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Nike Inc. is reportedly looking to cut more than 1,600 jobs, as part of its plan to cut costs so it can create capacity to boost profitability and innovation.
The jobs cuts won’t affect employees in stores, distribution centers or those involved in innovation, The Wall Street Journal reported late Thursday, after reviewing an employee memo.
The report comes two months after the athletic shoe, apparel and accessories giant
NKE,
said in its second-quarter earnings call that it was targeting $2 billion in cost cuts over the next three years. At that time, Nike said it was looking to streamline its organizational structure by “reducing management layers.”
The company did not immediately respond to MarketWatch’s request for comment early Friday.
Read: Nike’s stock dives after company cuts sales outlook, lays out cost-cutting plan.
Nike’s stock fell 0.6% in premarket trading on Friday. Through Thursday, the stock had tumbled 13.4% since it reported second-quarter results after the Dec. 21 close.
According to Nike’s latest annual report, the company had 83,700 employees as of May 31. So the report of job cuts could represents roughly 2% of its workforce.
Some examples of cost cuts Nike gave in December included lowering marginal costs of operations, increasing automation and speed from data and technology, improving the efficiency of its supply chain and improving procurement capabilities.
“[A]s we look to drive greater efficiency and productivity, we will reallocate and invest the majority of these savings to deliver the greatest consumer impact on our largest growth opportunities,” Chief Financial Officer said on the earnings call, according to a FactSet transcript.
Nike’s stock has dropped 14.7% over the past 12 months through Thursday, while the Consumer Discretionary Select Sector SPDR ETF
XLY
has rallied 19.6% and the Dow Jones Industrial Average
DJIA
has advanced 15.1%.
