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Nike’s anticipated layoffs of an estimated 1,600 people, or 2 per cent of its workforce, have begun this week, with multiple senior leaders across technology and marketing part of the cuts. These include VPs in technology, innovation and marketing, and senior directors in Nike’s technology innovation office.
The layoffs come on the heels of a dip in share prices for Nike stock — down 13 per cent year-on-year — and slowed revenue growth. In December, it announced a sales increase of 1 per cent, which missed expectations for the second quarter in a row. Nike also decreased its sales outlook for the year, and announced plans to cut $2 billion in costs over a three-year period. External factors such as decreased consumer spending and increased competition from smaller trainer brands are driving many of Nike’s recent struggles, which analysts also attribute to a series of missteps that have led the brand off course.
Layoffs are a faster way to recoup revenue than increasing sales. The significant layoffs in tech and marketing also come after bringing on new CTO Muge Erdirik Dogan (who most recently led Amazon Fashion) and CMO Nicole Hubbard Graham late last year. This week’s round of layoffs will be followed by a second round slated to complete by the end of the fourth quarter, which for Nike is in May. (Distribution centres, Nike Air manufacturers and store employees are not included in the layoffs, according to the company.)
Nike, a long-time leader in sportswear, has also led the charge in digital innovation. In recent years, it has cut wholesale distribution in favour of its own channels, developed a suite of apps, such as the Snkrs app for coveted product drops, invested in high-tech stores and been proactive in Web3, including an early acquisition of Web3 brand Rtfkt and a later development of its own Web3 studio, Nike Virtual Studios (NVS).
In an internal memo that was shared with Vogue Business, CEO John Donahoe said that Nike often wins when it offers innovative products, distinctive storytelling and differentiated marketplace experiences, suggesting that these are areas that need renewed focus. “Speed and end-to-end execution is critical to win. To compete, we must edit, shift and divest less critical work to create greater focus and capacity for what matters most.”
