Nike anticipates layoffs as it accelerates digital strategy

Dive Brief:

In conjunction with its Consumer Direct Acceleration strategy, introduced on Thursday, Nike expects there to be a "net loss of jobs," the company confirmed to Retail Dive via email. Complex first reported the news.
Although the company reported a $790 million loss for Q4, a company spokesperson said the layoffs were not related to losses incurred by the pandemic. Instead, any savings will be "reinvested into our priorities," the company said.
Nike said it is committed to acting with "thoughtful and robust severance practices" toward any employees impacted by the reductions.

Dive Insight:

Nike's Q4 results on Thursday displayed in full force the challenges of even strong retailers in the face of a pandemic that forced most retailers to close their stores for months. The athletic retailer's revenue fell by 38%, and in North America it was down by 46%.

At the same time, though, the retailer announced the next phase of its consumer direct strategy, which aims to take further advantage of the success the company has seen in digital. Digital sales grew 75% in the quarter and represented nearly 30% of the company's total business for that period.

The Consumer Direct Acceleration is focused on three key areas, the creation of a "marketplace of the future," a realignment of product categories and more investment in digital. On a conference call with analysts on Thursday, CEO John Donahoe said that changes to its category approach would allow the company to "significantly simplify" the organization. These reductions seem aimed at simplification.

"We are building a flatter, nimbler company and transforming Nike faster to define the marketplace of the future," the company said in a statement.

A Nike spokesperson did not immediately respond to questions about how many employees would be impacted by the layoffs and in what areas of the business. The report by Complex, which cited an email Donahoe sent to employees, said the cuts would likely not impact workers at retail stores, distribution centers and manufacturing facilities, but did not give details on which parts of the company were likely to be hit.

Despite the lower than anticipated results, analysts remain positive about the retailer's business, which has recovered in Greater China so that revenues were only down 3% in the quarter.

Susquehanna Financial Group analysts, led by Sam Poser, pointed to the impacts Nike's new plans for its consumer direct strategy could have on the company's wholesale partners, which are being pared down.

"Nike has the keys to most every large and small athletic retailers' success, and those keys are becoming more valuable," the analysts said in emailed comments.