Why Nike plans to layoff 1,500 employees?

Nike has announced a significant move in its ongoing restructuring efforts, revealing plans to trim its workforce by 2%, or more than 1,500 job cuts. The decision comes as part of a broader strategy aimed at improving capital allocation towards key growth areas, including running, women’s products, and the iconic Jordan brand.

CEO John Donahoe, addressing the changes in a memo, emphasized the necessity of these actions to reignite growth. He acknowledged the challenging nature of the decision, holding himself and the leadership team accountable for the company’s current performance.

How will the layoffs be implemented?

Nike plans to execute the layoff process in two phases, with the initial round starting immediately and the second phase finishing by the end of Nike’s fiscal fourth quarter in May. However, the timing of layoffs in the Europe, Middle East & Africa regions will be contingent upon local labour regulations.

While specific departments affected by the layoffs remain unspecified, Nike assures that retail employees and warehouse staff will be unaffected. This move occurs during a backdrop of cautious consumer spending and an overall slowdown in discretionary retail sectors, posing challenges to Nike’s core business of apparel and footwear.

Last December, Nike shared a comprehensive restructuring plan aimed at reducing costs by $2 billion over the next three years. This initiative includes streamlining the product assortment, increasing automation, reducing management layers, and leveraging scale for greater efficiency.

Prior to the official announcement of the restructuring, reports emerged of discreet layoffs across various divisions, including recruitment, sourcing, brand, engineering, human resources, and innovation. While the exact number of job cuts since December remains unclear, the company has been actively implementing cost-saving measures in preparation for likely market shifts.

Severance Entitlement for Nike’s Employees

In the Canadian context, non-unionized employees and executives impacted by the Nike layoffs can receive up to 24 months of compensation in situations of job loss, arising from downsizing or corporate restructuring. Several factors like age, time in role and level of responsibility impact the entitlement of an individual’s severance pay.

At Whitten & Lublin, we recognize the challenges associated with job loss or termination, and our employment lawyers can assist you in navigating legal options. Our goal is to ensure individuals receive the compensation they deserve. We encourage anyone affected by recent layoffs in Canada to reach out for a consultation, either online or by phone at (416) 640 -2667, to discuss their situation today.