Beaverton, Oregon – Nike, the global sportswear giant, announced on Thursday that it will be cutting about 2% of its workforce, equating to approximately 1,600 employees. The decision comes as the company restructures to prioritize investments in running, women’s apparel, and the Jordan brand, according to CEO John Donahoe. This move is part of a larger $2 billion restructuring plan set to unfold over the next three years.
The company’s stock has seen a 2.3% decrease year to date, in contrast to the 5.5% gain for the S&P 500. This reflects investor concerns about Nike’s top-line growth outlook, particularly in the critical market of China. With China accounting for about 15% of Nike’s annual sales, any weakness in the market could have significant implications for the company’s overall performance.
Furthermore, recent struggles of other consumer companies in the Chinese market, such as Burger King and Levi’s, have added to the apprehension about the retail landscape in the region. Analysts have also noted concerns about a slowdown in sales of higher-end skincare products in China, serving as an additional challenge for Nike’s sales in the country.
Meanwhile, golf legend Tiger Woods launched his own apparel line, Sun Day Red, adding to the competitive landscape for Nike’s golfing segment. The House of Jordan, a term used to refer to Nike, had close to 83,700 employees before the recent round of layoffs.
The restructuring decision indicates that more layoffs could be on the horizon for the company as it continues to navigate its long-term growth strategy. As Nike seeks to redirect its investments and streamline operations, the impact on its workforce signals a period of significant transformation within the sportswear industry.