Nike is cutting 775 jobs as part of its effort to increase automation within its U.S. distribution centers.
The layoffs mainly affect workers in Tennessee and Mississippi, where Nike has large warehouses. This move comes in addition to the 1,000 corporate job cuts announced last summer.
The company stated that these layoffs are intended to reduce complexity, improve flexibility, and create a more efficient operation.
In a statement to CNBC, Nike explained that it is taking steps to strengthen its operations to better serve athletes and consumers. The focus on automation is part of a broader strategy to achieve long-term, profitable growth and enhance profit margins.
CEO Elliott Hill is working to turn around the company's fortunes after experiencing years of slowing sales and decreasing margins.
Under the previous leadership of John Donahoe, Nike shifted its strategy to prioritize direct sales through its stores and websites, resulting in an increase in distribution center staffing that is now deemed unsustainable given the current volume of operations.
Nike's financial struggles are evident, with a reported net income decline of 32% during the fiscal second quarter. Factors contributing to this downturn include tariffs, costs related to the ongoing turnaround efforts, and a slowdown in the important China market.
The company is not only focusing on cutting jobs but also on re-establishing relationships with wholesale partners and managing excess inventory.
As Nike moves forward, the company aims to enhance its use of advanced technology and automation within its distribution centers.
Although the specific details on how automation will expand are not fully explained, the trend of automation is affecting many sectors in corporate America. Other companies, like UPS, have also announced significant job cuts as they integrate more automated processes in their operations.
