Weekend Briefing: Layoffs and bankruptcies continue to plague the fashion industry

Nike announced last week that layoffs were hitting Converse, one of its subsidiary brands.

The layoffs are part of Nike’s ongoing $2 billion cost saving plan announced in December that will see it lay off about 2% of its 84,000 employees across its brands, equating to around 1,600 jobs. There have already been two rounds of layoffs across Nike and more will come throughout the rest of this fiscal year.

While Nike has seen sales growth slowing and warned investors that its sales will fall by single digits through 2025, Converse has been hit harder than the rest of the company.

Converse is already a small portion of Nike’s business, only accounting for about 5% of sales. But last quarter’s earnings, reported in March, showed that Converse’s sales fell more than the rest of the company’s, declining by about 19%. That decline was primarily felt in North America and Europe. Over the last nine months, Converse sales fell 13%.

Nike’s troubles aren’t confined just to Converse, however. Its overall digital sales last quarter were down 3%. It marked the first time the company’s online sales had fallen in nearly a decade, signaling a deeper problem for the athletic megabrand. Its attempts to balance between wholesale and DTC haven’t quite paid off, which our colleagues at Modern Retail owed to bad timing.

Nike isn’t the only brand struggling with cost cutting. Since the beginning of 2024, layoffs have hit brands including Express, Rent the Runway and the recently relaunched Lord & Taylor.

Lord & Taylor has had a particularly dramatic flameout thanks to its new parent company, Saadia Group, which acquired the IP of the retailer in 2021. With a $25 million loan from White Oak Commercial Finance, Saadia Group relaunched the defunct Lord & Taylor as an e-commerce business. Saadia reportedly defaulted on the loan, and it has been ordered to halt all operations and cede control of its remaining inventory to White Oak.

Companies collapse all the time, but the last six months have seemed particularly difficult for fashion brands. In addition to Lord & Taylor’s shutdown and the aforementioned widespread layoffs, companies including Farfetch, Express and potentially Allbirds have delisted from the stock exchange or declared bankruptcy. As Ally Bank’s senior director of external communications, Peter Gilchrist, said last week when the company laid off 5% of its workforce, the macroenvironment for businesses across industries right now is “forcing difficult choices.”