Nike intends to lay off 775 employees in its distribution centers in the United States

Nike The company is laying off 775 employees as the company looks to boost its bottom line and accelerate its use of “automation,” CNBC has learned.

The layoffs, which are in addition to 1,000 job cuts at the company that it announced last summer, primarily affect distribution center roles in Tennessee and Mississippi, where the sneaker giant operates large warehouses, people familiar with the matter said.

In a statement to CNBC, Nike said the layoffs primarily affect its U.S. distribution operations and are designed to “reduce complexity, improve flexibility and build a more responsive, flexible, accountable and efficient operation.”

“We are taking steps to enhance and streamline our operations so we can move faster, operate with greater discipline, and better serve athletes and consumers,” Nike said in the statement. “We are improving our supply chain footprint, accelerating the use of advanced technology and automation, and investing in the skills our teams need for the future.”

It’s not clear how many total distribution jobs Nike has in the United States.

The company added that the cuts are part of Nike’s goal to return to “long-term profitable growth” and improve margins.

As the use of artificial intelligence and automation sweeps across US businesses, distribution center jobs are expected to be impacted. Last year, UPS announced plans to cut 48,000 jobs — partly due to more automation at its facilities. It’s unclear how exactly Nike plans to expand automation in its distribution centers and how much of a role it plays in the 775 job cuts.

The layoffs come as CEO Elliott Hill works to turn around Nike after years of sluggish sales and shrinking margins. These struggles came after former CEO John Donahue pursued a direct selling strategy that prioritized retail stores and websites over wholesale partners.

As part of that strategy, Nike’s distribution centers — and the number of employees inside those facilities — have ballooned, but they don’t have the scale to support those staffing levels, people familiar with the matter said.

Under Hill’s leadership, Nike has worked to attract wholesale partners, clean out old inventory and revitalize innovation. When reporting fiscal second-quarter earnings in December, Nike said its net income fell 32% as it grappled with tariffs, costs associated with its transformation and a slowdown in its key market of China.