Nike to Cut 1,400 Jobs
Nike said last week it will cut about 1,400 jobs, or 2 percent of its workforce worldwide as part of a new strategy to sell products more directly to customers. The Beaverton, Ore.-based company, which has 70,700 employees worldwide, including retail and part-time employees, also plans to reduce its number of product lines by 25 percent and introduce more selections for the remaining lines. "This new structure aligns all of our teams toward our ultimate goal — to deliver innovation, at speed, through more direct connections,” said Trevor Edwards, president of the Nike brand unit, which includes the Jordan Brand, Action Sports and Hurley, in a statement.
Total Retail's Take: While the job cuts may seem puzzling — after all, Nike remains a popular global brand and its revenue spiked 5 percent in the last quarter — the bottom line is that sportswear is a globally competitive category with emerging brands popping up every day that are eager to take market share. In addition, for years Nike has relied mostly on its retail partners to sell its shoes, clothes and sports gear. However, as many of these chains cut back on stores and/or go bankrupt, and more and more people shop online, Nike has decided to cut its distribution to smaller retail shops and focus more on its online business. As part of the new strategy, Nike's retail operations — Nike.com, retail stores and its loyalty program — will be grouped under a single business unit. And finally, the strategy will also include playing very close attention to sales and shopping trends in 12 key cities where Nike believes more than 80 percent of its sales growth will come from in the next three years. Those cities are New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, and Milan.