Nike is competing for funding. CEO Elliott Hill said after taking over in October that his top priority was to clear inventory. The company has been slashing prices so aggressively on its website that it not only jeopardizes its own holiday sales but also burdens its retail partners.
The sneaker giant will report its quarterly results for the quarter ended Nov. 30 on Thursday, with sales expected to decline for the third consecutive quarter, down 9% from a year ago, according to analysts surveyed by FactSet. Hill, a Nike veteran who returned to lead the comeback, is expected to develop a strategy after a year of underperformance.
The discount-driven cleanup is already impacting the performance of some of Nike’s biggest partners. The Dunk sneakers sell for $115 at Dick’s Sporting Goods and Foot Locker, but shoppers can purchase the same shoes for $85 on Nike’s website.
JD Sports CEO Regis Schultz said in November that Nike’s discounts “impact the consumer’s perception of the product and negatively impact the brand.”
Nike now sells more to retailers like Foot Locker and Macy’s than it did a few years ago. The company is also rekindling relationships with retailers such as DSW, which it cut ties with in 2022 under former CEO John Donahoe to focus on direct-to-consumer sales. The strategy initially brought record profits, but early last year executives realized they were stuck with too much product and needed help unloading it.
Academy Sports & Outdoors CEO Steve Lawrence said last week that the company plans to carry a broader selection of Nike products in about 140 stores, about half of Academy stores.
He said this would be the most meaningful announcement in the company’s 86-year history. The sporting goods chain has been experiencing a decline in sales since April 2022.
Nike still dwarfs its sneaker competitors, and its products are well-received by retailers. Executives at Foot Locker, JD Sports and Macy’s expressed support for Hill’s strategy, saying their businesses would benefit from increased sales of Nike products in the long run.
“I think Elliott and his team are definitely doing the right thing for the brand across the market,” Foot Locker CEO Mary Dillon said earlier this month. The chain suffered weak quarterly sales and lowered its financial targets in its October earnings report. Citing softness in Nike’s business, Dillon said Nike’s discounts were higher than retailers expected, but he expected the intensity to ease.
Hill’s return was met with optimism on Nike’s campus, where he did more than lower prices. In his first two months on the job, Hill cut technology spending, secured an extension to supply uniforms to the National Football League, and reorganized marketing and operations executives.
Mr. Hill appointed the company’s top lawyer to head its sports marketing department, one of Nike’s top jobs. He also appointed a new human resources director.
In November, Nike re-emerged as a major sponsor of Running Events, an industry trade show that has had little presence in recent years. Nike executives appeared with marathon world record holder Kelvin Kiptum to unveil the latest version of the company’s Alphafly 3 supershoe.
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The sports giants are playing catch-up in the running field because of a lack of investment in local communities in recent years. Other brands like Brooks and Hoka attracted runners during Nike’s absence.
Hills is dealing with the effects of a period of low morale resulting from several rounds of restructuring. Hill said in October that a recent internal survey showed many employees at Nike’s Beaverton, Oregon, headquarters were concerned about Nike’s future.
Investors say the move is a step in the right direction, even though much of it was launched by Hill’s predecessor earlier this year. The part of the plan that can’t come soon enough are new shoes that can captivate the masses, like the Nike Dunk, a revival of the classic 1985 sneaker that has become a multibillion-dollar franchise in recent years.
Nike executives have reduced supply of the Dunk, Air Jordan 1 and Air Force 1 franchises to protect public perception, but the company is still making more of these shoes than it can sell. As of Wednesday, more than half of Nike’s men’s shoes were on sale at a discount on the company’s website.
New tariffs could complicate Nike’s restructuring plans. The company manufactures most of its shoes in Asia. The company will face increased costs if President-elect Donald Trump implements his plan to impose new tariffs on most imports into the United States.
In Europe, Nike announced last year that it was appealing tariff charges imposed by European and Belgian authorities. The company said that losing this dispute would have a material adverse effect on its financial condition. A trial is scheduled for February 2026.
Email Inti Pacheco at inti.pacheco@wsj.com.
