John Donahoe took over as Nike CEO in January 2020.
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Nike announced a series of leadership changes Wednesday, as well as job cuts, in an effort to focus on its digital business and sell more directly to customers as the coronavirus pandemic changes purchasing habits.
The company said the changes it is carrying out will lead to a “net loss of company-wide jobs,” resulting in one-time, pre-tax layoff costs of approximately $ 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 is instead intended to invest resources in stronger parts of the business.
Among the leadership changes, listed here, Nike has named former head of its global categories, Amy Montagne, as vice president of its men’s business. She named the former head of her specialty business, Whitney Malkiel, as the head of her women’s business. McCallester Dowers, former head of Nike’s kids’ business in North America, has been named head of kids globally. They all report 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 further growth opportunities and expand our leadership position,” Nike President and CEO John Donahoe said in a statement. “Now is the right time to build on Nike’s strengths and build a pool of experienced and 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 digital focus as it took a hit from the Covid-19 pandemic.
While reporting an unexpected net fiscal loss in the fourth quarter and a 38% decrease in sales year-over-year, Nike’s digital sales soared 75%, accounting for about 30% of total revenue, as Shoppers turned to the Nike website to buy sneakers and training gear.
Several retailers, including Macy’s, JC Penney, Levi’s, the owner of Men’s Wearhouse, Tailored Brands and Sephora, have announced permanent layoffs among corporate staff and store-level workers 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 in the crisis. Its revenue in fiscal year 2019 jumped to more than $ 39 billion, compared to $ 36.4 billion the year before. 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 retail locations in the US as of its last annual presentation.
Nike shares fell less than 1% in morning trading. Shares fell 3% this year. Nike has a market capitalization of $ 153 billion.
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