- 3 hours ago
The Swoosh once seemed untouchable — so what went wrong? Join us as we break down how Nike lost its footing, from its bold but costly shift away from wholesale retail, to overexposed classics, rising rivals like Hoka and On, struggles in China, and the cultural controversies along the way. Can Elliott Hill's reset bring the brand back? Let us know in the comments!
Transcript
00:00Welcome to WatchMojo, and today we're exploring how Nike lost its stride, and what it'll take to get it back.
00:06Nike has announced about 1,400 more layoffs across its global operations.
00:12In 1964, runner Phil Knight and coach Bill Bowerman founded Blue Ribbon Sports, initially selling Japanese running shoes.
00:19The business became Nike in 1971, with Bowerman's experiments with a waffle iron helping develop its early running footwear.
00:27Nike then learned to turn performance into aspiration.
00:29Michael Jordan's 1984 signing connected basketball, celebrity, and streetwear.
00:34Just Do It, introduced in 1988, gave the brand an attitude beyond any particular shoe.
00:39People ask me how I keep my teeth from chattering in the wintertime.
00:45I leave them in my locker.
00:50Fashion wasn't a recent distraction from Nike's sporting roots.
00:53Combining sport and culture made the company dominant.
00:56Its success depended on giving people products they wanted, and reasons to want them.
01:01The retail network helped turn that desire into IRL purchases, putting Nike wherever customers were already shopping.
01:21Nike's increasing desire to own that relationship changed things.
01:24Wholesale retailers took a cut of sales and controlled part of the shopping experience.
01:29Nike's stores, website, and apps promised customer data, greater control, and potentially better margins.
01:35Selling directly could make an already powerful brand more profitable.
01:38So I've had a lot of people ask me, well John, you're a digital guy, what do you think?
01:42And I simply say this, I look at it through the eyes of the consumer, and consumers don't think about,
01:48think about when you shop.
01:49It's not, oh, I want to do this digitally or want to do it physically.
01:52We all want to get what we want, when we want it, how we want it.
01:55This shift began before John Donahoe became CEO in 2020.
02:00Under the former eBay chief, it ramped up.
02:02His technology background suited the ambition, that of building memberships and bringing customers into Nike's channels.
02:08But footwear isn't bought entirely on a screen.
02:10Imagine entering a running store planning to buy Nike.
02:13A salesperson brings out Hoka, Ahn, and Brooks.
02:16You compare cushioning, fit, and support, then leave with a brand you'd barely considered.
02:20That retailer has processed the sales, sure, but it's also helped determine which company gets it.
02:25Hey, Zach!
02:26No, that's Patrick.
02:29Post-run movie, cliffhanger, or happy ending?
02:37By pulling back from some wholesale relationships, Nike reduced its shelf presence.
02:42Retailers had space to fill in competitors ready to fill it.
02:45Nike was betting enough shoppers would follow it directly to outweigh those lost opportunities.
02:50If you are concerned about a consumer, and you're not sure about how long this tariff pressure,
02:54and then direct-to-consumer, I mean, down 9%, that's not great.
02:58I mean, it's a company that actually has had a bunch of iterations where they've tried to do this.
03:02You know, I know wholesale was up, but the direct-to-consumer I'm looking at was down 9% year
03:06over year.
03:07When demand cooled, that bet became harder to back.
03:10Nike had weakened relationships with businesses that could help sell its products,
03:14while alternatives were winning customers.
03:16Direct sales also carried costs.
03:18Stores, digital infrastructure, and online marketing.
03:20Better margins weren't a given.
03:22The wholesale retreat, in turn, amplified other weaknesses.
03:25Less exciting products became harder to sell through a retail network Nike had deliberately de-emphasized.
03:31It does appear, according to analysts, that Nike over-rotated toward the direct-to-consumer.
03:35And then when it came back time for Americans and folks around the world to go shopping again after COVID,
03:40Nike just didn't have the same kind of priority and placement on the shelves,
03:43and it didn't have those styles that were really resonating with consumers.
03:47Before we continue, what's earned a place in your sneaker rotation?
