Nike to cut jobs in push to sell more directly to consumers
Nike Inc. is cutting jobs as the world’s largest athletic brand refocuses on selling directly to consumers, pushing further away from a traditional retail channel that’s been ravaged by the pandemic.
Chief Executive Officer John Donahoe, a longtime Silicon Valley executive who took the helm at Nike in January, announced a new phase in its e-commerce push Thursday called the Consumer Direct Acceleration. He also sent employees a memo, first reported by the Complex website, saying that the changes would probably result in layoffs.
Nike confirmed that job cuts were coming in a statement Friday.
“Consumer Direct Acceleration is the next digitally empowered phase of our strategy,” the company said. “We are building a flatter, nimbler company and transforming Nike faster to define the marketplace of the future. We are shifting resources and creating capacity to reinvest in our highest potential areas, and we anticipate our realignment will likely result in a net loss of jobs.”
E-commerce sales were a bright spot for Nike last quarter, growing 75% at a time when overall revenue plunged. Shipments to Nike’s wholesale customers were down almost 50% in the period, leaving the company with excess inventory.
Nike’s gross margin fell 8.2 percentage points to 37.3 percent, falling well short of projections. That was its worst performance since 1998, according to data analyzed by Bloomberg. But cash isn’t tight at the company: It’s sitting on a $12.5 billion hoard.