Nike Layoffs Coming? CEO Warns Of Cuts Amid Economic Slowdown

Nike has warned employees of potential layoffs coming soon as the company reels from a recent $790 million loss. CEO John Donahoe gave the notice in an email obtained by Complex Magazine, which was sent out on the same day as its disappointing earnings report.

“We will soon be forced to make some difficult choices that will likely result in a net reduction of jobs,” Donahoe said in the Thursday email.

One of the many companies to experience financial strife in the wake of the coronavirus pandemic, Nike reported a 38% drop in sales for its recent fiscal fourth quarter. While all of its stores worldwide have now reopened and its stock has rallied by 50% since the close of the market on March 23, it is still a major blow to Nike’s business. This is especially grim considering that the company has only missed earnings estimates twice in the last eight years.

According to a Securities and Exchange Commission filing, Nike currently employs around 76,700 people. It is unclear how many employees will be impacted by these layoffs, but they are expected to come in two waves in late July and fall.

“We are committed to showing compassion and respect for our transitioning employees through thoughtful and robust severance practices, consistent with our company values, our legal obligations, the competitive marketplace and individual employee situations,” the company explained.

Despite the grim forecast, Donahoe attempted to explain that these layoffs would not be done for cost-saving purposes and are not a response to the coronavirus pandemic. According to the email, the cuts are instead intended to simplify the company’s structure and increase the efficiency of its business. The company reiterated this point in a response sent to Complex after its report was published.

“We are shifting resources and creating capacity to reinvest in our highest potential areas, and we anticipate our realignment will likely result in a net loss of jobs,” the company said. “Reductions are not being done for cost savings. Any savings will be reinvested into our priorities.”