Nike CEO Elliott Hill has outlined a new strategy to return the company to growth after blaming deep discounting and lack of innovation for declining revenue and profit. Hill, who returned to the company in October, aims to turn “sport” back into the center of everything Nike does.
Hill said that Nike’s reliance on promotions has led to a 50/50 split between full-price and discounted sales, which negatively impacts the brand and disrupts the marketplace. To address this, Nike will return its online business to a full-price model and aggressively liquidate old inventory through “less profitable channels.”
The company expects gross margins to be down between 3 and 3.5 percentage points during the holiday quarter due to deep discounting. Sales are also expected to be down low double digits, worse than analyst expectations.
Despite this, Nike beat Wall Street’s expectations on earnings per share and revenue in its second quarter of 2025. Hill plans to focus on building back trust with wholesale partners, such as Foot Locker, JD Sports, and Dick’s Sporting Goods, who have felt neglected under his predecessor John Donahoe’s tenure.
Hill has also acknowledged that Nike lost sight of its core values – athletes and performance – leading to market share losses to competitors like Asics, On Running, and Hoka. To address this, the company will cut back supply on popular lifestyle brands such as Air Force 1s and Dunks.
Sneaker sales were down 13% in the most recent quarter, with wholesale revenues also declining by 3%. Inventory remained flat at $8 billion, but is still higher than the desired level. Despite this, results were better than expected in all regions except China.
In a positive sign for Hill’s new strategy, Nike recently secured contracts to be the exclusive uniform provider for major sports leagues such as the NFL, MLB, and NBA.
Source: https://www.cnbc.com/2024/12/19/nike-nke-earnings-q2-2025.html