In an unexpected announcement, Nike IncNKE revealed its intention to slash over 1,600 jobs, approximately 2% of its workforce, in a bid to cut costs.

John Donahoe, Nike’s CEO, conveyed that the company intends to reallocate resources to bolster investment in crucial areas such as running, women’s apparel, and the Jordan brand, according to a report by The Wall Street Journal.

Despite the announced layoffs, employees working in stores, distribution centers, and the innovation team are expected to be unaffected.

As of May 31, 2023, the company boasted a global workforce of around 83,700 employees.

In a memo to employees, Donahoe expressed regret, stating, “This is a painful reality and not one that I take lightly. We are not currently performing at our best, and I ultimately hold myself and my leadership team accountable. To compete, we must edit, shift and divest less critical work to create greater focus and capacity for what matters most.”

The company anticipates commencing the layoffs imminently, with a second phase projected to be completed by the end of the quarter.

In the financial realm, Nike reported second-quarter FY23 revenue of $13.39 billion in December, falling short of the street’s estimate of $13.43 billion. Furthermore, the company revealed plans to achieve up to $2 billion in cumulative cost savings over the next three years.

Nike disclosed its anticipation of slightly negative revenue in the third quarter, with reported revenue projected to increase by low single digits in the fourth quarter. The full-year reported revenue is expected to grow by about 1%. This guidance reflects rising macro headwinds, particularly in Greater China and EMEA.

The same direction of running shoes since its incorporation, the company has maintained its stock price. NKE shares are down 0.65% at $105.36 in premarket trading as of the latest check on Friday.

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