1,600 Nike dreams on hold: Layoffs hit amid economic slowdown
Bangkok / Thailand - June 2020 : Nike is opening the new shop that located at Siam Center shopping mall. The new shop is reprensenred as the Biggest flagship store in ASEAN region.
Nike, the global leader in athletic apparel, has unveiled plans to cut around 1,600 jobs, constituting approximately 2% of its workforce, as a strategic response to industry challenges driven by shifting consumer preferences and economic pressures. The decision comes amidst rising rental and interest rates impacting consumer spending patterns, particularly in the market for high-end footwear, a hallmark of Nike’s brand. This trend is not unique to Nike but is affecting the broader industry, including competitors like Adidas. Additionally, a decline in orders through wholesale channels signals retailers adjusting strategies, prompting established brands to reassess operations.
Nike’s comprehensive $2 billion savings plan aims to optimize operational efficiency through measures such as product supply adjustments and management streamlining. Anticipating severance costs of $400 million to $450 million in the third quarter, Nike is aligning its workforce with market demands, preserving essential functions while addressing potential challenges. The proactive layoffs reflect Nike’s strategic maneuvering to ensure resilience amid market uncertainties and increased competition from newer brands like Hoka and On Holding.
The phased approach to job cuts underscores Nike’s commitment to swift and strategic execution, with a focus on preserving essential functions and innovation capabilities. However, the announcement triggered a 4% decline in Nike’s shares, influenced by concerns about future consumer demand highlighted by a brokerage downgrade. As Nike navigates these challenges, investors closely monitor its ability to maintain competitiveness in the dynamic sportswear landscape.
