Nike’s northeast base made 65 layoffs amid pandemic as revenue plummets

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A restructuring of Nike’s UK business has led to 65 layoffs, according to the latest accounts.

The Doxford Park-based company’s revenue also fell last year due to a deliberate slowdown in operations, including its marketing activity.

Nike (UK) Limited – which acts as an agent in the sale of the global sportswear brand’s products – said its revenue had risen from £79.7m to £63.3m in the year ending May 2021.

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The company receives a commission on the revenue it generates in the UK and Ireland for Nike’s group of companies, and it also receives payment from the group for operating costs.

In a report filed with Companies House, the company explained that while strong demand for Nike products has continued throughout the pandemic and created “high double-digit growth”, it has made the decision to reduce sales. operating costs when the market seemed uncertain.

This meant more “streamlined and targeted brand marketing activities” and fewer product launch events. As a result, the company reduced administrative and operating expenses by 30.1%.

Despite falling revenue, operating profit remained stable, rising from £19.5m to £20.09m during the year.

In last year’s accounts, covering the year ending May 2020, Nike signaled it may cut up to 80 jobs from its Sunderland base as part of an industry-wide effort. company to build a “flatter, more agile business” and shift resources to invest in its “high growth potential areas.”

New accounts covering 2021 indicate that 65 employees were affected by the redundancy process, 39 of whom had left before the end of the financial year, resulting in redundancy costs of £5.2million.

A statement in the most recent accounts on the layoffs said: “The impact of the evaluation and subsequent aligned implementation of this global strategy has been a key priority for directors during the year, including results led to a number of layoffs within the business.

“For all affected employees, detailed considerations have been made for any alternative and potentially suitable roles that would allow these employees to remain with the company or within the wider Nike business before any redundancies are made. formalized.

“For employees who have unfortunately had to leave the company, full support has been provided throughout the process, both internally and through access to an external professional consulting firm that supports individuals in these transitions and changes of professional career.”

As part of further restructuring, Nike moved its London office to a new development in Kings Cross, and a decision was taken to wind up Nike (UK) Limited and transfer all of its business activities, transferable assets and liabilities to another Nike group company.

The company also said it decided not to pay a dividend to its parent company, Nike International Holding BV, due to the uncertainty caused by the pandemic.

In a report accompanying the accounts, he said: “While the company’s financial position remains strong and distributable reserves are more than adequate, it has been felt, in another year of heightened uncertainty due of the global Covid 19 pandemic, that it was prudent to defer the potential decision to pay a dividend until the following year, when a new assessment would be made and further consideration granted.”

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