Nike has not been able to recover with its ‘Win Now’ strategy

According to recent data from market research company Euromonitor International, Nike’s global market share fell 3 percentage points last year, to nearly 23%, marking the third consecutive year of decline.

In contrast, the market share of “rival” Adidas increased to 12.2% last year, from 11.7% in 2024. Last week, this sportswear company continued to deal a strong blow in the product innovation race when an athlete wearing ultra-light shoes broke the marathon mark of under 2 hours.

The developments show that CEO Elliott Hill’s recovery strategy called “Win Now” has not yet yielded results after 18 months of implementation. In the stock market, investors are increasingly skeptical, reflected in the surge in short-selling of stocks.

According to data from S&P Global Market Intelligence through May 1, about 4.67% of Nike’s outstanding shares were on loan – an indicator of short selling activity. This number is more than 11 times higher than the level of 0.41% when Mr. Elliott Hill took over as CEO of Nike and launched efforts to revive the company. This ratio also exceeds smaller competitors, such as On Running’s 1.68% or Deckers Outdoor’s 0.52%.

When appointed to the CEO position in October 2024, Mr. Hill outlined the “Win Now” plan, promising to restore Nike’s dominant position. As of April, the airline’s operating profit margin continued to decline, he admitted that the process was taking longer than expected.

Investors expressed disappointment. On May 5, Nike shares closed at 43.06 USD, the lowest since 2014. Since the beginning of the year, this code has dropped nearly 32%, making Nike’s capitalization nearly 64 billion USD. “We’ve been talking about these issues since Hill took office, so there should have been more clear progress,” said Morningstar analyst David Swartz.

A Nike spokesperson said CEO Elliott Hill mainly spent the first months “diagnosing” and only began implementing a new core sports strategy late last year. “That is the right time to evaluate progress, not just 18 months,” this person said.

To revive Nike, Mr. Hill restructured the leadership team and streamlined personnel. In January, the company announced 775 job cuts, mainly at distribution centers in the US, as it accelerated the adoption of automation. Last month, an additional 1,400 employees, concentrated in the technology department, were laid off.

Chief Operations Officer (COO) Venkatesh Alagirisamy said this was a “very difficult decision” but was part of “Win Now”, to restructure the technology team, closing technology centers in China, Atlanta (USA) and Poland (Poland).

“These are intentional steps to build a leaner, faster and more connected technology organization capable of serving consumers, athletes and businesses,” COO Alagirisamy emphasized.

Nike management simultaneously increased marketing spending and committed to using targeted discount programs to clear inventory. However, profits recovered slowly. According to retail analysis company M Science, although the number of discounted products on the Nike website is less than at the end of 2024, the average discount is deeper, continuing to put pressure on profit margins. About 37% of products were discounted at the end of February, the most recent data available.

According to the company’s data, inventory accounts for more than 16% of the most recent quarter’s revenue, which is almost unchanged compared to the time Mr. Hill took over. Nike said it is eliminating outdated merchandise at retailers through a “combination of markdowns and returns,” which could skew promotional data.

Inventories accumulate as demand for classic Nike shoe lines including Dunk and Air Jordan cools due to increased competition from new brands such as On and Deckers. Meanwhile, the company remains slow to innovate.

Last year, the company launched the Nike Vomero 18 running shoe, achieving sales of $100 million in three months. But for a company once famous for continuously having “hit” products, single successes are not enough to reassure investors.

In its latest effort, the company launched new versions of its carbon-coated Alphafly running shoes and expanded the distribution of Nike Mind, a shoe promoted as being able to activate sensory areas of the brain.

“They are the strongest player in the market so they should be able to beat other competitors strongly,” commented Sarah Henry, portfolio manager at Logan Capital Management. She said she is delaying buying Nike shares.

Consumer and retail industry CEOs have recently been under great pressure with increasingly short “testing periods”. With thin operating margins – less than 6% in the last quarter, mistakes in pricing and inventory can quickly affect profits, leaving leaders vulnerable to pressure from shareholders.

Despite being impatient, many investors still support CEO Elliott Hill. “What he can control is going in the right direction,” commented Mr. Simon Jaeger, an expert from Flossbach von Storch. According to him, Nike’s situation is slow to progress partly due to external factors such as tariffs and rising energy costs.

Simon Jaeger pointed out the sportswear company’s bright spots such as double-digit sales growth in the running and soccer segments in North America in the most recent quarter. But he noted that the improvement needs to expand to other areas this year, otherwise investors “will not be satisfied”.