TL;DR
Nike reported a steep revenue slide and weakening digital metrics in 2025 after strategic shifts that pared back wholesale relationships, reorganized product teams, and softened marketing. Competitors, supply‑chain shocks and new tariffs intensified pressure, prompting a leadership change and a return to sport‑focused product strategy.
What happened
In fiscal 2025 Nike posted an 11.5% revenue decline to $11.01 billion, with digital sales down 20%, app downloads falling 35% and store foot traffic off 11%. Gross margin contracted to 42.7% (about 190 basis points below a mid‑2010s peak near 45%), driven by heavier discounting and an unfavorable sales‑channel mix. Strategic moves beginning in 2020 under CEO John Donahoe accelerated a shift to direct‑to‑consumer sales and reduced wholesale distribution, which improved per‑unit margin assumptions but ceded retail shelf space to rivals. Nike also reorganized sport‑specific product teams into broad categories, a change that, according to the analysis, weakened specialized product development and precipitated talent departures. High‑profile athlete partnerships migrated to other brands, and emerging competitors such as On and Hoka posted rapid revenue growth. Tariff changes in early 2025 added an estimated $1–1.5 billion of future cost exposure. In September 2024 Nike replaced Donahoe with long‑time executive Elliott Hill and announced a renewed product‑centric “Sport Offense” strategy.
Why it matters
- A traditional combination of product R&D, athlete partnerships and marketing that underpinned Nike’s premium pricing has eroded, reducing its ability to command high margins.
- Direct‑to‑consumer moves altered Nike’s retail footprint at a moment competitors were expanding into the vacated shelf space, shifting consumer discovery away from Nike.
- Concentrated manufacturing in Southeast Asia exposed Nike to trade‑policy shifts and tariffs, creating sizeable incremental costs and operational disruption.
- Athlete endorsements act as product and development inputs; the loss of key partners reflects deeper competitive changes rather than only marketing spend decisions.
- Rebuilding complementary capabilities is harder than restoring individual elements, so recovery may be prolonged even with strategic course corrections.
Key facts
- Fiscal 2025 revenue fell 11.5% to $11.01 billion.
- Digital sales declined 20%; app downloads dropped 35%; store foot traffic fell 11%.
- Gross margins slipped to 42.7% in fiscal 2025, about 190 basis points below mid‑2010s levels.
- Nike manufactures roughly 95% of its shoes and 60% of its apparel in Southeast Asia.
- Reciprocal tariffs introduced in early 2025 are estimated to add $1 billion to $1.5 billion in costs over coming years.
- Nike planned to reduce China’s share of U.S. footwear imports from 16% to single digits by fiscal 2026.
- On’s revenue grew from $330 million in 2020 to $1.8 billion by 2025; Hoka (Deckers) rose from $352 million to $1.4 billion over the same period.
- Leadership change: John Donahoe was succeeded by Elliott Hill in September 2024.
- Nike shifted from sport‑specific product teams to general Men’s/Women’s/Kids’ categories under Donahoe, according to the analysis.
What to watch next
- Whether Elliott Hill’s “Sport Offense” product focus reverses sales and margin declines — not confirmed in the source.
- Nike’s success in reducing China’s share of U.S. imports and the cost, timing and logistics of that supplier transition.
- Retention and recruitment of top athletes and designers as a signal of renewed product leadership — not confirmed in the source.
- How competitors (especially On and Hoka) convert retail and product momentum into longer‑term market share.
Quick glossary
- Direct‑to‑Consumer (DTC): A distribution model where a company sells products directly to customers, bypassing traditional retail partners.
- Gross Margin: A profitability metric showing the percentage of revenue remaining after subtracting the cost of goods sold.
- Athlete Partnership: Commercial agreements between brands and athletes that can include endorsements, collaborative product development and promotional activity.
- Tariff: A government tax on imported goods that can raise costs for companies relying on overseas manufacturing.
- Complementary Assets: Resources or capabilities that produce more value when deployed together than when managed independently, such as product development, marketing and distribution.
Reader FAQ
What triggered Nike’s 2025 revenue decline?
The source links the decline to a combination of weaker product development, a retreat from wholesale retail, softer marketing, intensified competition and tariff pressures.
Did tariffs cause the crisis?
Tariffs added significant cost pressure (estimated $1–1.5 billion) but the source frames them as amplifying structural strategic problems rather than the sole root cause.
Who replaced John Donahoe as CEO?
Elliott Hill, a 30‑year Nike veteran, was installed in September 2024.
Have athletes left Nike?
Yes; the source cites several departures including Roger Federer to On and other athletes signing with competing brands.
Is Nike returning to its old strategy?
Nike announced a renewed product‑centric plan called “Sport Offense,” but whether it will restore prior structural advantages is not confirmed in the source.
Nike's Crisis and the Economics of Brand Decay December 2, 2025 • 1500 words • 7 min read • ∞ What it sounds like is that the CEO has the…
Sources
- Nike's Crisis and the Economics of Brand Decay
- Nike's Downfall: Insights for Fashion from the Sports Titan's …
- Nike: 5 Ecommerce Mistakes That Caused a Major Crisis
- (PDF) An Analysis of Nike's Issues and Strategic Solutions
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