For decades, Nike has reigned as the undisputed global leader in the sportswear industry, a brand built on iconic partnerships with generational athletic talent and a legacy of game-changing innovation. But in recent years, the Swoosh has stumbled badly, facing sliding sales, eroding market share, and growing competition from smaller, faster-rising rivals. Today, the once-disruptive brand finds itself fighting to cling to its market dominance via a slow-going turnaround strategy, even as high-profile departures of star athletes continue to test its resilience.
Nike’s latest quarterly financial results offer faint early signals that the turnaround plan led by veteran executive Elliott Hill, who was lured out of retirement two years ago to steady the ship, may be starting to gain traction. But progress is moving far slower than stakeholders hoped, and the company’s fragile recovery was recently hit by a major blow: Kylian Mbappé, one of the world’s biggest football stars, ended his 20-year association with Nike to join fast-growing Swiss competitor On. Mbappé’s exit has reignited urgent questions: can Nike retain its appeal not just to elite athletes, but to the legions of fans who idolize them?
To be clear, Nike remains a massive global brand with hundreds of millions of loyal customers. But years of missteps have erased hundreds of billions of dollars from its market capitalization, with its share price plummeting 75% over five years. Just last month, the company was removed from the S&P 100, the prominent index that tracks the largest blue-chip companies listed on U.S. stock exchanges, a symbolic and public acknowledgment of its shrinking status.
Industry analysts point to a string of self-inflicted strategic errors that created Nike’s current predicament. Matt Powell, a veteran sports retail analyst and industry adviser, notes that one of the company’s most consequential mistakes was cutting ties with traditional retail partners to shift almost exclusively to direct-to-consumer online sales. Nike also weakened the cachet of its popular limited-edition sneakers by expanding their availability, a move that backfired dramatically. “The more broadly available those shoes became, the fewer people were interested,” Powell explains.
Another key misstep was diverting research and development budget away from new product innovation to invest in digital operations. Powell says that the brand effectively paused its product innovation, prompting industry insiders to joke that Nike was trying to reinvent itself as an e-commerce platform rather than a sportswear innovator. That jab was directed at John Donahoe, the former eBay CEO who led Nike during this strategic pivot before handing the reins to Hill. Donahoe’s four-year tenure coincided almost exactly with Nike’s share price nosedive.
While Donahoe’s tenure initially saw sales surge, boosted by pandemic-era restrictions that drove a massive boom in online shopping, the post-pandemic era brought cost-of-living pressures that crushed consumer discretionary spending. Weakening demand in key overseas markets, most notably China, forced Nike to implement sweeping cost cuts and layoffs. The brand’s focus on digital transformation created an opening for newer trend-focused footwear brands to move in and take prime shelf space once held by Nike, with rivals like On and Hoka snapping up market share. For a company that built its entire identity on innovation, this shift has been a humbling wake-up call.
Nike’s golden era of innovation and athlete partnerships is the stuff of industry legend. In the 1980s, the then-small running shoe brand bet its entire basketball marketing budget on an untested rookie named Michael Jordan, a gamble that paid off beyond all expectations and turned Nike into the global powerhouse it is today. The iconic Air Jordan line, the banned-by-the-NBA red-and-black color scheme that Nike turned into a viral marketing stunt, cemented the brand’s reputation for bold risk-taking. In the decades that followed, Nike repeated that magic by partnering with generational greats including Tiger Woods, Serena Williams, and Cristiano Ronaldo, helping to build the brand’s image as the go-to for top athletes.
Today, most of those historic partnerships remain intact – except for Tiger Woods, who left Nike in 2024. Marketing strategy academic Tim Derdenger argues that those historic wins are no longer enough to drive modern apparel sales. “I’m not saying that what they did wasn’t great, but it was in the past. It’s not the future and it’s not the current and that is what drives apparel sales today,” he explains.
While Nike still boasts a roster of top current athletes, from golfer Rory McIlroy to footballer Vinicius Junior, it has recently lost two of its most high-profile young football talents: Mbappé, who had been with Nike since age nine, and World Cup winner Lamine Yamal, who left for Adidas. Both athletes cited a desire for a more central brand role as a key reason for their departures, with Mbappé saying On would surround him with “innovators who dream of the same things I do.” Derdenger notes that Mbappé’s move echoes Jordan’s decision to choose Nike over Adidas and Converse decades ago, when the young rookie sought a brand that would center him rather than tuck him into a deep roster of stars. “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,” Derdenger explains.
Despite the string of setbacks, analysts remain cautiously optimistic about Nike’s future. Powell argues that while Nike will never regain the unchallenged dominance it once held, the brand can still return to sustainable growth and profitability. “Will Nike be the gorilla they once were? I don’t think so. Can the brand come back to growth and profitability? Yes,” he says, adding that “when you shut down innovation, you don’t turn it back on and it goes right back to full speed.”
Powell predicts that Nike’s current turnaround plan, dubbed “Sport Offense”, will start to deliver visible positive results by next year. For now, though, Hill acknowledges the company still has “more work to do” across its core sportswear line, the Jordan Brand, and its operations in China. Nike’s most recent quarter posted $11 billion in revenue, which fell short of analyst expectations, and the company has projected that revenues will decline by a high single-digit percentage for the full financial year. It has also announced plans to cut $2.5 billion in costs by 2031, a move that will include some job losses. Last year, Nike launched a youth-focused spin-off of its iconic “Just Do It” slogan with the line “Why Do It?” Today, young consumers and the next generation of sporting stars may well be asking a different question: Why Nike?