The fashion industry is being hit with a swathe of layoffs, meaning thousands of Americans will soon find themselves out of work.
Fashion Fallout
Across the fashion industry, there’s a growing sense of unease. As the economy is struggling with inflation across all sectors and layoffs in factories and manufacturers, it was only a matter of time before other industries started getting hit.
Cutting Threads
That time was the end of last year – when over 4000 staff were made redundant after cuts at the following companies: Stitch Fix (558), Zulily (800), VF Corp. (500), Farfetch (400), Kayser-Roth (126), Hanesbrand (250), and Gap Inc. (1,800). That brought the total to 4,434 fashion job losses in the USA at the back end of 2023.
From Threads to Threats
What many believed to be a stable industry is now facing significant challenges as more layoffs begin to pour in from the fashion industry.
Layoffs Loom at Converse
One big company to announce layoffs was Nike, who announced at the weekend that as part of its streamlining process – in which the company hopes to save $2 billion over three years – Converse would be letting go of almost 750 employees from its Oregon headquarters.
Nike’s Nosedive
Nike is planning on letting go of 2% of employees across its 84,000-strong workforce – around 1600 jobs in total.
Sole Sorrow
Brands under the Nike umbrella include Converse, Jordans, Hurley, Umbro, and Cole Haan – and all are at possible risk. There have already been two rounds of layoffs, and more are coming within 2024.
John Donoahoe’s Layoff Lament
In a memo, Nike CEO John Donoahoe stated, “This is a painful reality and not one that I take lightly. We are not currently performing at our best, and I ultimately hold myself and my leadership team accountable.”
Nike’s Workforce Woes
He went on to explain the reasoning behind the move, “While interest in sport, health, wellness, and comfort has never been stronger, we are in a highly competitive industry where speed and end-to-end execution is critical to win. To compete, we must edit, shift, and divest less critical work to create greater focus and capacity for what matters most.”
Trimming the Workforce
Early reports indicate that Nike is planning on cutting roles in brand engineering, human resources, innovation, recruitment, and sourcing divisions, while roles in retail and warehouses aren’t expected to be affected.
Sneaker Sadness
Converse, for its part in Nike’s business plan, only accounts for 5% of their sales. And while they only account for a small portion of sales, a disappointing set of last quarter earnings have put them in the firing line.
Sales Slip
In the last quarter, sales fell more than the rest of Nike’s brand combined – by just under 20% – and Converse’s sales have been down by 13% overall in the last nine months.
Digital Disappointment
Nike is also struggling with digital sales, which were down 3% last quarter. This is the first time in almost a decade that the company has reported a fall in sales – an indication of a bigger problem within the industry.
Layoffs Leave Lingering Loss
Nike is not struggling alone. 2024 has seen layoffs hit other fashion brands, namely Express, Rent the Runway, and the recently relaunched Lord & Taylor.
Historic Highs
In fact, experts point to the last six months as being some of the worst in recent fashion industry history for layoffs.
Lord & Taylor’s Last Stand
Lord & Taylor, acquired by the Saadia Group in 2021, was relaunched as an online store with a $25 million loan.
Saadia Group’s Setback
Saadia defaulted on the loan and now must cease operations and give control of its remaining inventory to White Oak Commercial Finance.
Rent the Runway Reductions
Rent the Runway announced it will cut 10% of its corporate workforce – about 37 employees – in the second quarter of 2024. The company is aiming to save $11 to $13 million annually.
Express Eviction
Companies like Express have been feeling pressured by decreased revenues and increased costs.
Goodbye NYSE
Following layoffs and other cost-saving initiatives, the company eventually saw its EXPR stock delisted from the New York Stock Exchange in March.
Job Cuts on the Horizon
Other fashion companies planning layoffs this year include Vans, which announced just under 100 job cuts; Columbia Sportswear, which plans to reduce its workforce by 3-5%; and Levi’s, which has announced over 2,000 layoffs.
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The post – Fashion Industry Rocked by Widespread Layoffs Pointing to a Grim Outlook – first appeared on Liberty & Wealth.
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