By Jeff Manning

Nike Inc. implemented the second phase of its downsizing Wednesday, notifying hundreds of employees they were being let go.

The athletic footwear giant faces an increasingly difficult market environment and announced in June it would lay off about 2 percent of its workforce. That equates to about 1,400 employees.

The first cuts came in June -- most of them in the product development and technology side of the company. Many more, from operations, sales support and customer service and other units, got the bad news this week.

Phil Gold worked for the company for 15 years, most of them in IT roles. He was one of hundreds of technology workers laid off in June. He said veteran employees who commanded higher salaries felt the brunt of the layoffs.

“They definitely targeted tenured, experienced employees as a money-saving thing with very little regard for how the work is going to get done,” Gold said. “It wasn’t about performance.”

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Nike informed hundreds of employees they would be let go on Wednesday. It was part of a larger downsizing that will eliminate 1,400 positions. (Drew Angerer/Getty Images)

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High anxiety reigned inside the Nike hallways as employees got emails notifying them to report to a conference room on Tuesday or Wednesday. There, human resources officials made the notifications and told them what kind of severance package, if any, they could expect.

One veteran of more than 10 years told The Oregonian/OregonLive he received 25 weeks of severance pay. Like other newly unemployed workers, he didn’t want his name used for fear of losing his severance.

It's unclear how many of the 1,400 layoffs will be in Oregon. The company employs 74,000 worldwide, including 12,000 at its headquarters and neighboring business parks in Washington County. It's in the process of a billion-dollar expansion of its headquarters, launched long before it talked of cutbacks.

Nike is the largest company headquartered in Oregon. It had $34.3 billion in sales in fiscal 2017, up 5.8 percent from the prior year, and reported $4.2 billion in profits. Yet it’s becoming increasingly apparent Nike is no longer the unassailable giant of the industry. Adidas has enjoyed significant gains, much of it at Nike’s expense.

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Morgan Stanley Research

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Industry analyst Jay Sole, of Morgan Stanley, downgraded Nike’s stock Tuesday predicting that the company’s North American sales will decline 3 percent in its 2018 fiscal year.

It was a startling reversal for Sole, who in July had upgraded Nike’s stock and declared its product pipeline stuffed with innovative footwear and apparel. But in the intervening four weeks, Sole took a more downbeat outlook, saying “Nike has "lost" its core sneaker enthusiast customer to Adidas.”

He called Nike’s sales trends in North America “surprisingly weak,” adding that its prospects “have slowed much more than anticipated” since its fourth-quarter earnings call in July.

Analysts at Jeffries issued their own downgrade of Nike’s stock on Aug. 21, also citing Adidas’ gains in market share. "Adidas has been successful in leveraging the spark from its fashion retro footwear resurgence into other categories like running and athletic apparel," said analyst Randall Konik.

The weakness of sports product retailers adds to the company’s headaches. Finish Line Sports’ stock plummeted nearly 20 percent this week when it announced quarterly sales declined 3 percent.

Ironically, Nike is downsizing just as hundreds of construction company employees continue work on the company’s massive headquarters expansion, said to be costing the company $1 billion. The campus project was launched before the magnitude of Nike’s challenges became clear.

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Mary Altaffer

Nike CEO Mark Parker speaks during a news conference, Wednesday, March 16, 2016, in New York. (AP Photo/Mary Altaffer)

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Nike’s slump presents CEO Mark Parker with the biggest challenge of his tenure. In a July earnings call, he was full of comeback strategies. There’s the "Consumer Direct Offense," to get fewer, but more compelling, products to customers more quickly. There’s also Nike’s “Triple Double” strategy aimed at doubling the speed of product creation, doubling the speed with which it gets products to market and doubling the company’s number of direct consumer interactions.

Time will tell if the strategies work. But the company has determined the new strategy can be executed with fewer employees.

Some employees predict Nike is already planning additional cutbacks. Company spokesman Greg Rossiter said 1,400 remains the number.

“We previously announced the Consumer Direct Offense – a new company formation that allows us to serve the consumer faster and more personally, at scale,” he said. “This month, many of our global teams aligned to the Consumer Direct Offense, yet some parts of the organization will complete their transition in the coming weeks and months.”

Nike employees lamented the company’s downturn on social media. Some, like the anonymous poster below on TheLayoff.com, criticized Parker and other top management for the company's weakened competitive position. Others questioned the wisdom of Nike's manic hiring spree in recent years. The company has added about 30,000 workers since 2012.

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TheLayoff.com

Laid-off Nike employees flocked to TheLayoff.com and other social media sites Wednesday to commiserate and criticize management.

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-- Jeff Manning

503-294-7606, jmanning@oregonian.com