Will Nike’s new broom reveal sweeping changes at sneakers giant?
The world’s biggest sportswear company needs to innovate and repair retail partner relationships after its direct-to-consumer strategy failed to deliver as hoped
Second-quarter results (19 December) from Nike [NKE:NYSE) will give Wall Street analysts a first opportunity to hear from new CEO Elliott Hill, tasked with turning round the world’s biggest sportswear company’s fortunes.
Shares in the struggling sneakers-to-soccer balls titan, which recently withdrew full year 2025 guidance amidst a major restructuring, have shed a third of their value in the past year and expectations are subdued heading into the quarterly print.
Alarmingly, key retail partner Foot Locker (FL:NYSE) recently downgraded (4 December) its full year 2025 sales and profit guidance on the back of weaker US sales, which offset a stronger European performance, echoing the same trends flagged by JD Sports Fashion (JD.) in its recent third-quarter update. Foot Locker blamed its quarterly sales and earnings miss on soft consumer demand and elevated promotions across the marketplace, with CEO Mary Dillon citing ‘some more softness out of Nike’ in an interview with CNBC.
Nike is paying the price for a direct-to-consumer strategy that saw it try to bypass JD Sports and other retailers and taking its eyes off the ball in terms of innovation, allowing running shoe rivals like Hoka, On and Asics to take market share. Former CEO John Donahoe wanted to bypass the retail middleman for part of Nike’s sales, but this direct-to-consumer strategy failed to deliver as hoped, so it will be interesting to see if there is a radical change in strategy under Hill.
Nike’s revenues fell 10% to $11.6 billion in the first quarter and the performance in North America and Greater China, where the sneaker giant’s sales have been flagging, will be in focus along with Nike’s inventory levels.
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