03:50Scan the QR code to join our WatchMojo pop culture livestream for more conversation.
03:55Nike has fallen behind, and I think that's illustrative of the fact that they've had a bit of a lull
04:01when it comes to innovation.
04:03If you don't have that, then the kind of scale that Nike has achieved isn't worth much if you don't
04:08have the growth.
04:08Nike was leaning heavily on Air Force Ones, Dunks, and Jordans.
04:11Those were valuable franchises, but endless colorways couldn't keep recreating the excitement of a coveted release.
04:17Greater availability weakened scarcity.
04:19Excess inventory needed discounts, and repeated promotions gave shoppers a reason to wait rather than pay full price.
04:25This wasn't just sneaker psychology.
04:27By May 2025, Nike was planning price increases on selected products,
04:31even as discounting and aging inventory were already squeezing its margins.
04:35Nike planning to raise prices now on a wide range of footwear, apparel, and equipment.
04:39As soon as this week, a source telling CNBC that prices on apparel and equipment for adults will increase between
04:45$2 and $10.
04:46The hikes cover a large part of Nike's products assortment, but many items will remain the same price.
04:52Meanwhile, rivals offered compelling alternatives in running.
04:55The category Nike was built on.
04:56Hoka paired distinctive silhouettes with generous cushioning.
04:59On combined performance with recognizable design, their shoes were desirable without carrying a swoosh.
05:04What do you think is the biggest driver of the company's growth?
05:09I think the biggest driver is the product.
05:12It's the innovation.
05:13It's that field that's running on clouds.
05:16And it's not just in footwear, but now we have brought that to apparel as well.
05:21So we're really growing toe to head.
05:23Hoka's sales rose nearly 16% in fiscal 2026.
05:28Ons grew 30% in 2025.
05:30Those figures don't establish how much business came from Nike, but they do show its competitors gaining momentum.
05:35Nike, meanwhile, hadn't stopped innovating.
05:38Its carbon-plated running shoes demonstrated real technological progress.
05:41The challenge was consistently delivering exciting products while managing classics that have become overexposed.
05:46That challenge grew harder as rivals gained room on retailer shelves.
05:50The trajectory of them getting to a billion dollars versus Nike, they did it in one-eighth the time of
05:56Nike.
05:56So Nike's better wake up and realize that On is a performance shoe that has also taken on a fashion
06:02element.
06:02China complicated the comeback.
06:04Nike faced a difficult spending environment and increasingly credible domestic competitors, including Anta and Li Ning.
06:11Stronger interest in Chinese brands also challenged the assumption that Western branding would keep winning customers.
06:16I lived up to the free agent tag for sure.
06:18I tried literally everything and there was a reason that Li Ning stood tall at the end because the product
06:23kind of reigned supreme.
06:25And so Dwayne Wade, Jimmy Butler, two guys that have been with the brand for a very long time that
06:30kind of set the stage.
06:31So I'm excited.
06:31We're five months in.
06:33I just got back from a tour the last week.
06:37So I'm excited about the opportunity.
06:38Nike's greater China footwear revenue fell 13% in fiscal 2026, while regional earnings before interest and taxes dropped 20%.
06:47Elsewhere in the portfolio, Nike-owned Converse saw annual revenue fall 31%, demonstrating the weakness extended beyond one Nike sneaker
06:55franchise.
06:56I think, you know, Nike has really relied on Converse for the Chuck Taylor, but has struggled to diversify outside
07:02of that.
07:03So they're trying to make a basketball push, but, you know, we're not seeing a lot of progress in that
07:07area.
07:08Nike's cultural positioning also drew criticism online.
07:11Its Colin Kaepernick campaign prompted boycott calls.
07:14Plus size and parasport mannequins at its London flagship in 2019 won praise for inclusion and backlash over body positivity.
07:21In 2023, transgender influencer Dylan Mulvaney promoted Nike leggings and a sports bra and sponsored posts, triggering more boycott calls.
07:28Its diversity policies also faced federal scrutiny.
07:31According to the filing, Nike set diversity targets and tied executive bonuses to hitting those numbers.
