Nike Inc. is cutting nearly 1,700 jobs, as part of its plan to cut costs so it can create capacity to boost profitability and innovation.
The job cuts come two months after the athletic shoe, apparel and accessories giant
NKE,
said in its second-quarter earnings call that it was targeting $2 billion in cost cuts over the next three years. At that time, Nike said it was looking to streamline its organizational structure by “reducing management layers.”
Read: Nike’s stock dives after company cuts sales outlook, lays out cost-cutting plan.
“The actions that we’re taking put us in the position to right-size our organization to get after our biggest growth opportunities as interest in sport, health and wellness have never been stronger,” Nike said in an emailed statement to MarketWatch.
Nike’s stock fell 1.5% in premarket trading on Friday. Through Thursday, the stock had tumbled 13.4% since it reported second-quarter results after the Dec. 21 close.
According to Nike’s latest annual report, the company had 83,700 employees as of May 31. Nike said the job cuts would affect “approximately 2%” of its workforce, which would translate to about 1,674 employees.
Some examples of cost cuts Nike said it would make in December included lowering marginal costs of operations, increasing automation and speed from data and technology, improving the efficiency of its supply chain and improving procurement capabilities.
“[A]s we look to drive greater efficiency and productivity, we will reallocate and invest the majority of these savings to deliver the greatest consumer impact on our largest growth opportunities,” Chief Financial Officer said on the earnings call, according to a FactSet transcript.
Nike’s stock has dropped 14.7% over the past 12 months through Thursday, while the Consumer Discretionary Select Sector SPDR ETF
XLY
has rallied 19.6% and the Dow Jones Industrial Average
DJIA
has advanced 15.1%.
