Nike plans second phase of layoffs

A letter on Friday revealed that Nike will lay off approximately 740 employees at its world headquarters in Oregon. The top sportswear company is looking to rein in prices after warning of an earnings drop in the first half of fiscal 2025.

Nike, the global sportswear giant, is set to initiate a “second phase of impacts” at its headquarters, according to Michele Adams, the company’s vice president for people solutions. 

The timeline for this phase is slated to begin by June 28, as stated in a legally mandated notice to state authorities.

The news comes amidst a challenging period for Nike, with its shares experiencing a marginal uptick in after-hours trading. However, the company’s stock has faced a decline of nearly 13% since the beginning of the year.

Cost Savings Plan and Workforce Reductions

In December, Nike had announced a cost savings plan aiming for $2 billion over the next three years. 

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Subsequently, in February, the company disclosed plans to cut approximately 2% of its total workforce, equating to more than 1,600 roles. As of May 31, 2023, Nike had approximately 83,700 employees.

Responding to Uncertain Demand Environment

The decision to implement layoffs reflects broader trends in the industry, with several companies in the U.S. and Canada announcing similar measures to mitigate costs amid an uncertain demand environment. Nike’s move aligns with its strategy to adapt to changing market conditions.

Revenue Projections and Strategic Adjustments

In March, Nike projected a low-single-digit percentage decrease in revenues for the first half of fiscal 2025. This outlook reflects the company’s strategic decision to scale back on certain franchises as part of its broader efforts to optimize operations and navigate market challenges.