World’s largest footwear maker, Nike recently warned its employees of possible job cuts as the company shifts its focus towards online shopping.
The recent development from the company comes just days after it posted a net loss of $790mn, its first in more the two years. The company attributed the loss in part to the strain COVID-19 placed on its business globally.
Nike CEO John Donahoe announced in a company-wide email on Thursday that the brand will soon be “forced to make some difficult choices” that will “likely result in a net reduction of jobs.”
Nike’s results put fourth-quarter revenues at $6.3 billion and digital sales in the same period up 75 percent.
“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,” Nike said in an e-mail statement.
“Reductions are not being done for cost savings. Any savings will be reinvested into our priorities,” the footwear maker said.
Through his message about the pending layoffs at Nike, Donahoe ensured that the reductions in staff would “not be done for cost reasons.” The CEO also said they were not a response to the coronavirus pandemic.
Donahoe said that the company would now aim for digital to account for 50% of its overall business, up from the 30% recorded in the reported quarter.
“Our vision is to create a clear and connected digital marketplace … So we’re accelerating our approach,” he said.
The company has not given out any details about the number of employees going to be affected by the downsizing exercise. However, the internal email mentioned that workers at Nike’s retail stores, distribution centers, and manufacturing facilities are not expected to be cut.
The layoffs are scheduled to happen in phases, the first one concluding in late July and the last one in the fall.
“These decisions are exceptionally difficult because they impact friends and colleagues at Nike,” Donahoe wrote in the email. “You have my personal commitment that we will put people at the center throughout this entire process. We will support everyone impacted by this transition.”
Donahoe, a former ServiceNow CEO and eBay executive, joined Nike earlier this year as the company was bolstering its direct-to-consumer business.
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