CNBC reported that Nike is cutting 775 workers as the firm aims to improve its bottom line and hasten its deployment of “automation.”
People familiar with the matter stated that the layoffs, in addition to the 1,000 corporate layoffs the company announced last summer, are primarily in distribution center positions in Tennessee and Mississippi, where the sneaker giant has large warehouses.
Nike responded to CNBC in a statement that the layoffs are mostly due to its U.S. distribution operations and are designed to “reduce complexity, improve flexibility, and build a more responsive, resilient, responsible, and efficient operation.”
In a statement, Nike said, “We’re taking steps to strengthen and streamline our operations so we can move faster, operate with greater discipline, and better serve athletes and consumers. We are sharpening our supply chain footprint, accelerating the use of advanced technology and automation, and investing in the skills our teams need for the future.”
Therefore, there is no clear information on the number of overall U.S. distribution jobs Nike holds. The company mentioned that the cuts are a part of Nike’s efforts to return to the “long-term, profitable growth” and improve margins.
With AI and automation coming to the rest of corporate America, a blow is likely to befall the jobs of distribution centers. UPS also declared that it would eliminate 48,000 positions, including some due to a rise in automation of its facilities in the previous year.
It is not clear how Nike intends to increase automation in its distribution hubs and the extent to which that is contributing to its 775 job losses. The layoffs coincide with CEO Elliott Hill attempting to turn around Nike after several years of declining sales and diminishing margins.
The struggles followed the efforts by top Executive John Donahoe to follow a direct selling strategy whereby the retailer focused its stores and websites to the point of excluding wholesale partners.
The people familiar with the matter reported that as a component of that approach, Nike distribution centers and employees in those centers were expanded, but lack the volume to accommodate such staffing levels.
Under Hill, Nike has been working to woo back wholesale partners, clean out stale inventory, and reignite innovation. In its earnings reporting on the fiscal second quarter of December, Nike reported that its net income had declined by 32 percent amid its struggle against tariffs, as well as expenses incurred in its turnaround and deceleration of its major Chinese market.
