The anticipated Nike comeback is hitting another sizable bump in the road.
The sports apparel and footwear giant said Tuesday it is cutting another 775 employees, mainly at distribution centers in Tennessee and Mississippi, as it looks to increase automation in many of its processes. The latest cuts add to a workforce cut of more than 2% announced nearly two years ago. Nike still has more than 77,000 employees.
“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,” Nike said in a statement. “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.”
During its most recent quarterly earnings report last month, Nike said it was in the “middle innings” of a large-scale turnaround, and it posted a set of fiscal second-quarter earnings that beat analyst expectations. Investors have remained somewhat wary of the alleged progress, though, and have dropped Nike stock by more than 14% in the last year, even with a 6% lift in the past month. In early Tuesday trading, company shares fell by nearly 2%.
Bigger Problems
A big part of Nike’s challenge is that it doesn’t have just one pressing issue to resolve, but many, all at once. The company is simultaneously trying to refine and upgrade its product line while dealing with different sales patterns across various parts of the world, pursuing an enhanced relationship with its wholesale suppliers and retail outlets, and grappling with macroeconomic forces—many of which are entirely out of its control.
“The turnaround is progressing slower than we expected, we’re concerned about the recent level of sell-in to the North America wholesale channel, China appears highly problematic, and Street numbers for the next 12-24 months look too high for us,” wrote Needham analyst Tom Nikic earlier this month amid a downgrade of Nike from a buy to hold.
Nike is also not alone in these struggles, as much of the apparel and footwear category is getting battered in similar ways. Under Armour, for example, has also gone through an extended run of declining sales and layoffs, and it also recently split with Warriors star Stephen Curry. Adidas stock has fallen by more than a third in the last year as it also worked through a series of competitive, demand, and tariff-related issues.
