Nike announces likely job cuts, $790 million loss due to COVID-19 on its business globally.
Nike Inc. an American multinational corporation, warned of job cuts as the world’s largest footwear maker ramps up efforts to sell directly to customers through its online and retail channels.
Nike, Inc. is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services.
The planned layoffs come after the company on Thursday, 25 June reported a US$790 million quarterly net loss, its first in more the two years, as its wholesale business bore the brunt of footwear retailers and department stores shutting down due to the coronavirus outbreak.
“We are shifting resources and creating the capacity to reinvest in our highest potential areas, and we anticipate our realignment will likely result in a net loss of jobs,” Nike said in an e-mail statement.
“Reductions are not being done for cost savings. Any savings will be reinvested into our priorities,” the footwear maker said.
Chief Executive Officer John Donahoe told analysts on Thursday the company would now aim for digital to account for 50% of its overall business, up from the 30% recorded in the reported quarter
Instead, he wrote, the restructuring is a remedy to the “overburdened matrix” the company has become. He said the planned cuts are meant to simplify how Nike works and increase speed and responsiveness.
“Our vision is to create a clear and connected digital marketplace … So we’re accelerating our approach,” he said.
Donahoe, a former ServiceNow CEO, and eBay executive joined Nike earlier this year as the company was bolstering its direct-to-consumer business.
According to media company Complex, Donahoe in a letter to employees said “the company does not yet know how many jobs will be reduced, nor who will be specifically impacted.”
