Nike is making smart moves to tackle money issues caused by less demand. They plan to cut over 1,600 jobs, which is about 2% of all their workers. This is because of problems like higher rent and interest rates that are affecting Nike and its rival, Adidas. People are also spending less on expensive stuff, so stores are being careful about how much they order.
To fix this, Nike announced a big plan to save $2 billion over three years. They will do this by making fewer products and organizing their management better. A big part of this plan involves spending $400 million to $450 million on letting go of some employees. As of May 31, 2023, Nike had around 83,700 workers.
This move is meant to help Nike deal with the possibility of less demand in the future, and also to face tough competition from new brands like Hoka and On Holding. These brands are becoming popular for their unique and cool running shoes.
To stay strong in the market, Nike is focusing more on running products. They are balancing spending more money on some things with spending less on others. The layoffs will start soon, and the whole process is expected to finish by the end of this quarter.
It’s important to know that these job cuts won’t affect people working in Nike’s stores, distribution centers, or the team that works on new ideas. Even though Nike’s shares went down a little bit after the news, it wasn’t a big drop. This shows that the market sees Nike’s plan as a smart move.
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In summary, Nike is making smart choices by reducing its workforce early to deal with money problems and changes in the market. Their plan to save money shows they are adapting to these changes while trying to keep a good balance in how they use their resources. Nike aims to stay strong in the market by preparing for less demand and facing competition confidently, maintaining its position as a global leader in sports shoes and clothes.
