NEW YORK — Nike, once synonymous with global sportswear, is in a steep decline driven by a failure to innovate. With earnings stagnating and rivals gaining ground, the company has been dropped from the Standard & Poor's 100 index after 18 years. Analysts point to two direct causes: weakness in China, a key market, and an overly rigid commitment to direct-to-consumer sales. Repeated reissues of past limited-edition models and consumer resistance to politically driven marketing are also cited as reasons many shoppers turned away. Wall Street expects Nike to struggle to show results quickly, even as it attempts a turnaround under a new chief executive.
From Asics Distributor to Jordan Legend: Nike Drops Out of S&P 100 After 18 Years
Nike closed at $38.10 on the New York Stock Exchange on the 8th, down 0.78% from the previous session. The stock fell as low as $37.90 during the day. Nike is suffering its worst stock decline of the year. As of the 8th, the shares had fallen 9.52% over the past month and 48.62% over the past year.
Compared with the all-time high of $177.51 set on Nov. 5, 2021, the stock has plunged 78.5% in five years. Market capitalization has shrunk to $56.5 billion from $264 billion at the end of 2021.
Against that backdrop, S&P Dow Jones Indices announced on the 4th that Nike will be removed from the S&P 100 before the New York market opens on the 21st. The S&P 100 comprises 100 large-cap blue-chip companies representing the U.S. stock market. Nike had been a constituent continuously since December 2008. Taking its place will be technology companies including PC maker Dell, SanDisk, Palo Alto Networks and Arista Networks. Nike will remain in the S&P 500.
Given that Nike reigned as the premier premium brand in sportswear until recently, its removal from the S&P 100 came as a considerable shock on Wall Street and in South Korea as well. Nike was co-founded in 1964 by Bill Bowerman, a former University of Oregon track coach and former board member, and Phil Knight, his student, an accountant and later chief executive. The company was originally named Blue Ribbon Sports and was a distributor rather than a shoe manufacturer. Its main business was hauling 200 pairs of Onitsuka Tiger sneakers — the predecessor of Japan's Asics — in a car trunk and selling them to athletes at track meets.
Nike became an independent shoemaker in 1971, immediately after its distribution contract with Onitsuka Tiger ended. The name Nike came from Nike, the Greek goddess of victory, which first employee Jeff Johnson saw in a dream. The Swoosh logo was created in 1971 for just $35 by Carolyn Davidson, then a graduate student in graphic design at Portland State University, on commission from Knight. The shape, meant to evoke the goddess's wing and a sense of motion, has become the world's most recognizable logo.
What lifted Nike from an also-ran in sporting goods was the jogging shoe. When a jogging boom swept the United States in the 1970s, Adidas — already the industry leader — responded with indifference, and Nike seized the opening. Bowerman also developed a rubber-poured outsole in 1972, inspired by his wife's waffle iron. The runaway success of the Cortez, the first Nike-made sneaker to use the technology, gave the company wings.
'Just Do It' Became an Icon of U.S. Cultural Power After the Cold War; Wholesale Stores Exited Under Digital-First Donahoe
In 1979, Nike embraced an idea from Frank Rudy, a former aerospace engineer, and became the first in the industry to put air in a shoe's sole. In 1982, it applied the technology to a basketball shoe with the Air Force 1, sketching the outline of its success story.
Nike stumbled in the mid-1980s as Reebok rode an aerobics boom, but it entered a different league of growth after signing then-rookie basketball player Michael Jordan to an endorsement deal in 1984. The Air Jordan 1, released in 1985, became a global phenomenon and made Nike the undisputed industry leader. In 1988, it unveiled the legendary slogan "Just Do It," establishing itself not as a mere sporting goods brand but as an icon of the American cultural dominance that swept the world after the end of the Cold War. Through the 1990s and 2000s, it continued marketing that projected its brand image onto the great narratives of sports stars including golfer Tiger Woods, tennis players Roger Federer and Serena Williams, soccer player Cristiano Ronaldo and basketball player LeBron James.
