, the company experienced a net loss of $790 million compared to the same period the previous year. Revenues plunged 38% to $6.3 billion, primarily due to COVID-19 store closures in North America, EMEA and Asia Pacific/Latin America. These losses were partially offset by a 75% jump in Nike’s digital sales during Q4.

It’s likely the cuts are designed to reinforce Nike’s efforts to build on the momentum in digital sales, a fast-growing trend in retail. For example, Microsoft plans to shutter all its brick-and-mortar stores as it pivots to digital operations, although the technology company has a far smaller physical footprint (approximately 80 stores) than the sneaker giant. Nike operates more than 1,100 stores worldwide, with nearly 400 stores under various banners in the U.S. alone.

Donahoe maintained in the email that the job cuts were not a response to the pandemic and would not be done for cost reasons. The corporate restructuring program, termed Consumer Direct Acceleration, is a remedy to the “overburdened matrix” that the company has become, and is designed to simplify how Nike works and to increase its speed and responsiveness.

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In a statement provided to Complex, Nike said: “Consumer Direct Acceleration is the next digitally empowered phase of our strategy. We are building a flatter, nimbler company and transforming Nike faster to define the marketplace of the future. We are shifting resources and creating capacity to reinvest in our highest potential areas, and we anticipate our realignment will likely result in a net loss of jobs. Reductions are not being done for cost savings. Any savings will be reinvested into our priorities.”

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