{"id":32949,"date":"2025-07-01T16:58:10","date_gmt":"2025-07-01T16:58:10","guid":{"rendered":"https:\/\/financialrush.com\/?p=32949"},"modified":"2025-07-01T16:58:10","modified_gmt":"2025-07-01T16:58:10","slug":"fixing-up-nike-is-a-marathon-not-a-sprint","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=32949","title":{"rendered":"Fixing up Nike is a marathon, not a sprint"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=ed57f488-d715-445f-82d0-bf11aa964d4d\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>By almost all measures, the past year was an annus horribilis for Nike. The sportswear group\u2019s sales fell at the second-fastest rate in its history. The 10 per cent drop the company reported for the fiscal year that ended in May was only surpassed by an 18 per cent drop in 1987. Earnings, meanwhile, almost halved year on year, one of the biggest falls since Nike went public in 1980.<\/p>\n<figure class=\"n-content-image n-content-image--full\" data-component=\"image-set\"><picture><source media=\"(min-width: 700px)\" srcset=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Aa5325885-0d44-4633-a299-2b7afa8b0219?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=1 1x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Aa5325885-0d44-4633-a299-2b7afa8b0219?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=2 2x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Aa5325885-0d44-4633-a299-2b7afa8b0219?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=3 3x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Aa5325885-0d44-4633-a299-2b7afa8b0219?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=4 4x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Aa5325885-0d44-4633-a299-2b7afa8b0219?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=5 5x\" width=\"3500\" height=\"2500\"\/><source media=\"(max-width: 490px)\" srcset=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Af7297472-20eb-42fc-8494-e33cd470ca88?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=1 1x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Af7297472-20eb-42fc-8494-e33cd470ca88?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=2 2x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Af7297472-20eb-42fc-8494-e33cd470ca88?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=3 3x\" width=\"1500\" height=\"2000\"\/><\/picture><\/figure>\n<p>As if that weren\u2019t enough to make investors lace up their trainers and run for the hills, Nike did not offer full-year guidance for the current fiscal year. It did warn, however, that it expected to pay $1bn in additional costs for the current fiscal year as a result of US President Donald Trump\u2019s tariffs on its important trading partners.<\/p>\n<p>This looks a lot like an example of the kitchen-sinking effect. One of the advantages of taking over a company in crisis is the opportunity to reset sales and earnings expectations by dumping as much bad news on investors as possible. And <a href=\"https:\/\/www.ft.com\/stream\/8f60badc-d833-4a61-9026-92a43af079b3\" data-trackable=\"link\">Elliott Hill<\/a>, the company veteran who returned from retirement last year to take the top job, has not only thrown out the kitchen sink, but the fridge and oven too.<\/p>\n<p>Under Hill\u2019s predecessor John Donahoe, the footwear group went too far in cutting relationships with big retailers in a bid to sell more directly to consumers. It also relied too much on the retro trainer trend for growth \u2014 pumping out endless reiterations of Air Jordans and Air Force 1s, while investment and innovation took a back seat. A brand that was once synonymous with athletic dominance and fronted by the biggest names in sports began ceding market shares to upstart brands such as Hoka and On.<\/p>\n<p>Since taking the helm, Hill has increased efforts to clear out excess inventory and focused on mending relationships with Nike\u2019s wholesale retailers. He has made investing in product development for sports athletes a priority once again. Plans to raise prices on some products and reallocate supply from China to other countries are expected to help mitigate the impact of Trump\u2019s tariffs. Investors seem to have faith: the day after last week\u2019s dismal earnings, the shares swooshed 15 per cent higher. They are now up almost 40 per cent from this year\u2019s low, in April.<\/p>\n<p>When it comes to audacious comebacks, Nike has form. Back in 1987, the company was beset by competition from companies such as Reebok, which had capitalised on the aerobics craze, and Adidas, which also targeted serious athletes. A year later, helped by a new \u201cJust Do It\u201d campaign and sales of Nike Air shoes, it reported a leap in sales, and grew at more than 30 per cent in each of the subsequent four years.<\/p>\n<p>Can Hill, too, turn a crisis into an opportunity? Investors almost seem to expect it. Nike shares trade at roughly 40 times forecast earnings, according to LSEG, their highest level in more than three years. Fixing Nike won\u2019t be easy or cheap, but getting the bad news out is a good first step.<\/p>\n<p><a href=\"https:\/\/mail.google.com\/mail\/?view=cm&amp;fs=1&amp;tf=1&amp;to=pan.yuk@ft.com\" data-trackable=\"link\"><em>pan.yuk@ft.com<\/em><\/a><\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/ed57f488-d715-445f-82d0-bf11aa964d4d\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this&hellip;\n","protected":false},"author":5,"featured_media":32950,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-32949","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32949","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32949"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32949\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/32950"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32949"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32949"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32949"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}