Nike axes 1,600 workers to cut costs amid sales slump

NIKE will axe more than 1,600 jobs as the sportswear giant battles to slash costs amid weaker sales.

The US company has said it will reduce its global workforce by around 2pc, with cuts expected to start taking place as of yesterday.

It comes weeks after Nike unveiled plans to strip $2bn (£1.6bn) of costs from the business, saying at the time it was “taking steps to streamline the organisation”. The cuts are expected to allow Nike to invest more in women’s apparel and running.

A Nike spokesman said: “The actions that we’re taking put us in the position to right-size our organisation to get after our biggest growth opportunities as interest in sport, health and wellness have never been stronger.”

The fresh wave of job cuts follows a wider slowdown in spending on sportswear as consumers tighten their purse strings.

Nike bosses previously said shoppers were only spending during major retail events such as Black Friday, when they were able to get discounted prices.

Matthew Friend, Nike’s chief financial officer, said: “We know that in an environment like this where the consumer is under pressure and there is a stronger promotional environment, it is newness that causes the consumer to act.”

The struggle to attract customers has weighed on sportswear brands in particular, which have scaled back plans to launch new products.

Investec analyst Kate Calvert said there had been a lack of innovation in the athleisure sector in recent months. She said: “You look at what’s out there and it’s a bit samey.”

In December, Nike slashed its sales forecasts for the year after revenues rose by just 1pc in the three months to November. It said conditions were tougher in the US and Europe.

Nike is not alone in announcing redundancies in the US, as the rate of corporate job cuts has grown amid high interest rates.

In the past few weeks, companies including Paramount, Amazon and Google owner Alphabet have unveiled plans to reduce their workforces.

Nike previously laid off 700 head office roles in 2020 as it sought to battle challenges from Covid.