Nike is having a difficult year, and things just got tougher. Recent government filings show that the company’s workforce has shrunk much more than expected. Annual reports submitted to the SEC on Thursday, 25 July, indicated that Nike now has 4,300 fewer employees compared to the previous year, significantly exceeding the approximately 1,600 layoffs announced in February 2023.
Nike had initially planned to cut two per cent of its staff, but the filings show that its workforce is now five per cent smaller than it was last year. This reduction has impacted Nike’s operations and stock performance significantly.
The latest layoffs hit hard, especially among top-level employees, with 40 per cent of the cuts affecting vice presidents, directors, or senior directors, totalling 318 out of 700 job losses. This workforce reduction caused Nike’s stock to fall by 20 per cent in one day in late June. Additionally, the company cut a significant number of jobs in its sustainability sector, which faced heavy criticism.
Furthermore, John Donahoe, CEO, Nike, also took an 11 per cent pay cut, reducing his compensation to $29.1 million.
Despite the setbacks, there have been some positive developments for Nike in 2024. The company signed Caitlin Clark, a rising star in American sports, for a $28 million shoe deal and is sponsoring numerous athletes for the Olympics. However, these moves have not been enough to placate investors. Following a disappointing quarterly earnings report in late June, Nike’s shares dropped by over 11 per cent.
As Nike navigates these turbulent times, the company faces ongoing challenges in balancing workforce reductions, financial performance and investor expectations.
