Nike shakes up its executive team to bolster its digital business, announces job cuts
- Nike said the changes it is making will lead to a "net loss of jobs across the company," which will result in pretax, one-time employee termination costs of roughly $200 million to $250 million.
- A spokeswoman declined to tell CNBC exactly how many jobs will be affected but insisted that this is not a cost-cutting move and instead is meant to invest resources in stronger parts of the business.
- Nike President and Chief Executive Officer John Donahoe had hinted when Nike reported earnings last month that the retailer was looking to streamline its business with a focus on digital, as it took a hit from the Covid-19 pandemic.
Nike on Wednesday announced a number of leadership changes as well as job cuts, in an effort to focus on its digital business and selling more directly to customers as the coronavirus pandemic shifts buying habits.
The company said the changes it is making will lead to a "net loss of jobs across the company," which will result in pretax, one-time employee termination costs of roughly $200 million to $250 million. As of May 31, 2019, Nike had approximately 76,700 employees worldwide, according to its annual report.
A spokeswoman declined to tell CNBC exactly how many jobs will be affected but insisted that this is not a cost-cutting move and instead is meant to invest resources in stronger parts of the business.
Among the leadership changes, which are all listed here, Nike has named the former head of its global categories, Amy Montagne, as vice president of its men's business. It named the former head of its specialty businesses, Whitney Malkiel, as head of its women's business. The former head of Nike's North American kids business, McCallester Dowers, has been named head of kids globally. They are all reporting to Michael Spillane, who is becoming head of a new consumer creation division, Nike said.
"We are announcing changes today to transform Nike faster, accelerate against our biggest growth opportunities and extend our leadership position," Nike President and Chief Executive Officer John Donahoe said in a statement. "Now is the right time to build on Nike's strengths and elevate a group of experienced, talented leaders who can help drive the next phase of our growth."
Donahoe had hinted when Nike reported earnings last month that the retailer was looking to streamline its business with a focus on digital, as it took a hit from the Covid-19 pandemic.
While it reported an unexpected fiscal fourth-quarter net loss and a sales decline of 38% year over year, Nike's digital sales soared 75%, representing about 30% of total revenue, as shoppers flocked to Nike's website for sneakers and workout gear.
A number of retailers, including Macy's, J.C. Penney, Levi's, Men's Wearhouse owner Tailored Brands and Sephora, have announced permanent layoffs among corporate staff and workers at the store level during the pandemic. Dozens, including J.Crew and Neiman Marcus, have filed for bankruptcy.
Nike was seen as one of the strongest in the industry heading into the crisis. Its revenues in fiscal 2019 jumped to more than $39 billion, up from $36.4 billion the year prior. The company has increasingly focused on investing in its own stores and website versus wholesale channels such as department stores.
Nike, which also owns the Converse brand, had 384 stores including outlet locations in the U.S. as of its latest annual filing.
Nike shares were down less than 1% in morning trading. The stock is down about 3% this year. Nike has a market cap of $153 billion.