For decades, Nike (NKE) was a dominant leader in running shoes and running culture. However, the sneaker maker has lost its grip in recent years as new competitors like Hoka and On make aggressive inroads to appeal to runners. Now, the Swoosh-adorned company is ready to launch a comeback. “This has been one of our toughest fights over the past few years, and it is one of our biggest opportunities,” Matthew Friend, Nike’s chief financial officer, told analysts during the company’s quarterly earnings call yesterday (Oct. 1).
Friend acknowledged that Nike has “lost share in the running specialty channel” after pulling away from the sector more than four years ago and suffering market losses. In recent years, the company has shifted its focus to classic franchise brands like the Air Force 1, Air Jordan 1 and Dunk models. However, as a result of overselling these once-exclusive sneaker franchises, they have become less desirable to modern customers. As revenue from the company’s classic footwear franchises has “decelerated,” Nike is intentionally cutting back its offerings for those styles, according to Friend. “We are moving aggressively to shift our product portfolio,” he said, adding that “a comeback at this scale takes time.”
Nike has also lost ground in running culture as well. The company notably failed to take advantage of a rise in running groups after the Covid-19 pandemic, which became launching pads for emerging rivals like Hoka and On. “The importance of investing and connecting in the running specialty channel extends way beyond the business impact of driving revenue there, it’s about the community of running,” said Friend.
The company said its “running offense” is its main priority, the CFO said. Its product pipeline includes a new maximum cushioning system, premium models and a refreshed line of running apparel. The sneaker maker has also amped up its presence across on-the-ground activations and events in running communities around the globe. “Nike is a running brand, and it’s incredibly important for Nike to win with runners,” said Friend.
Nike’s revenue for the June-August quarter came in at $11.6 billion, representing a 10 percent drop from the same time period a year prior. Net income fell 28 percent year-over-year to $1.1 billion. Nike shares fell by more than 5 percent today (Oct. 2) after yesterday’s earnings release.
The company reported earnings during a time of transition, as its current CEO and president, John Donahoe, is set to step down on Oct. 14 and be replaced by Elliott Hill, who had worked at Nike for more than three decades before briefly retiring in 2020. In light of the leadership shuffle, Nike said it will withdraw full-year guidance and instead provide quarterly guidance for the balance of the fiscal year, which ends on May 31, 2025. It expects the current quarter’s revenue to drop by 8 percent to 10 percent, a steeper decline than Wall Street’s estimates.
The company will additionally postpone its annual Investor Day, originally scheduled for next month. “This provides Elliott with the flexibility to reconnect with our employees and teams, evaluate the current strategies and business trends, and develop our plans to best position the business for fiscal ’26 and beyond,” said Friend.
