June 2024 was one of the worst months in Nike’s (then) 60-year history. Shares plummeted to the point that the sports giant, more than a fifth of its market value, almost all of a sudden. Investors sold thirteen million shares in a matter of weeks.
Sales had been reducing little by little since 2018 but, as analysts commented then, the problem came from further afield: Nike had been losing its cultural importance in the minds of consumers for almost a decade. In this year and a half after the fall, the Oregon megacompany has changed its CEO and has restructured its business model. But things have not gone much better: this past Friday it announced to its shareholders 12.4 billion, 1% more than the previous quarter, but far from enough to maintain their confidence. Its net profit has fallen 30% compared to the previous year, that is, after production and logistics costs the company has earned just over 750 million. “Nike is halfway to the comeback,” its CEO, Eliot Hill, declared on Thursday after presenting the results. A comeback that aims to correct in record time a chain of errors committed in the last five years and that have turned Nike into a kind of secondary actor on the board of sports brands.
Know (or not) who buys from you
“There is an almost official story that has been repeated ad nauseam and in which there is a declared villain: John Donahoe,” explains , also known as Sz9, a journalist specializing in sneakers, sports and fashion. Donahoe took up his position in January 2020 after working at eBay and Paypal. He was an outsider, something unusual in the company: “Nike has a very powerful, entrepreneurial culture. After the founder, Phil Knight, the first external CEO came from a cleaning products company. And he lasted two years, leaving the position due to strategic differences with Knight. The next CEO was a Nike veteran, who had been with the company since 1979. They did not feel like trying more with outsiders,” continues Marina.
When Donahoe joined, he had a clear mission: eliminate sales in stores and multi-brand platforms and sell directly to the consumer through his channels, although the withdrawal of points of sale had already occurred before: “In 2015 he closed the door on us. He implemented what he called the key cities (key cities) and left the rest behind. What you found in Barcelona you couldn’t find, for example, in the rest of Spain. So they lost the day-to-day reality, the pulse of the store, which is where these types of products are bought,” explain Teresa Escribano and Gorka Bilbao, owners of , one of the most pioneering sneaker stores in Spain. In 2019, in that attempt to control the narrative and the product, Nike left Amazon. .
While they narrowed their distribution, they increased their production of best-selling models. Five years ago, in the midst of a fever for collaborations with artists and drops limited edition, that is, when the boom of the exclusive shoe reached its maximum levels, the company decided to bet everything on its classics. “It changed the existing segmentation, related to sports, to one based on gender, and focused on the references that were sold to eliminate those that did not work. Air Jordan, Air Force 1 and Dunk have worked very well, but once they were sold out, there was nothing new,” explains Marina. In the first half of 2024, Nike sales on StockX, the website par excellence for reselling exclusive sneakers, fell 21% compared to the previous year. Those of Asics, for example, grew by 600%. Between 2022 and 2023, according to them, they launched no less than 700 different Jordan references. And the problem with the stock began, because they did not sell them: “Nike began to raise the product so much that everything became a raffle (a kind of digital raffle to achieve a limited edition novelty) and in the end almost all of that ended up in outlets with discounts,” explain those responsible for Edonora.
Neither fashion nor sport
When the numbers amply demonstrated that its strategy to grow even more (that is, to exceed 60 billion euros per year) was not only not working, but was reducing the company’s market volume, Nike also found itself with a very different panorama than usual: it continued to dominate the sneaker market but, during this failed attempt to distance itself from Adidas (a story that has been repeating itself for more than half a century), several new brands had been born that promised either technical innovation or either a design much more in line with the times, or both. On the one hand, and by leaving aside marketing and sports-oriented news, the public went to cheaper brands that fulfilled the same function. “With a market of 51 billion, Nike’s message had been diluted, sport is no longer important and competitors become generalist fashion brands that do it better and faster,” says Marina. “And in its own field, sports, brands emerge that occupy the space that Nike once occupied, as a rebel brand. They also occupy its physical space because it had already left aside stores that filled its warehouses with other brands,” he adds.
