Nike, once a dominant force in sportswear, now faces challenges.
- The company announced plans to cut 1,600 jobs aiming to save £1.6bn.
- Shares dropped 20% in response to underwhelming fourth-quarter sales.
- Competition from brands like On and Hoka has impacted Nike’s market share.
- Nike plans to return to its roots with innovative strategies for recovery.
Nike has historically led the sportswear market with its innovative products and expansive global presence, but recent trends indicate a decline in its industry dominance. The company recently unveiled plans to cut 1,600 jobs, aiming to save £1.6bn over three years as a response to declining sales figures. In his announcement, CEO John Donahoe admitted accountability, stating, “We are not currently performing at our best.”
The gravity of the situation became apparent when Nike reduced its 2025 forecast and reported weaker-than-expected fourth-quarter sales, leading to a 20% plunge in share value. This marks the largest single-day drop in the company’s stock history. With increasing competition from both emerging and established brands, Nike struggles to keep up with evolving consumer preferences.
The sportswear giant’s challenges stem from a noted lack of innovation, particularly in diversifying its offerings. Moses Rashid, CEO of The Edit LDN, attributed this to the oversaturation of similar products, damaging their desirability. Similarly, former Nike executive Peter Harewood highlighted the company’s overreliance on its iconic Air Force 1 model, stating it failed to excite post-pandemic consumers seeking fresh designs.
Adding to its challenges, Nike’s 2017 strategic shift to focus more on direct-to-consumer sales has not fully paid off. Harewood noted that eliminating many wholesale partnerships limited the brand’s market reach. Nike confirmed a necessary adjustment to this strategy, planning to renew some wholesale connections to balance its sales approach.
The sportswear market’s competitive landscape has drastically evolved, with brands like Adidas, On, Hoka, and Lululemon seizing market share. Notably, Hoka and On’s rise was fuelled by innovative shoe designs appealing to younger consumers, significantly impacting Nike’s market standing.
Despite facing stiff competition, Nike is committed to revitalising its brand by fostering a multi-year innovation cycle. CEO Donahoe emphasised the company’s renewed focus on performance innovation and consumer engagement aimed at reclaiming its market leadership.
Nike’s future hinges on its ability to innovate and adapt to an evolving market landscape.
