Nike, the world's most recognized sportswear brand, has spent five years learning a lesson as old as commerce itself: that dominance, once taken for granted, tends to quietly slip away. A series of strategic choices made under former CEO John Donahoe — abandoning retail partners, starving innovation, and chasing a digital model ill-suited to the brand's identity — cost the company 75 percent of its share price and its place among America's most elite public companies. Now, under veteran executive Elliott Hill, Nike is attempting to remember what it once knew about itself, even as rivals like O
Nike's stumble: How strategic missteps cost the sportswear giant its dominance
Athletes want to be part of something being built, not something already built.
Mark
So Nike lost Mbappé—a player who'd been with them since childhood. How much does one athlete actually matter to a company this size?
Mimi
It matters more than the numbers suggest. Mbappé isn't just revenue; he's a signal. When a generational talent leaves and says he wants to be surrounded by innovators, that's a public statement about what he thinks Nike has become.
Luke
But we should be careful here. Mbappé's departure is real and symbolic, but Nike still has Rory McIlroy, Vinicius Junior, and others. The stock fell 8 percent on earnings, not on the Mbappé news specifically. The real damage was already done.
Mark
What was the actual strategic mistake? Was it the online-only pivot, or something else?
Mimi
It was the online pivot combined with abandoning product innovation. They thought they could become a digital retailer and cut R&D costs at the same time. That's like a restaurant deciding to only deliver food while also firing its chefs.
Luke
The source attributes this to John Donahoe's four-year tenure, but we should note that initial sales actually surged during his time—the pandemic helped. The real problem emerged when demand fell and they'd already committed to this model. That's a timing problem as much as a strategy problem.
Mark
They're now planning to cut $2.5 billion in costs by 2031. Is that enough to fix this?
Mimi
It's a start, but Elliott Hill himself said they have "more work to do." The company expects revenues to keep declining. You don't fix a brand crisis with cost-cutting alone—you fix it by making people want your products again.
Luke
And we don't know yet if the "Sport Offense" turnaround plan will actually work. Hill said it will show positive signs next year, but that's a forecast, not a fact. The analyst quoted in the piece thinks it will work, but one analyst's opinion isn't certainty.
Mark
Is Nike actually in danger, or is this just a rough patch for a giant company?
Mimi
It's somewhere in between. Nike will almost certainly remain the largest sportswear brand. But the question of whether it can be the dominant, culture-setting brand it once was—that's genuinely open now.
Luke
The source is clear on one thing: hundreds of billions have been wiped from market value, the stock fell 75 percent over five years, and they were kicked out of the S&P 100. Those are facts. Whether that's recoverable is still being written.
O Pulso
- Nike's stock has lost 75% of its value over five years, and the company was quietly removed from the S&P 100 — a symbolic fall from grace for a brand once synonymous with winning.
- The pivot to direct-to-consumer online sales gutted retail relationships and drained resources away from the product innovation that had always been Nike's competitive heartbeat.
- Competitors moved fast into the vacuum: On and Hoka claimed shelf space, Adidas signed Lamine Yamal, and Kylian Mbappé — a Nike athlete since childhood — walked away to join On, saying he wanted to be surrounded by 'innovators.'
- CEO Elliott Hill's 'Sport Offense' turnaround plan is showing early signs of life, but quarterly revenues of $11 billion still missed analyst expectations and the stock dropped another 8% on the news.
- Nike is planning $2.5 billion in cost cuts by 2031 and expects revenues to fall further this year — recovery, analysts warn, will be measured in years, not quarters.
Nike, the world's most recognized sportswear brand, has spent five years learning a lesson as old as commerce itself: that dominance, once taken for granted, tends to quietly slip away. A series of strategic choices made under former CEO John Donahoe — abandoning retail partners, starving innovation, and chasing a digital model ill-suited to the brand's identity — cost the company 75 percent of its share price and its place among America's most elite public companies. Now, under veteran executive Elliott Hill, Nike is attempting to remember what it once knew about itself, even as rivals like On and Adidas fill the space it left behind.
Nike, the world's largest sportswear brand, has spent five years watching a largely self-inflicted erosion of its market dominance. Its stock has fallen 75 percent, hundreds of billions in market value have vanished, and last month the company was removed from the S&P 100 — a symbolic demotion for a brand that built its identity on bold innovation.
The roots of the crisis trace back to former CEO John Donahoe, who steered Nike away from its retail partnerships and toward a direct-to-consumer digital model. The strategy initially benefited from pandemic-era online shopping, but when consumer spending softened — especially in China, where revenue has dropped 26 percent — Nike found itself overextended. Research and development spending was redirected toward digital operations, and the innovation pipeline that had defined the brand began to dry up. Limited-edition products were made widely available, killing the scarcity that had fueled desire. Shelf space once held exclusively by Nike was quietly claimed by faster, hungrier rivals like On and Hoka.
