Nike to axe scores of jobs in $2bn cost-cutting drive

NIKE is poised to shed swathes of jobs in an effort to cut $2bn (£1.6bn) of costs amid weak sales at the sneaker giant.

The Oregon-headquartered company said it was “taking steps to streamline the organisation” that would lead to as much as $450m (£353m) in employee severance costs.

Nike did not specify how many jobs would be affected by the cost-cutting drive. The last time it made large-scale layoffs, in 2020, it shed 700 people.

It comes as Nike cut its sales forecasts amid weakening demand from consumers. It reported a 1pc rise in revenues over the three months to Nov 30.

Nike’s shares plunged by more than 14pc in pre-market trading as investors flinched at the prospect of softer demand. Shares in fellow sportswear brands JD Sports and Adidas have also fallen following Nike’s announcement, dropping by 4.7pc and 5.5pc respectively yesterday.

The drive also involves Nike simplifying its range of products and ramping up automation across its business.

Nike said money saved in the cost-cutting drive would be used “to fuel future growth, accelerate innovation at speed and scale, and drive greater long-term profitability”.

While sales rose in China, that growth was offset by declines in the US and Europe, Nike said.

Matthew Friend, the chief financial officer, said: “Nike’s second-quarter financial performance was a turning point in driving more profitable growth.

“As we look ahead to a softer second-half revenue outlook, we remain focused on strong gross margin execution and disciplined cost management.”

News that Nike plans to simplify the range of products it sells comes after the company was criticised for making a £45 pair of baby trainers, the launch of which was met with derision on social media by users who branded them “unnecessary”.

Nike has also been locked in a battle with Adidas to create so-called “super shoes” that are super-light and are reported to save athletes’ energy.

The introduction of these shoes into professional sports and athletics has sparked debate over whether rapid product development has devalued world records. Nike was approached for further comment.