Key facts
- Nike's stock market value has fallen by hundreds of billions of dollars.
- Nike's share price has tumbled by 75% over five years.
- Nike was ejected from the S&P 100 stock market index last month.
- Nike's quarterly revenues were $11 billion, undershooting analyst expectations.
- Nike expects revenues to decline by high-single digits in the financial year ahead.
- Nike plans to make savings of $2.5 billion by 2031.
Nike, once a dominant force in the sportswear industry, is grappling with a significant loss of market share and customer interest. The company, named after the Greek goddess of victory, has seen its stock market value plummet by hundreds of billions of dollars, with its share price falling 75% over the past five years, leading to its recent ejection from the S&P 100 index.
Company veteran Elliott Hill, coaxed out of retirement two years ago, is leading a turnaround strategy. While recent financial results show some signs of progress, the pace of recovery is slow. Nike's efforts have been further hampered by the departure of high-profile athletes, including football star Kylian Mbappé, who ended a 20-year partnership to join rival On.
Analysts point to several strategic missteps by Nike. Matt Powell, a sports retail industry advisor, suggests that cutting ties with retailers to focus solely on direct-to-consumer sales and making limited edition items more widely available have alienated customers. He also noted a shift in research and development spending from new products to digital operations, a strategy associated with former eBay boss John Donahoe, who previously led Nike's online pivot. This digital focus, while initially boosting sales during pandemic restrictions, has allowed newer, trend-focused brands like On and Hoka to gain ground.
Historically, Nike built its success on bold partnerships, such as its gamble on Michael Jordan before his NBA debut, which led to the creation of the iconic Air Jordan brand. Subsequent collaborations with stars like Tiger Woods, Serena Williams, and Cristiano Ronaldo cemented its status. However, marketing and strategy academic Tim Derdenger suggests that past successes are not driving current apparel sales, and athletes like Mbappé are seeking brands that align with their ambition to be synonymous with growth and innovation, as seen in his move to On.