07:37The EEOC says that crossed the line into illegal discrimination and says that Nike engaged in what they call disparate
07:44treatment against white employees in hiring, promotions and even layoffs.
07:49Those controversies may have alienated some customers, but they don't establish the scale of any sales impact.
07:55It can be tempting to make politics the main explanation, but that overlooks the distribution, product and execution decisions we
08:01can tangibly work with and analyze.
08:03Now, Nike told us in a statement that this EEOC subpoena, quote, feels like a surprising and unusual escalation.
08:10They say that they've been cooperating, providing thousands of pages of documents.
08:15Long-time Nike executive Elliot Hill became CEO in 2024, emphasizing product innovation and stronger retail relationships.
08:23John Donahoe, Hill's predecessor, emphasized digital transformation and direct customer relationships.
08:28Hill's Reset put renewed emphasis on sporting products in the wider retail marketplace.
08:32With partners helping reach shoppers, Nike can't automatically pull into its own channels.
08:37What's happening at Nike?
08:38I think it's a reflection on where we are in this moment in time.
08:41We are in a cleanup mode and we're reset mode.
08:44We're setting this business up for the next 40 years.
08:46In fiscal 2026, wholesale revenue rose 6%, while Nike Direct fell 6%.
08:51In the fourth quarter, wholesale rose 4% and Direct declined 7%.
08:56As such, getting shelf space back takes more than reopening an account.
09:00Retailers now have profitable alternatives, and Nike needs products that justify giving it more room.
09:04That isn't to say that there aren't encouraging releases.
09:07The Vomero 18 reached about $100 million in sales in its first three months.
09:11But the repair has been costly.
09:13Nike announced approximately 1,400 global operations job cuts in April 2026, mostly affecting technology roles.
09:20Nike says it's trying to build a model that'll deliver, quote, long-term profitable growth.
09:25It's unclear how many local workers could be impacted.
09:28This follows several rounds of layoffs in recent years, with the latest being almost 800 employees getting pink slips back
09:36in January.
09:37Spectacular fourth quarter profit growth didn't establish a recovery either.
09:40An expected tariff refund substantially boosted earnings, which wasn't evidence of shoppers suddenly returning.
09:46According to the lawsuit filed in federal court in Portland, Nike is asking the federal government to pay it back
09:51for the roughly $1 billion it lost to costs related to President Trump's tariffs.
09:56But people filing the lawsuit say Nike should not be allowed to keep that refund money.
10:01They say Nike passed those costs on to shoppers by jacking up prices by as much as $10 per item.
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10:19Nike's $46.4 billion in fiscal 2026 revenue was roughly flat against the previous year.
10:26Its sales hadn't collapsed 80%.
10:28Nike's fiscal 2025 net income fell 44%.
10:31That weakened the earnings supporting its valuation, while doubts about future growth added pressure to investor expectations.
10:38A share price reflects expected future profits and what investors are willing to pay for them.
10:42Weaker earnings can hurt the stock.
10:44Investors paying a lower multiple can compound the damage.
10:46That's called valuation compression.
10:48And it helps explain why a stock can fall far more dramatically than sales.
10:52After 18 years, Nike is being pushed out of the S&P 100.
10:56The sportswear giant has lost roughly $200 billion in market value.
11:02At yesterday's closing bell, Nike stock was valued at $37.35, which is down from more than $160 five years
11:11ago.
11:12Nike's September 2026 removal from the S&P 100 similarly reflected diminished market standing, not the cause of the operating
11:19problems.
11:20The company still has extraordinary recognition, athletes, and reach.
11:23No one's denying that.
11:24But its comeback depends on earning the next purchase.
11:27A shoe runner's prefer.
11:29A release collector's want.
11:30And products retailers can sell profitably.
11:33Nike once made the future of sport feel like something you could wear.
11:35Now it has to make that promise believable again.
11:45Air Jordan.
11:46It's all in the imagination.
11:49Do you think Nike can just do it and regain its momentum?
11:52Be sure to let us know in the comments.
11:53Do you think Nike would be Male for Serie FASHION?
11:58In the comments.
11:58Amen.