Nike Cuts 775 Jobs As Part of Hill's $2B Restructuring Plan
"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 is cutting 775 jobs across its U.S. distribution operations, making this the latest move in CEO Elliott Hill's $2 billion restructuring plan. The layoffs, announced January 26, 2026, will primarily affect distribution center roles in Tennessee and Mississippi, where Nike operates large warehouse facilities. This move is Nike's third major workforce reduction in two years aiming to restore profitability and declining sales.
Nike's sales trends over the past two years have been well below normal, creating severe overcapacity in its distribution infrastructure. According to Morningstar analyst David Swarz, "Nike's sales trends over the past two years have been well below normal, so it's highly likely that it overbuilt warehouse capacity and overstaffed. Coupled with the rapidly increasing capabilities of AI, the cuts were not surprising."
Nike's revenue declined 10% year over year during the period preceding Hill's appointment in October 2024, with full-year fiscal 2024 revenue growing just 1%. The company has lost market share to specialized competitors like Hoka and On, which have captured momentum in the performance running category, a segment that once defined Nike's competitive dominance. Excess distribution capacity became a drag on margins at precisely the moment when Nike could least afford operational inefficiency.
Hill's response has been systematic. "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 a statement. The distribution center consolidation is part of this broader effort to align infrastructure with actual demand levels.
Switching To Automation
The company stated it is "sharpening our supply chain footprint, accelerating the use of advanced technology and automation, and investing in the skills our teams need for the future."
Nike's automation strategy is not only focused on distribution centers. The company has been deploying advanced AI capabilities across supply chain operations, including demand forecasting, real-time inventory management, and dynamic route optimization.
These systems leverage machine learning to analyze historical sales data, market trends, and external variables to forecast demand with precision and dynamically reroute shipments when disruptions occur. Fewer manual workers are needed when machines can optimize and execute supply chain decisions autonomously.
The distribution center layoff is Nike's third major workforce reduction in 14 months. In February 2024, Nike announced it would cut 2% of its total workforce, approximately 1,620 employees, as part of a $2 billion cost-reduction plan spanning three years. That wave primarily affected corporate staff and management layers, designed to eliminate bureaucratic complexity and accelerate decision-making.
In August 2025, Nike cut approximately 1% of its corporate workforce (roughly 800 employees) as part of its organizational realignment around the "Win Now" strategy. Combined with additional reductions in the technology division, these cuts established the foundation for Nike's operational restructuring.
The January 2026 distribution center layoffs complete the trilogy. Together, these three waves will eliminate approximately 3,200+ positions over 14 months, roughly 4% of Nike's global workforce of 77,800 employees (as of May 2025).
Hill's "Win Now" strategy is aimed at shifting their focus to sports performance and away from lifestyle franchises. When Hill took the helm, he told employees, "We lost our obsession with sport. Moving forward, we will lead with sport and put the athlete at the center of every decision."
This sports-focused reset has produced good results. Nike's running business grew by more than 20% in the most recent quarter (ended November 2025), marking the second consecutive period of comparable growth.
Automation enables this transition. Fewer, more skilled workers managing AI-augmented systems outperform larger teams managing manual processes. A team of 10 people working with AI optimization tools can manage the work that previously required 50 people doing manual sorting, routing, and inventory management. This is the real transformation Hill is trying to execute.
While Hill's automation strategy sounds good in theory, supply chain and technology leaders are raising critical warnings about execution risk. Supply chain expert Nikola Sretenovic reminded professionals of Nike's $400 million supply chain overhaul in 2000, when the company deployed SAP ERP and advanced demand planning software.
The result was catastrophic. A $100 million loss, warehouses overflowing with unwanted inventory, empty shelves where products should have been, and a stock collapse of nearly 20% in a single day.
His key insight was, "Technology doesn't replace planning. It magnifies it. If your process is weak, automation will multiply the weakness. If your process is strong, automation will scale the strength."
This historical warning is directly relevant to Hill's current strategy. Nike's 775 distribution center cuts assume the AI and automation technology will work flawlessly. But if data quality is poor, processes are misaligned, or integration is incomplete, the company could face severe supply chain disruptions, exactly what happened 26 years ago.
Leadership expert Paul Young raised another concern when Nike eliminated its Chief Technology Officer (CTO) and Chief Commercial Officer (CCO) roles in December 2025. His observation: "This shows what happens when new CEOs restructure around their priorities. The goal is removing management layers and refocusing on athletes."
Despite the operational improvements, Hill faces another challenge. China. Nike's sales in the region dropped 17% year-over-year to $1.4 billion, marking the sixth consecutive quarter of declining revenue. This sustained weakness forced Hill to acknowledge publicly, "With that said, it's clear that we need to reset our approach."
The financial case for these layoffs is simple. Nike's gross margins declined for the second consecutive quarter in December 2025, driven by poor sales in China, inventory management challenges, and efforts to reset its product mix. The company is targeting improved EBIT margins as a primary outcome of these operational changes.
Distribution automation reduces both fixed and variable costs while accelerating inventory turns. The strategy aligns with Hill's stated objective. "Support our path back to long-term, profitable growth."