After a challenging 2024 that saw Nike’s stock decline by 32 percent, the company enters 2025 with a significant opportunity to regain its footing. Once the dominant force in athletic footwear and apparel, Nike now finds itself as an underdog, working to reclaim its position amidst rising competition from brands like On Holdings' On and Deckers' Hoka.
Under the leadership of its returning CEO, Elliott Hill, Nike aims to reset its strategy by leaning on its traditional strengths of innovation, athlete-centric design, and retail collaboration.
The Challenges of 2024
Nike’s previous strategy, which prioritized direct-to-consumer (DTC) sales and relied heavily on its flagship products—Air Force 1, Dunks, and Air Jordans—left the company vulnerable.
This approach reduced its presence in retail stores, allowing competitors to gain shelf space. The lack of fresh product innovation compounded the issue, leading to inventory buildup and promotional sales, which eroded margins.
Nike’s guidance for fiscal Q3 2025 reflects the ongoing struggles, with expected revenue declines in the low double digits year-over-year and a projected gross margin contraction of 300-350 basis points. Clearing old, marked-down inventory remains a key challenge, and the company has significant work ahead to restore full-price sales in its digital business.
Returning to Innovation and Athlete-Centric Focus
One of Elliott Hill’s primary objectives is to reignite Nike’s innovation engine by returning to its roots in sports performance. Hill has acknowledged that the company lost its focus on sports, and moving forward, every decision will prioritize the athlete. Key areas of focus will include high-volume categories such as running, training, sportswear, and the Jordan brand.
The promise of innovation in upcoming product lines is expected to play a crucial role in Nike’s recovery. By delivering fresh, performance-oriented designs, the company aims to attract both athletes and casual consumers. If Nike can align its product portfolio with these goals, it stands to reestablish itself as a leader in the athletic apparel industry.
Rebuilding Retail Partnerships
Nike’s shift away from traditional retail partners in favor of DTC sales created friction with key accounts. Under Hill’s leadership, the company is reversing this strategy, reinvesting in its commercial sales teams and reengaging with wholesale partners.
Early feedback from these renewed partnerships has been positive, signaling a willingness from retail partners to support Nike’s turnaround.
This shift could be pivotal for Nike, as retail partnerships provide critical exposure to consumers who prefer in-store shopping and offer a broader reach than its DTC model alone. By strengthening these relationships, Nike can accelerate its recovery while expanding its customer base.
The Path Ahead
While Nike’s turnaround will take time to fully materialize, there are reasons for optimism. The company’s long-standing reputation for innovation and its global brand recognition provide a strong foundation for recovery. Hill’s focus on clearing inventory, improving margins, and reigniting product development is expected to yield gradual improvements by the latter half of 2025.
Nike’s stock selloff in 2024 has also reset investor expectations, creating an appealing risk-reward opportunity for those willing to bet on the company’s ability to execute its strategy. Despite near-term choppy results, Nike’s commitment to its core strengths of sport, innovation, and retail collaboration positions it for a strong comeback in the years ahead.