Report: Nike to Cut 7-10% of Workforce Due to Reorganization

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Massive changes to the company’s management structure were announced in a letter CEO John Donahoe wrote in June, in which he made it clear that job losses would be a part of the overhaul.

According to the Oregonian:

The first layoffs implemented over the summer hit more than 100 vice presidents. This week’s downsizing involves so called ‘S-band’ employees, generally the most senior and highest paid workers after the top executives and vice presidents.

Rather than making all the cuts at the same time, Nike seems to be implementing them in phases and by job classification. It appears that under John Donahoe, Nike’s new CEO, the higher you are one the org chart the quicker you could be shown the door.

Nike uses its VALUES system to classify employees based on seniority and responsibilities. Junior newbies are V, the next class up is A, then L and so on.

Susquehanna International Group analyst Sam Poser says that while upper-management appears to have been hit the hardest by the initial wave of layoffs, “less senior” employees could be hit in the coming weeks.

“Based on our proprietary checks, it has become evident that a large number of senior directors who oversaw major athletic specialty retailers, family footwear and moderate retailers, and department stores were let go from Nike,” Poser said.

“The layoffs are not a surprise and fit into the changes that Nike’s management has discussed on recent earnings calls. Our proprietary checks also indicate that layoffs of less senior Nike employees will be implemented over the next few weeks.”

According to Front Office Sports, “Nike had about 75,400 employees as of May, according to Statista. If the layoffs are in the 7-10% range, that’d be between about 5,300 and 7,500 workers.”

Poser says that the layoffs are part of a reorganization with a focus on virtual sales, as opposed to wholesale accounts that require large numbers of employees.