Nike loses ground after strategic missteps and star departures

Nike is losing some of its former dominance in sportswear after strategic missteps, weaker demand and the departure of prominent athletes.

Over the past five years, the company’s market capitalisation has fallen by hundreds of billions of dollars, while its share price has dropped 75%. Last month, Nike was removed from the S&P 100 index.

The shift to direct online sales

Retail analyst Matt Powell says Nike made mistakes by reducing ties with retail chains in favour of selling directly to consumers online. He also argues that limited-edition footwear became too widely available, weakening its appeal.

Former Nike chief executive John Donahoe, previously head of eBay, placed greater emphasis on digital operations. Online sales initially surged during pandemic restrictions, but the later cost-of-living squeeze reduced consumer spending, while demand in China and other key overseas markets weakened.

Nike announced cost reductions and staff layoffs during Donahoe’s tenure. At the same time, faster-growing brands including On and Hoka began taking up shelf space once held by Nike.

Losing football’s biggest stars

Nike’s recovery was complicated by Kylian Mbappé’s move to Swiss rival On after 20 years with the brand. The company also lost World Cup winner Lamine Yamal, who moved to Adidas.

Nike still works with major athletes including Rory McIlroy and Vinícius Júnior. However, Tiger Woods ended his partnership with the brand in 2024.

Financial pressure and recovery plan

Nike reported quarterly revenue of $11 billion, below analysts’ expectations. Revenue in China fell 26%, while global sales of the Jordan brand also declined.

Chief executive Elliott Hill, who returned from retirement two years ago, said the company still had work to do on sportswear, Jordan and the Chinese market. Nike also plans to reduce the volume and frequency of Jordan retro releases because, Hill said, the market had become oversaturated with them.

Powell believes Nike’s Sport Offense recovery plan could begin producing positive results next year. He does not expect Nike to become the same giant it once was, but says the brand can return to growth and profitability.