Nike Inc says most of its employee severance costs will be recognized in the third quarter of fiscal year 2026

Nike Inc says most of its employee severance costs will be recognized in the third quarter of fiscal year 2026

Nike Inc. announced that the majority of its employee severance costs associated with recent workforce reductions will be recognized in the third quarter of fiscal year 2026. The company is implementing cost-cutting measures as part of its "Save to Invest" strategy, aiming to reduce expenses by up to $2 billion over three years through automation, supply chain consolidation, and workforce reductions. These actions are intended to reinvest savings into consumer-focused initiatives, including growth areas like women's products, the Jordan Brand, and running.

The layoffs, primarily affecting distribution centers in Tennessee and Mississippi, involve 775 employees and mark the third consecutive year of workforce reductions. In 2024, Nike cut 1,600 corporate roles, and in 2025, it reduced another 1,000 corporate positions under CEO Elliott Hill's restructuring efforts. The 2026 cuts focus on streamlining operations amid challenges such as rising tariffs, inventory obsolescence, and softer demand in key markets like China.

Nike expects severance-related charges of $400 million to $450 million in the third quarter, largely attributed to these layoffs. The company reported a 32% decline in net profit for its most recent quarter, citing pressures from tariffs, restructuring costs, and reduced demand. Despite these challenges, Nike revised its full-year revenue guidance upward to a 1% increase, though it anticipates revenue for the third quarter to be slightly negative.

The cost-cutting strategy aligns with broader industry trends, including automation-driven job reductions seen at companies like UPS. Nike emphasized that the restructuring is designed to enhance operational flexibility and responsiveness in a competitive market environment.