Nike is shifting its executive team and cutting jobs as the company looks to further focus its efforts on its digital business amid a drop in retail sales due to the coronavirus pandemic. The apparel and sneaker giant posted a net loss of $790 million and a 38% decline in sales year-over-year in its most recent quarter, a period in which a majority of its stores across the globe were closed or operating at reduced hours.
Under a new strategy that Nike is calling ‘Consumer Direct Acceleration,’ it will continue its push to sell more products directly to customers through its website and digital platforms. Nike has leaned into its training and exercise apps during the pandemic to connect with at-home athletes – those platforms also have e-commerce tie-ins. Roughly 30% of Nike’s revenue in its last quarter came from digital sales, an increase of 75% year-over-year.
These changes will lead to a “net loss of jobs across the company” which will result in a one-time employee termination cost of between $200 to $250 million, Nike said in a statement. It is unclear how much downsizing will occur. Nike had roughly 76,700 employees worldwide as of May 31. The company is creating a new ‘consumer creation’ division, shifting several executives to oversee its men’s, women’s, and children’s businesses.
The last few months have not been kind to the sneaker industry. Footwear sales in the U.S. totaled $1.7 billion in the second quarter, down 48% from 2020, according to the NPD Group.