“Now every three months there are new technical brands,” they explain from Edonora. “And the thing is that people gave value to Nike products, they have not belonged to a specific field like the world of skating or basketball, they have been entering those worlds through people and of course, the same thing is no longer the case, because Nike has never been a leader in technical innovation, and if you do not have that and you do not have the cultural value, it is impossible to always be at the top, especially now with so much specialized competition,” they say.
They have also lost the pulse of fashion. While Nike reduced net profit in this last quarter, the sneaker brand running which is also successful on the street (and has a line of products with Loewe), tripled its total to 152 million euros, with sales of more than 850. On StockX, the winning brands (that is, those that have increased their value the most in resale) are Asics and Salomon. And in recent years, Adidas has managed to resurrect itself to be one of the most searched on Google Trends. “Apart from sneaker fans and athletes, who buy according to other parameters, I think that on the street brands like On, Asic, Under Armor and Lululemon have taken a good part of their market share and have known how to reposition themselves in a much better way within the fashion and lifestyle sector,” says Josu Aboitiz, director of international communication for fashion brands, “and the fact that they have changed CEOs, I don’t know if it has helped.”
New leader, new rules
In October 2024, Nike dismissed Donahoe and appointed Elliot Hill, one of those managers who has been with the company all his life, as CEO. Literally, because he joined Nike as an intern in 1988. “The story is perfect, and in the United States they really like the rhetoric of someone who recovers from the blow and comes back (although Nike has never stopped being a leader in the sector). Hill promises to return the brand to the place it was, with sport and rebellion in the foreground. Although I have my doubts that a 51 billion dollar brand can respond to the stimuli of the 90s,” says Kike Marina, who believes that the bad news Decisions in recent years have not been Donahoe’s fault, but that story, the one about the scapegoat, also sells sneakers. “I have my doubts about this official story. First, Donahoe was an outsider, but since 2013 he was part of Nike’s steering committee. Second, many of the strategies attributed to him had already begun to be developed under the previous CEO, Mark Parker. He was fired for doing what was expected of him.”
In any case, in addition to restructuring the management team and cutting 3% of jobs, Hill has been implementing a strategy for a year that they have named. It is about focusing its efforts on three countries (the United States, China and the United Kingdom, places where sales have suffered resounding falls due to tariffs and the slowdown in consumption) and on five areas of activity (running, basketball, soccer, training and urban footwear). Thus, they once again prioritize sport, sport and its rhetoric, as well as sales on platforms and multi-brand stores. But are they on time?
In recent years Nike has lost its star ambassadors: Tiger Woods, Roger Federer and Simone Biles, among others. They have all gone to smaller brands that are more aligned with values that Nike has been diluting in its brand story. At the Paris Olympic Games the brand was back with its controversial campaigns, which usually bring benefits in the medium term, but this time the spot (winning is not for everyone) that talked about the unhealthy obsession with victory, did not have the expected visibility. They have a new opportunity to regain relevance in the Winter Olympic Games and, as far as fashion is concerned, they have had lukewarm success with the collaboration they have launched with Jacquemus and they are betting everything on one card: , a line that was released last September and that massively distributes Kim Kardashian’s successful shapewear, this time designed for training (or the street). “They want it to be the counterpoint to Yeezy, that is, Ye’s line with Adidas, which built the brand for years in the fashion sector,” says Aboitiz. “The problem is that the cycles are shortening. Before, the sneakers from twenty years ago returned and now the ones from ten, or five years ago return, in addition to those from twenty years ago. And you have to know what to offer and when to offer it, but without going overboard, because on the street you see only two colors of the same model but then twenty colors appear,” they say in Edonora.
The problem, furthermore, is that of any fashion brand with a stratospheric turnover. The same thing happens to Nike as to the big luxury brands: they are suffering a drop in sales in the last two years because they have tried to grow more when it was almost impossible and they have failed along the way, not only economically, but also culturally. “In 1993 Nike had a turnover of just under 4 billion dollars. In 2003 it was 10.7, in 2013 25 and in 2023 51. In the 90s, it could afford to take risks, in 2023 it could not,” says Kike Marina. Nike, like luxury, is not in crisis because it has stopped selling, but because trying to sell more it has stopped meaning something to its audience, and is now moving in a no man’s land that especially penalizes companies that want to cover everything. In a market saturated with options, even the biggest brands can become irrelevant if they forget why they started to matter.
