Nike, the world's largest sports brand, has once again embarked on large-scale layoffs to escape the ongoing slump in performance. The explosive growth witnessed during the pandemic has vanished, and the brand has failed to adequately respond to changing consumer perceptions in the post-pandemic era, tarnishing its reputation as the 'king of sports.' This round of layoffs serves as a stark example of how Nike, once a symbol of constant innovation, has unexpectedly found itself in crisis.
On the 28th (local time), Nike announced that it would reduce its workforce by less than 1% of its total staff of approximately 77,800 employees (as of May 31, 2025). This comes just a year and a half after laying off more than 1,600 employees, which accounted for 2% of its total workforce in February last year. The repeated news of job cuts indicates that the crisis facing Nike is more severe than initially thought.
Nike stated that this restructuring is part of a major reorganization led by Chief Executive Officer (CEO) Elliott Hill, who was appointed as a savior in September last year. CEO Hill has announced plans to reorganize the company by sport, re-focusing on Nike's core identity of 'sports' and 'athletes.' In a memo sent to internal staff, Nike's management explained the significance of the layoffs, saying, 'The changes we are implementing are a preparatory process to open the next great chapter of Nike.'
Last year, Nike's stock price plummeted by 32% over the year. Revenue for the fourth quarter of the fiscal year (March to May) fell 12% compared to the same period last year. Sales declined in not only North America, where its headquarters is located, but also in Europe, the Middle East, Africa (EMEA), and China, a core market. In particular, in China, where Nike had invested heavily, quarterly sales decreased by 17%, and more than 330 stores were closed over the past year. As a result, this year's annual revenue is forecasted to drop 10% from last year to $46.3 billion (approximately 64 trillion won). Analyst John Kernan from TD Cowen noted to Reuters, 'Nike's failure to innovate has significantly diminished its brand appeal.'
The poor performance results from a combination of various factors, but experts have pointed to an overly politicized marketing strategy as the primary misstep. In April 2023, Nike featured transgender influencer Dylan Mulvaney, who has over 10 million followers, as a model for a women's sports bra advertisement. The advertisement showed him striking a yoga pose while promoting that it was 'soft and comfortable.' This decision was met with strong backlash from the core support base of female athletes and conservative consumers. Criticism arose that it 'created confusion beyond inclusivity,' leading to boycotts. It has been recorded as a representative incident that sparked serious debates about Nike's brand identity.
Nike faced conflicts with its existing loyal customers and also failed to attract new consumer groups during the same period. The brand, which was once for everyone, is now criticized for not being clear about whom it represents. Former CEO John Donahoe aimed to restructure Nike's operations into women, men, and children divisions, hoping to shift it from a sports brand to a lifestyle brand. Ultimately, this strategy diluted Nike's core philosophy of 'creating the best products for athletes' and has been pointed out as having weakened its innovation momentum in materials and design.
Strategic misjudgments have also worsened the crisis. When the pandemic hit in 2020, Nike aggressively pursued a Direct-to-Consumer (D2C) strategy, selling products directly to consumers via its website, bypassing retailers. As a result, relationships with long-standing partners like Foot Locker and JD Sports deteriorated. The rapid contraction of sales channels led to a massive inventory burden. Accumulated stock was sold at discounted prices rather than at normal prices, simultaneously harming profits and brand image. Nike has now raised the white flag and is finally trying to restore relations with retailers while facing strategic confusion.
While Nike has lost its direction, the market landscape has dramatically changed. Brands like Hoka and Switzerland-born On Running have rapidly grown, threatening Nike's stronghold. These brands have captured the MZ generation with their unique cushioning technology and differentiated designs. Consumers have opened their wallets for freshness and functionality that they did not experience from Nike. On Running recorded second-quarter revenues of 749.2 million Swiss francs this year, a 24% surge compared to the same period last year. Hoka also saw first-quarter revenues of $653.1 million in this fiscal year, an 11% growth over the previous year, marking its highest quarterly revenue ever.
To overcome the crisis, Nike declared a major overhaul earlier this year under the slogan 'Win Now.' The plan is to revamp key brands like Air Jordan to restore its diminishing brand status. However, market reactions remain lukewarm. The brand continues to rely on past hits like Air Jordan 1, Air Force 1, and Dunk Low, facing criticism that 'innovation has stalled.'
CEO Hill promised, 'We will assemble sport-obsessed teams to continuously churn out innovative products.' He is currently working on dismantling the existing divisions divided by gender and age and is restructuring the organization around sports and culture. The layoffs are also a measure taken during this process.
Forbes, quoting retail analyst Jessica Ramirez, reported, 'Nike remains a huge and powerful brand, but the market has changed, and it can no longer rest on past successes.' She added, 'Young consumers are drawn to the freshness offered by new brands like Hoka and On Running, and to win back their hearts, Nike must show a new face.'