What's gone wrong at Nike? How the world's sportswear giant lost its mojo

What has gone wrong at Nike? How the global sportswear giant lost its edge

Nike has had a tough few years.

The world’s biggest sportswear brand, named for the ancient Greek goddess of victory, has recently been on the slide. It has been losing sales, losing customers and losing ground to competitors.

Once the disruptor of the industry, Nike is now part of the establishment and is in the midst of a difficult turnaround effort designed to preserve its market lead.

Nike’s latest financial results suggest that the turnaround plan introduced by company veteran Elliott Hill, who was brought out of retirement two years ago to run the business, is beginning to work — but the pace is more marathon than sprint.

Even so, its recovery has been hit by the departure of football star Kylian Mbappé, who ended his 20-year relationship with the brand last week to sign with fast-growing Swiss rival On.

The Real Madrid striker’s exit raises the question of whether Nike can stay the leading logo not only for elite athletes, but also for the fans who admire them.

To be clear, Nike remains a huge brand and is popular around the world. But mistakes have erased hundreds of billions of dollars from its market value, with its share price falling 75% over five years.

Last month, Nike was removed from the S&P 100 stock market index of the biggest blue-chip companies in the US.

So what went wrong? And can Hill fix it?

Matt Powell, a long-time analyst and adviser in the sports retail sector, says Nike made "several strategic errors" that have been hard to undo, including cutting off retailers to sell only directly to customers online and making limited-edition items more widely available.

"The more broadly available those shoes became, the fewer people were interested," Powell says.

He also points to other self-inflicted problems, including directing research and development money toward digital operations instead of new products.

"They really shut down their innovation on product. Someone jokingly said they were trying to turn Nike into eBay."

That remark was aimed at John Donahoe, the former eBay chief who drove Nike’s shift to online direct-to-consumer sales before being replaced by Hill.

Donahoe’s four years at Nike coincided with a sharp fall in the company’s share price.

During his time, sales first surged, helped by pandemic restrictions that pushed more shopping online, but later cost-of-living pressures reduced consumer spending.

As demand weakened abroad in major markets such as China, Nike announced cost cuts and redundancies.

Its digital focus allowed newer footwear companies riding the latest trends to catch up. Shelf space once held by Nike was taken by brands such as On and Hoka.

For a company that prided itself on innovation and was built on it, this was a clear warning.

Nike was the company that signed a deal with a rookie named Michael Jordan in the mid-1980s, when it was not yet a major force in basketball and was still best known for running shoes.

The gamble — using its entire basketball budget on Jordan before he had even played in the NBA — helped make Nike what it is today.

The company built a shoe line around him: Air Jordan. The red and black colours broke NBA rules, but Nike turned that into a marketing stunt and paid the fines.

In the years that followed, Nike partnered with generational stars Tiger Woods, Serena Williams and Cristiano Ronaldo, all of whom wore the Swoosh on their way to greatness in golf, tennis and football.

Although the brand still has partnerships with long-retired Jordan, as well as Williams and Ronaldo — Woods ended his association in 2024

"[I'm] not saying that what they did wasn't great, but it was in the past," said Tim Derdenger, an academic in marketing and strategy. "It's not the future and it's not the current and that is what drives apparel sales today."

Nike’s roster still includes top athletes such as Rory McIlory and Vinicius Junior.

But it has now lost its biggest football star in Mbappé, who had been with Nike since he was nine, along with World Cup winner Lamine Yamal.

Yamal said his move to Adidas gave him the chance to stand out from Nike’s star-packed lineup, while Mbappé said On would have him "surrounded by innovators who dream of the same things I do".

Was that a parting shot at Nike?

Derdenger says Mbappé’s move had echoes of Jordan’s decision decades earlier to choose Nike over Converse and Adidas because it gave the athlete the chance to become closely identified with one brand.

"Athletes have egos and those egos want them to be a part of something big and that they're the ones that are helping drive that change, that growth."

Despite all the "doom and gloom", Powell says Nike will remain number one — millions around the world, including young people, are still loyal — but its mistakes have weakened its dominance.

"Will Nike be the gorilla they once were? I don't think so. Can the brand come back to growth and profitability? Yes," Powell says.

"When you shut down innovation, you don't turn it back on and it goes right back to full speed," he adds.

Powell believes Nike’s turnaround plan, called "Sport Offense", will begin to show positive signs next year.

Hill said Nike had "more work to do" on its sportswear, Jordan brand and in China as the company announced quarterly revenues of $11bn, below analysts’ expectations.

The company said it expected revenues to fall by "high-single digits" in the financial year ahead, and added that it planned to save $2.5bn by 2031, some of which would come from job losses.

Last year, the company launched a spin-off campaign from its iconic "Just Do It" slogan aimed at younger generations, using the line "Why Do It?"

Young people, and future sporting stars, may ask themselves: Why Nike?