Nike Bleeds Market Share, Investors Worry Over Relevance

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As Nike Bleeds Market Share, Investors Worry Over Relevance

Nike has increasingly leaned on its iconic basketball shoes to boost sales, but as the sportswear giant bleeds market share to newer brands, some analysts and investors are wondering if that is a mistake.

In a post-earnings conference call, Nike executives acknowledged Nike had lost share in running shoes, a category that has surged in popularity over the last year. It comes as Nike prepares to scale back on franchises to save costs.

Nike CFO Matt Friend told investors the company was cutting back on supplies of "classic" shoes, including the company's Air Force 1 sneakers, to focus on upcoming launches and new product development.

The move is a major shift for Nike compared to five years ago when basketball shoes from the Jordan brand and court-inspired styles such as the Air Force 1 and Nike Dunk drove the company's sneaker sales. However, consumers have new favourites in the market like On and Deckers-owned Hoka, which have grabbed more shelf space globally.

Data from analytics firm Altan Insights, which studies the collectible sneaker market, shows that Nike doubled the number of Air Jordan 1 Highs released through its SNKRS app between 2019 and 2023 and more than tripled the number of Nike Dunk Lows released over the same period.

Jordan accounts for roughly 16% of the retailer’s wholesale revenues, according to Nike’s fiscal 2023 annual report - up 29% compared to the previous year.

On's market share at retailer Dick's Sporting in the footwear category increased to 8.2% in February from the 6.1% it had in October 2023, while New Balance saw its market share rise to 5.4% from 4.6% for the same period.

This is in contrast to Nike's Jordan whose market share at the retailer has hovered over only 5% from October to February, according to YipitData, which collates market share using email receipt and transaction data.

Nike executives have highlighted upcoming products in the running category to compete with On and Hoka, whose sneakers have become popular with shoppers who wear them to the office as well as on runs.

Tierney said investors are also hopeful that upcoming fashion shoe launches, such as the Nike Air Max DN, which will price at $160, will counteract the slowdown in Nike’s retro business. "I think the next six months are critical," he said. "We know that newness is coming, but if it doesn't take off now, I think investors will ask the question, 'then when?'"