Nike, the world's largest sportswear brand, which takes its name from the ancient Greek goddess of victory, has recently been facing financial difficulties, recording sales declines and customer loss compared to its competitors.
The Nike faces difficulties, but is not defeated
The corporation, which once revolutionized the sector, is now part of the group of dominant market companies and is engaged in an extensive restructuring plan to preserve its leadership position.
The most recent financial indicators show that the restructuring strategy, led by Elliott Hill, who returned to leadership after two years of retirement, is showing positive results, although the progress is more gradual than accelerated.
However, the recovery was significantly affected by the departure of football player Kylian Mbappé, who ended his twenty-year partnership with the brand last week to join Swiss competitor On, which shows accelerated growth.
The departure of the Real Madrid forward raises doubts about Nike's ability to maintain its relevance not only among elite athletes but also among the fans who admire them.
Although Nike remains a massive and popular brand worldwide, past mistakes have resulted in market value losses in the hundreds of billions of dollars, causing its stock price to fall by 75% in five years.
Last month, Nike was removed from the S&P 100 index of the United States stock exchange, which groups the country's leading companies.
Matt Powell, a consultant and experienced analyst in the sports retail sector, points out that Nike made 'several strategic errors' that are difficult to reverse. Among them are the breaking of agreements with retailers to focus exclusively on direct-to-consumer online sales and the greater offering of limited edition items.
According to Powell, 'the more accessible these shoes became, the less interested people were.'
Other failures attributed to the company itself include investing research and development funds in digital operations, instead of new product development.
'They really suffocated innovation in their products. Someone jokingly said they were trying to turn Nike into eBay,' commented Powell, referring to John Donahoe, former eBay CEO, responsible for Nike's transition to direct-to-consumer sales before Hill's arrival.
Donahoe's four years at Nike coincided with the sharp devaluation of the company's shares. During his administration, sales initially increased, driven by pandemic restrictions that fostered e-commerce, but subsequent inflationary pressures limited consumer spending.
With decreasing demand in crucial international markets, such as China, Nike implemented cost cuts and layoffs. Its excessive concentration on the digital environment allowed new footwear brands, attentive to trends, to gain ground, replacing Nike on shelves with names like On and Hoka.
This scenario served as a warning for a company whose identity was built on innovation. Nike consolidated its strength by signing an agreement with Michael Jordan in the mid-1980s, when it was not a basketball powerhouse and was primarily known for running shoes.
The decision to invest the entire basketball budget in Jordan, even before he competed in the NBA, transformed Nike into the entity it is today, creating the Air Jordan line. Although the red and black colors violated NBA rules, Nike used this as a marketing tactic and covered the fines.
In the following years, Nike established partnerships with prominent figures from generations such as Tiger Woods, Serena Williams, and Cristiano Ronaldo, who displayed the Swoosh in their careers in golf, tennis, and soccer.
Despite maintaining ties with Jordan, Williams, and Ronaldo, Woods ended his association in 2024. Tim Derdenger, a marketing and strategy academic, observed that 'I am not saying what they did wasn't great, but that is in the past. It is not the future, nor the present, and that is what drives apparel sales today.'
Currently, Nike's catalogs still feature top athletes, such as Rory McIlroy and Vinicius Junior. However, the brand lost its biggest football star, Mbappé, who had been linked to Nike since he was nine years old, as well as World Cup winner Lamine Yamal.
Yamal mentioned that his transfer to Adidas gave him the opportunity to shine in a team full of Nike stars, while Mbappé stated that at On he would be 'surrounded by innovators who dream the same things as me.'
Derdenger speculates that Mbappé's move echoes Jordan's choice decades ago, when he opted for Nike over Converse or Adidas, seeking to associate with a single brand. He argues that 'athletes have egos, and those egos want them to be part of something big and for them to be helping drive this change, this growth.'
Hill, Nike's leader, acknowledged the 'great moments' the brand had with Mbappé over two decades and wished him success in the new phase, stating that the company still has an 'excellent group of athletes.'
Even though there is pessimism, Powell assesses that Nike will continue to be the leader, as millions of people globally, including young people, remain loyal to the brand, but its mistakes compromised its hegemony.
When asked about returning to former glory, Powell replied: 'Will Nike become the giant it once was again? I don't think so. Can the brand grow and be profitable again? Yes,' emphasizing that 'when you stop innovation, you don't restart it, and it doesn't immediately work at full speed.'
Powell predicts that Nike's recovery plan, called 'Sport Offense', will start showing positive signs next year.
Hill admitted that Nike still has 'a lot of work to do' regarding the sportswear line, the Jordan brand, and the Chinese market, after the release of quarterly revenues of US$11 billion (R$8.3 billion), a figure lower than expected by analysts.
Specifically, the company pointed to 'difficulties' in China, where revenue fell by 26%.
Jordan brand sales also declined globally. Hill reported that the company was 'over-supplying' the iconic retro sneaker and plans to reduce the volume and frequency of releases for this line.
Nike projected a 'high single-digit' revenue reduction for the next fiscal year and plans to save US$2.5 billion by 2031, part of which results in layoffs.
Dave Denton, Nike's CFO, stated that 'our results are below both our expectations and our potential, and we are focused on closing that gap.'
After the announcement of the results, the company's shares fell by more than 8% in after-hours trading in New York.
Last year, the company launched a campaign derived from its slogan 'Just Do It', aimed at younger generations, using the phrase 'Why Do It?' raising the question of why young people prefer Nike.