After a challenging year, Nike, the biggest sportswear company in the world, is trying to get back on track.
According to analysts, a string of strategic blunders spanning years caused the company to have its worst trading day ever during the summer, when shares dropped 20%, wiping out $28 billion from Nike’s market capitalization.
Analysts believe that the company’s recent first earnings report under new CEO Elliott Hill may be the start of a lengthy turnaround for the brand.
Nike can revive growth when they innovate their products, but it will be a painful, long-term process, according to Stacey Widlitz, president of SW Retail Advisors.
In an attempt to increase sales from its own platforms and stores, the retailer started cutting off relationships with wholesale partners, such as Foot Locker and Dick’s Sporting Goods, in 2020. This was the beginning of the company’s difficulties. Nike’s revenue from direct channels started to stagnate in 2021 after the Covid lockdowns ended, despite the plan’s initial increase in direct sales.
Analysts claim that newer competitors like Hoka and On Running were able to increase their market share due to Nike’s lack of product innovation and wholesaler absence.
Nike Is Facing New Competitions
In April, then-CEO John Donahoe revealed that the company had over rotated to digital and was working to correct it.
Due to sales slowdowns and consumers switching to newer styles from other brands, Nike is currently facing an excess of inventory. Nike stated in its most recent financial report that it will prioritize innovation, sports-focused marketing, and the elimination of outdated inventory through sales.
Hill, a 32-year Nike veteran and the company’s new CEO, is now under intense pressure to turn around the sportswear behemoth.
