Nike to Refocus on Sports Like Basketball and Running

Nike’s new CEO Elliott Hill warned of a long road to sales recovery for the sportswear giant. In his first public address as CEO, Hill stated that Nike had “lost its obsession with sport” and vowed to refocus on sports like basketball and running. The company aims to move away from heavy discounting and streetwear trends that have shifted its identity, instead prioritising premium pricing and full-price sales through its website and app.

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Hill’s strategy is a return to Nike’s roots, which John Nagle of Kavar Capital Partners described as “taking it back to what worked.” By redirecting attention to sports and addressing strained relations with retailers like Foot Locker, Nike hopes to strengthen its core business. However, analysts like Barclays’ Adrienne Yih cautioned that the next four quarters could bring significant margin pressure and EPS reductions as the company navigates this transition.

Nike’s market share has been challenged in recent years by rivals like Roger Federer-backed On and Deckers’ Hoka, both of which have gained traction with innovative designs. Hill highlighted the need for more innovation and less reliance on promotions, a strategy that has weighed on Nike’s profitability. Shares of Nike, which have lost half their value over the past three years, dipped 4% in premarket trading following the muted sales forecast.

Despite the challenges, portfolio managers like Eric Clark of the Rational Dynamic Brands fund remain optimistic about Hill’s leadership, describing him as “a sailor who knows how to drive the ship.” As Nike begins this multi-year recovery, the focus on sports and premium pricing could signal a new chapter for the brand.