Nike Tried to Keep More of Every Sale. Instead, It Gave Its Competitors an Opening

For decades, Nike stood as one of the most dominant brands in American business, a fixture of the S&P 100 since 2008 and a company nearly synonymous with athletic footwear itself. That era officially ended on September 21, 2026, when Nike was removed from the index following a prolonged stock decline, part of a broader shuffle that replaced Nike and three other companies with stocks tied to the artificial intelligence boom. Nike’s shares have fallen roughly 50 to 57 percent over the past year alone. Behind that decline sits a genuinely instructive business story about what happens when a company drifts away from the relationships and channels that originally built its success.

This article was created with the assistance of AI and reviewed by our editorial team for accuracy and clarity.

The Strategic Bet That Started Nike’s Slide

According to financial analysts tracking the company’s decline, Nike’s troubles trace back to decisions made in the years following the COVID-19 pandemic. The company aggressively expanded its direct-to-consumer sales channels, essentially selling more directly to shoppers online and through its own stores, while pulling back significantly from traditional retail partnerships. The strategy aimed to cut out the middlemen entirely, securing better profit margins by controlling more of the sales process itself. It was a bet built on the assumption that pandemic-era shopping habits, with more people buying online rather than in physical stores, would simply continue as the new permanent normal.

Why Cutting Out Retail Partners Backfired

That assumption turned out to be wrong, and the consequences proved considerably more damaging than a simple miscalculation. By pulling back from retail partnerships with stores like Foot Locker, Nike effectively ceded valuable shelf space that had long kept its products in front of shoppers browsing multiple brands side by side. That opening gave rival brands room to move in, and once-loyal Nike customers, no longer seeing Nike products prominently displayed everywhere they shopped, started taking chances on newer competitors instead. In business terms, Nike had broken a fairly basic rule, walking away from the exact distribution relationships and customer touchpoints that had made the brand so dominant in the first place.

Bringing Back a Company Veteran to Fix It

Nike’s board brought back Elliott Hill, a 32-year veteran of the company, to serve as CEO in 2024, specifically to address these mounting problems. Hill outlined a turnaround plan built around what the company has called its Win Now strategy, focused on rebuilding relationships with wholesale partners, refocusing product development around specific sports categories including running, basketball, and training, and generally returning Nike’s attention to what he described as its lost obsession with sport and the athlete at the center of every decision. Rebuilding those damaged retail partnerships, however, has proven to be a slower and more complicated process than initially hoped.

Faster, Trendier Competitors Seized the Opening

While Nike worked to repair its distribution network, competitors didn’t wait around. Running shoe brands On and Hoka in particular have taken a meaningful bite out of Nike’s sales during this window, positioning themselves as trendier, more focused alternatives specifically within the running category Nike had traditionally dominated. On, a Swiss company founded in 2010 and backed in part by tennis legend Roger Federer, has expanded well beyond its original running-focused identity, pushing into new categories including tennis and, more recently, football, directly challenging territory Nike once considered firmly its own.

Losing a Global Superstar to a Rival Brand

That competitive pressure became strikingly visible in September 2026, when French soccer star Kylian Mbappé ended his nearly two-decade partnership with Nike, signing instead with On as the Swiss brand made its first major push into football. Mbappé, who had been with Nike since childhood in 2006 and became the all-time leading scorer for both Paris Saint-Germain and the French national team, represented exactly the kind of high-profile athlete endorsement that had long reinforced Nike’s cultural dominance. According to a person familiar with the negotiations, Nike ultimately chose not to renew Mbappé’s contract, deciding to direct its endorsement budget elsewhere as his deal expired.

A Second Front Opened Up in China

Nike’s challenges haven’t been limited to distribution strategy and athlete endorsements alone. The company has also faced a persistent slowdown in China, one of its most historically important international markets. An estimated 18 percent of Nike’s footwear is currently manufactured in China, a share that was likely considerably higher in years past, underscoring just how deeply intertwined the company’s supply chain and market performance remain with conditions in that country. Continued weakness in Chinese consumer demand has weighed heavily on Nike’s overall financial results even as other parts of the business have shown modest signs of improvement.

Some Genuine Signs of Stabilization

Despite the broader downturn, Nike’s turnaround hasn’t been entirely without progress. North American footwear sales climbed roughly 9 percent year over year to reach 3.54 billion dollars in a recent fiscal quarter, suggesting Hill’s renewed focus on core product categories and rebuilt wholesale relationships may be gaining some real traction domestically. That regional improvement, however, has largely been overshadowed by the continuing weakness in China, which remains the more significant drag on Nike’s overall financial performance and investor sentiment heading into the company’s next few quarters.

The Real Cost in Dollars and Jobs

The financial toll behind this story is substantial by any measure. Nike suffered its worst single trading day in the company’s 53-year history at one point during this stretch, a single session that wiped roughly 28 billion dollars off its market capitalization. The company has also gone through repeated rounds of layoffs during this period, with one round of cuts eliminating around 1,500 positions and a later, deeper round affecting roughly 40 percent of top-level positions within the company. Those numbers illustrate just how seriously Nike’s leadership has treated the turnaround effort, restructuring significant portions of its workforce in an attempt to right the ship.

The Broader Lesson Behind Nike’s Stumble

Nike’s experience offers a useful case study that extends well beyond athletic footwear. Chasing higher margins by pulling back from established distribution partnerships can look appealing on a spreadsheet in the short term, but it risks weakening the very customer relationships and market presence that made a brand successful in the first place. Once competitors gain that opening, winning back shelf space, athlete loyalty, and everyday customer habits takes considerably longer than losing them did. Whether Nike’s current rebuilding effort under Elliott Hill ultimately succeeds remains genuinely uncertain, but the underlying lesson is already clear. A brand’s distribution and its relationships with customers aren’t simply a cost to optimize away, they’re often the actual foundation the entire business is built on.