Nike To Cut 2% Of Global Workforce

(RTTNews) - Sportswear giant Nike Inc. plans to reduce its global workforce by about 2 percent as part of its efforts to reduce costs and streamline the organization amid softer revenue outlook and increasing competition, reports said citing a memo.

More than 1,600 employees are likely to be affected with the job cuts based on the company's total workforce of about 83,700 employees worldwide.

The job cuts are planned in two phases, with first round starting on Friday, and the second round to be completed by the end of the company's fourth quarter.

Nike reportedly said, "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."

The planned job cuts are said to be part of its up to $2 billion cost savings plan over the next three years that was announced in December, along with its second-quarter results.

Nike then said it is taking steps to streamline the organization and identify opportunities for cumulative cost savings. Areas of potential savings include simplifying product assortment, increasing automation and use of technology, streamlining organization, and leveraging scale to drive greater efficiency. A majority of these savings will be invested to fuel future growth, accelerate innovation at speed and scale, and drive greater long-term profitability, it added.

The company also had announced that it would incur pre-tax restructuring charges of about $400 million to $450 million, primarily associated with employee severance costs.

Matthew Friend, Executive Vice President & Chief Financial Officer, NIKE, then said, "As we look ahead to a softer second-half revenue outlook, we remain focused on strong gross margin execution and disciplined cost management.... We see an outstanding opportunity to drive long-term profitable growth."

In its recent second quarter, the company's earnings increased 19 percent from last year, and revenue edged up 1 percent on a reported basis, but it decreased 1 percent on a currency-neutral basis amid slower demand as consumers are cutting back on non-essential spending.