Nike’s Comeback: Why It Will Take Time
Nike, the world’s largest sportswear brand, is working hard to make a comeback after a tough year. A string of strategic mistakes led to the brand’s worst trading day ever last summer, causing a 20% drop in shares and a $28 billion dip in market capitalization.
But hope is on the horizon. Just last week, the company released its first earnings report under new CEO Elliott Hill, and experts think this could be the beginning of a much-needed recovery process.
Stacey Widlitz, president of SW Retail Advisors, believes that when Nike invests in innovation for their products, they will start seeing growth again. However, she cautions that it won’t happen overnight—it’s going to take some time and effort.
The trouble began in 2020 when Nike decided to reduce its partnerships with wholesalers like Foot Locker and Dick’s Sporting Goods in favor of boosting sales from its own stores. This move initially increased direct sales, but as Covid restrictions eased in 2021, revenue from direct channels stalled.
Not only did this hurt Nike’s sales, but it also opened the door for competitors like Hoka and On Running to snatch up market share, taking advantage of Nike’s absence in popular retail channels.
CEO John Donahoe admitted earlier this year that Nike had shifted too heavily towards digital, and now the company is dealing with a surplus of inventory as shoppers flock to other brands. In response, Nike plans to focus on innovation, revamp its marketing strategies, and clear out old merchandise through promotions.
Now, the spotlight is on new CEO Elliott Hill, a 32-year Nike veteran, to steer the company back on track. It’ll be interesting to see how the sportswear giant bounces back from its setbacks.
