Nike shares fall 24% in the year and brand calls on former executive to reverse low sales

Due to its strategies that had no effect and also the strong competition in the market, the shares of the giant Nike have fallen 24% so far this year. With the decline, the company is reshaping its team, bringing the experienced Elliott Hill, a former executive with experience, to replace CEO John Donahoe, who will retire next month.

In the last year the company slowed down its growth, the high competitiveness mainly in the sports sector with brands such as Hoka and On that emerged with great strength in the market and also the approach taken by the company caused sales to fall by more than 10% in the last quarter.

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Wrong strategy

This drop in Nike shares can be explained due to its sales distribution focused on its internal audience. The company paid more attention to its physical stores and websites, with the argument that it could earn twice as much with this idea, but the result backfired. Concentrating their focus on this segment, they ended up with third-party partnerships and retailers that drove a lot of sales. Without these partners, sales on websites and physical stores fell by around 8% of Wall Street expectations.

The move into this segment was made very abruptly by their team, who focused their core products on just 40 select retail partners, such as Dick's Sporting Goods and Foot Locker. One of the best-known brands, Converse, which highlights the Chuck Taylor line as a reflection of Nike's onslaught, saw revenue plummet 18% due to weak sales in both North America and Western Europe.

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Market changes

Much changes over time, currently a large part of the public is no longer interested in spending a lot on expensive sneakers or branded clothes, their preference is to spend on leisure and other things that will cost less. Currently, a large portion of the public is interested in clothes that are not considered “fashionable” and focus on the comfort that the pieces can bring, thus providing good value for money.

After this failed strategy, Nike has already returned to partnerships with some of its main partners in the retail sector, including CEO Donahoe who was emphatic in saying that he will give priority to sports materials and focus on new brands to serve wholesalers who have received less attention During this time the company focused on its internal channels.

Featured Photo: Nike Mercurial x Air Max (Reproduction/Creative Soccer Culture/Daniel Jones)