Nike Logs $300M Restructuring Charge, Cuts 800 Jobs and Eyes Converse Disposal
Nike approved organizational changes expected to incur $300 million pre-tax restructuring charges for the nine months ended Feb. 28, primarily reflecting employee severance for about 800 U.S. distribution center roles. Analysts say flat SG&A and Converse’s 28% Q1 and 31% Q2 revenue declines may presage its sale.
1. Restructuring Plan and Charges
Nike approved organizational changes leading to approximately $300 million pre-tax charges for the nine months ended Feb. 28, primarily reflecting employee severance. These actions included cutting nearly 800 roles to consolidate U.S. distribution operations across Tennessee and Mississippi facilities in January.
2. SG&A and Cost Realignment
Management noted that cost realignment efforts are ongoing and could generate further charges. However, SG&A expenses remain flat since the 2024 restructuring plan aimed at $2 billion savings by fiscal 2026.
3. Converse Performance and Potential Sale
Converse faced a 28% revenue decline in the first quarter and a 31% drop in the second quarter, driving its EBIT into negative territory. Analysts interpret the 8-K’s exit activity classification as an indicator Nike may move toward divesting the underperforming brand.