The unraveling of the Nike myth began with the 2020 appointment of former Chief Executive John Donahoe, an information technology specialist who had worked at eBay and Bain & Company. Taking the helm as the COVID-19 pandemic hit, Donahoe severed relationships with wholesale and retail partners such as Foot Locker and ABC-Mart that had worked with Nike for decades. The strategy was to move preemptively into the contactless era by concentrating on online-centered direct-to-consumer sales. Another aim was to lift profitability by cutting out middlemen's margins.
Early in his tenure, the strategy appeared to work: expectations for a contactless shift during the pandemic drove the share price to a record high in November 2021. Nike drew praise for successfully transforming itself from a sporting goods company into a technology company. The trouble arose in its core business of selling sporting goods.
The situation reversed as store shelves once stocked with Nike products filled up with newcomers such as On and Hoka, along with a revived Adidas. As opportunities for consumers to try Nike products shrank markedly, sales at company-run stores and online began falling as well. Nike had effectively walked out of the market on its own, ceding share to rivals and ending up with nothing but higher inventories.
Reselling Old Hits as Limited Editions, Losing Ground in China, and Facing Marketing Controversy: A Rebound Looks Difficult
Investor disappointment with Nike goes beyond its distribution structure. After executives from Bain & Company — Donahoe among them — who prized data and efficiency took control, Nike also neglected the development of shoe technology, the essence of a sports brand. Rather than competing with products built on new technology, it leaned excessively on marketing that resold classic models such as Air Jordan, Air Max and Air Force in new colorways as limited editions. Releasing limited editions too frequently stripped the products of scarcity, and technological innovation stalled. The equation of "Nike sneakers equal cutting-edge" broke down in consumers' minds, replaced by a perception of the shoes as collectibles.
To make matters worse, Nike also lost significant ground in China, which had powered its growth. China accounted for close to 20% of annual revenue in 2021 but now stands at about 13%. Chinese consumers have abandoned Nike in large numbers in recent years as cheap domestic brands such as Anta and Li-Ning rose on a wave of guochao, or patriotic consumption. Nike's China revenue fell for eight consecutive quarters, from the first quarter of fiscal 2025 (June to August 2024) through the fourth quarter of fiscal 2026 (March to May 2026). Greater China revenue for fiscal 2026 came to $5.85 billion, down 13% from a year earlier. According to Reuters, Nike's share of the global footwear market fell to 22.9% last year from 25.9% in 2022 as demand for premium sports brands shifted to On and Hoka as well.
Nike's revenue for fiscal 2026 (June 2025 to May 2026) was $46.4 billion, barely holding the prior year's level of $46.3 billion. Excluding currency effects, it effectively declined 2%. Compared with the peak in fiscal 2024, when revenue was $51.4 billion, sales have evaporated by 9.7%.
While not a direct cause of the deteriorating results, the politically driven marketing strategy pursued around the time of Donahoe's appointment also stirred controversy among consumers. When Nike cast transgender people, plus-size women and activists who reject body-hair removal as advertising models in an effort to break with convention, consumers who had thrilled to the functionality of sport and the passion of athletes complained of fatigue with the excess of political and social messaging. From Nike's perspective, the strategy was meant to expand its market by drawing in a range of minority groups, but it never really paid off. Many assessments hold that it only damaged the company's established image as an object of aspiration that anyone would want to be and emulate. Nike was also drawn into charges of hypocrisy, accused of championing human rights, protection of minorities and justice in public while failing to resolve controversies over poor overseas production conditions and child labor.
Since Chief Executive Elliott Hill took office in October 2024, Nike has again focused on repairing relationships with retailers and launching new products, but Wall Street remains cool. Analysts expect Nike to have difficulty recovering its lost market share and brand image in the near term. Brian Mulberry, senior market strategist at Zacks Investment Management, said improvements in wholesale relationships and the supply chain would not happen overnight, and predicted it would likely take another three to four quarters before a genuine rebound.
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