NIKE's Fresh Launches to Drive Recovery Amid Fading Iconic Franchises

NIKE's iconic franchises like Air Force 1, Dunk, and AJ1 are fading, leading to a 30% decline in classic footwear in Q4 of fiscal 2025. To recover, NIKE is focusing on fresh launches, sport-led innovation, and new franchises like Vomero 18 and women's basketball apparel. Wholesale partners are showing renewed confidence, but digital traffic remains pressured, and China's recovery is expected to take longer. Success depends on keeping launches relevant, scaling new products at speed, and rebuilding consumer excitement across performance and lifestyle categories.

NIKE Inc. (NKE) is at a crossroads, as some of its most iconic franchises, such as the Air Force 1, Dunk, and AJ1, are experiencing a decline in consumer demand. This has led to a significant 30% drop in classic footwear sales in the fourth quarter of fiscal 2025, forcing NIKE to accelerate markdowns and inventory cleanup [1]. The company is deliberately right-sizing these franchises to reset its brand positioning and focus on a healthier, more innovative product portfolio.

To fuel recovery, NIKE is heavily investing in fresh launches and sport-led innovation. The company's performance categories are showing encouraging signs, with products like the Vomero 18 already crossing $100 million in sales within 90 days, and A'ja Wilson's signature basketball line selling out in minutes [1]. NIKE is also expanding into women's basketball, training apparel, and global football with new kits and upgraded boot lines ahead of the World Cup.

Wholesale partners are showing renewed confidence, with holiday order books improving, and NIKE's direct-to-consumer channels becoming more premium-focused. However, digital traffic remains pressured, and China's recovery is expected to take longer [1]. Success will depend on NIKE's ability to keep its launches relevant, scale new products at speed, and rebuild consumer excitement across performance and lifestyle categories.

NIKE's competitors, such as adidas AG (ADDYY) and lululemon athletica inc. (LULU), are also facing similar challenges with their long-standing franchises. Adidas is leaning into innovation and partnerships, while lululemon is continuously expanding its product innovation engine [1]. NIKE's stock has gained 0.7% year-to-date against the industry's decline of 1.6%, and its forward price-to-earnings ratio is 40.37X compared to the industry's average of 30.25X [1].

Investment analysts are optimistic about NIKE's potential. Bernstein analyst Aneesha Sherman raised the price target on NIKE to $90.00, citing potential upside from the Jordan brand [3]. However, NIKE faces challenges such as inventory issues in Greater China and North America, and potential margin pressure due to new US-Vietnam trade agreements [3].

NIKE's strategic shift towards fresh launches and sport-led innovation is crucial for its long-term growth. The company's ability to execute this strategy will determine its success in the competitive global market.

References:
[1] https://www.nasdaq.com/articles/nikes-classic-franchises-fade-can-fresh-launches-drive-recovery
[2] https://in.fashionnetwork.com/news/Nike-regains-spotlight-at-foot-locker-for-first-time-in-years,1756871.html
[3] https://www.investing.com/news/analyst-ratings/bernstein-raises-nike-stock-price-target-to-90-on-jordan-brand-potential-93CH-4197521