Nike slashing jobs as customers turn to online shopping
The leader in sports shoes and apparel has announced it is cutting 1,400 jobs with intention of selling its products more directly to customers. Nike has over 70,000 employees worldwide and is intending to also reduce its product lines by cutting 25% and increase the selection for the remaining lines.
Nike’s sales continue to climb, but still has to compete with brands attempting to cut into their market. Nike’s decision comes as people are no longer shopping at stores and malls and turning to shopping online. More than 80% of its sales growth comes from 12 cities, which include New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul and Milan.
More people are choosing fashion over function, with sales of classic sneakers climbing 26 percent last year. Sales of running sneakers were flat and sales of basketball sneakers dropped, according to the same report. Adidas is attempting to increase its sales in the United States and has seen its revenue in North America, jump 31% in comparison to 2016.
The decision comes just two weeks before Nike will present its financial results for the recent quarter. Nike CEO says its part of an attempt to zero in on key markets, digital sales and less products. “We’re getting even more aggressive in the digital marketplace, targeting key markets and delivering product faster than ever,” CEO Mark Parker said.
Christopher Svezia, a footwear and apparel analyst at Wedbush, said that when companies announce jobs cuts and restructuring ahead of earnings reports, it doesn’t typically bode well for how business is going. “We’ll learn more in two weeks,” he said. Adidas managed to steal the spotlight last year with their retro Superstar shoes becoming the top-selling sneakers in the United States. Nike also announced it is cutting the time it takes to make its products by half.