The human cost of that drift became vivid when Kylian Mbappé, a Nike athlete since the age of nine, ended his 20-year relationship with the brand to sign with On. He said his new partner would surround him with 'innovators who dream of the same things I do.' The departure raised a question Nike had never seriously had to face: whether it could still be the aspirational choice for the athletes who shape what millions of fans want to wear. Nike's history was built on exactly that formula — from the gamble on a rookie named Michael Jordan in the mid-1980s to generational partnerships with Tiger Woods, Serena Williams, and Cristiano Ronaldo. But as one marketing strategist observed, past victories no longer drive present sales.
Company veteran Elliott Hill was brought in two years ago to lead a turnaround called 'Sport Offense.' His latest results show cautious early progress, but quarterly revenues of $11 billion fell short of expectations, and the stock dropped more than 8 percent on the announcement. Nike expects revenues to decline by high-single digits in the coming year and plans to cut $2.5 billion in costs by 2031. Analysts believe the brand will eventually stabilize — its global popularity remains vast — but warn that innovation, once abandoned, cannot simply be switched back on. The door Nike left open has already been walked through, and closing it will take far longer than a sprint.
Nike, the world's largest sportswear brand, has spent the last five years watching its dominance erode in ways that were largely self-inflicted. The company's stock price has fallen 75 percent over that span, wiping hundreds of billions of dollars from its market value. Last month, it was removed from the S&P 100 index of America's largest blue-chip companies—a symbolic demotion for a firm that built itself on being the industry's boldest innovator.
The troubles began under John Donahoe, the former eBay executive who led Nike for four years and pushed the company toward a direct-to-consumer online sales model, abandoning the retail partnerships that had long been central to its distribution strategy. The pivot initially worked. Pandemic lockdowns drove online shopping, and sales surged. But when consumer spending weakened—particularly in crucial markets like China, where revenue has now declined 26 percent—Nike found itself overextended and out of step with what customers actually wanted. The company announced layoffs and cost cuts. More damaging still, it diverted research and development spending away from new product innovation and toward digital operations. As one industry analyst put it, Nike was trying to turn itself into eBay.
This abandonment of innovation proved catastrophic for a brand built on it. When Nike made limited-edition shoes more widely available, the scarcity that had driven demand evaporated. Shelf space in stores that once belonged exclusively to Nike was claimed by faster-moving competitors like On and Hoka. Young athletes and the fans who follow them began looking elsewhere. Last week, Kylian Mbappé—the Real Madrid striker who had been with Nike since he was nine years old—ended his 20-year association with the brand to join On, the Swiss rival. Lamine Yamal, a World Cup winner, also departed for Adidas. Mbappé said his new sponsor would surround him with "innovators who dream of the same things I do"—a pointed contrast to what he apparently saw in Nike's current direction.
The Mbappé loss stung particularly because it raised a question Nike had never seriously faced before: Can the brand remain the aspirational choice for elite athletes and the fans who idolize them? The company's history is built on exactly this formula. In the mid-1980s, Nike gambled its entire basketball budget on a rookie named Michael Jordan before he had even played in the NBA. The bet created the Air Jordan brand and transformed Nike from a running-shoe company into a global powerhouse. Decades later, partnerships with Tiger Woods, Serena Williams, and Cristiano Ronaldo cemented Nike's status as the brand of choice for generational talent. But as one marketing strategist noted, those victories belong to the past. What drives apparel sales today is current momentum and the sense that an athlete is part of something being built, not something already built.
Nike brought in Elliott Hill, a company veteran, two years ago to execute a turnaround plan called "Sport Offense." His latest financial results show early progress, but the pace is slow. The company reported quarterly revenues of $11 billion, below analyst expectations. Hill acknowledged the firm has "more work to do" on its sportswear line, its Jordan brand—which he said had been oversupplied and will now be scaled back—and in China. Nike expects revenues to decline by high-single digits in the year ahead and is planning to cut $2.5 billion in costs by 2031, some through job losses. When the earnings were announced, the stock fell more than 8 percent.
Industry analysts believe Nike will eventually stabilize. The brand remains enormously popular worldwide, and millions of young people still wear the Swoosh. But the question of whether it can reclaim the dominance it once held is more complicated. One veteran retail analyst suggested that when you shut down innovation, you cannot simply flip a switch and have it roar back to full capacity. The turnaround, he predicted, will show positive signs next year. But Nike's stumble has opened a door that competitors have already begun walking through, and closing it will take far longer than the sprint the company needs.
Citações Notáveis
The more broadly available those shoes became, the fewer people were interested.— Matt Powell, sports retail analyst
Athletes have egos and those egos want them to be a part of something big and that they're the ones that are helping drive that change, that growth.— Tim Derdenger, marketing and strategy academic
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