Nike to lay off 775 employees at U.S. distribution centers

Nike is cutting 775 employees as the company looks to boost its bottom line and accelerate its use of “automation,” CNBC has learned. 

The layoffs, which are in addition to the 1,000 corporate job cuts the company announced last summer, primarily impact distribution center roles in Tennessee and Mississippi, where the sneaker giant operates large warehouses, people familiar with the matter said. 

In a statement to CNBC, Nike said the layoffs primarily affect its U.S. distribution operations and are designed to “reduce complexity, improve flexibility, and build a more responsive, resilient, responsible, and efficient operation.”

“We’re taking steps to strengthen and streamline our operations so we can move faster, operate with greater discipline, and better serve athletes and consumers,” Nike said in the statement. “We are sharpening our supply chain footprint, accelerating the use of advanced technology and automation, and investing in the skills our teams need for the future.” 

It is unclear how many total U.S. distribution jobs Nike has.

The company added the cuts are part of Nike’s goal to get back to “long-term, profitable growth” and improve margins.

As the use of AI and automation sweeps across corporate America, distribution center jobs are expected to take a hit. Last year, UPS announced plans to cut 48,000 roles — in part because of more automation at its facilities. It’s unclear how exactly Nike plans to expand automation at its distribution centers and how much of a role that’s playing in its 775 job cuts.

The layoffs come as CEO Elliott Hill works to turn around Nike following years of slowing sales and shrinking margins. The struggles came after former top executive John Donahoe pursued a direct selling strategy that prioritized the retailer’s stores and websites over wholesale partners. 

As part of that strategy, Nike’s distribution centers — and staff within those facilities — ballooned, but they don’t have the volume to support those staffing levels, the people familiar with the matter said. 

Under Hill, Nike has been working to woo back wholesale partners, clean out stale inventory and reignite innovation. When reporting earnings for the fiscal second quarter in December, Nike said its net income had fallen 32% as it contended with tariffs, costs associated with its turnaround and a slowdown in its key China market.