Nike (Beaverton, Ore.) announced plans to cut $2 billion in costs over the next three years, a move that will involve making major layoffs at the company, according to a variety of publications, including this article in The Oregonian. Executives at the seller of athletic footwear and apparel said the belt-tightening is part of an effort to regain lost momentum and spark the company’s sputtering innovation engine.
These disclosures took place on a conference call with stock analysts to discuss the results of the brand’s most recent fiscal quarter. CEO John Donahoe and CFO Matt Friend said the cuts will eventually make Nike a stronger and more efficient company.
Nike expects to incur as much as $450 million in restructuring charges in the quarter that ends Feb. 28, mostly from severance costs, suggesting Oregon’s largest company is in the process of parting with a significant number of employees, The Oregonian reported.
(To put that cost in perspective, the publication noted, Nike predicted it would incur between $200 million and $250 million in severance costs in 2020 when it eliminated 700 jobs.)
On the conference call, Donahoe and Friend didn’t give details about the number of workers who will be impacted, but Donahoe said the process will be “led with respect and thoughtfulness.”
Nike employs 83,700, including 11,400 at its roughly 400-acre corporate headquarters campus near Beaverton, according to its last annual report.
The executives also didn’t offer specifics about how Nike plans to save $2 billion over the next three years, but they said the company could save money by doing everything from streamlining its organizational chart to reducing the number of Nike products and eliminating layers of management.
(No mention was made of closing any stores. As of mid-2023, Nike operated a total of 1032 retail stores worldwide, including just under 300 in the U.S., Statista reports.)
Analysts continue to criticize the company’s product pipeline, The Oregonian article noted. “They haven’t created enough newness,” said Sam Poser, a Williams Trading analyst, in an appearance on Yahoo Finance after the earnings report.