Can Nike’s brand strength carry its turnaround?
Nike’s fiscal 2025 results marked a turning point for the world’s largest athletic apparel brand.
While headline figures pointed to declining revenues and shrinking margins, the broader narrative was one of strategic recalibration.
For corporate finance leaders, the latest results offer a window into how the company is managing channel complexity, cost pressure, and brand reinvestment during a critical transitional phase.
Nike closed FY2025 with $46.3 billion in annual revenue, down 10% year over year (9% on a currency-neutral basis).
The fourth quarter was particularly tough, with a 12% drop in revenue and a sharp 440-basis-point decline in gross margin to 40.3%. Quarterly earnings per share collapsed to $0.14, an 86% fall from the prior year.
Net income for the quarter was just $0.2 billion.
The company had already signaled that the final quarter would reflect the brunt of its self-imposed turnaround plan.
That plan—branded as the “Win Now” strategy—included aggressive inventory clearance, cost-cutting, and a reorientation of product development around performance sports.
Selling and administrative expenses stayed relatively flat despite inflationary pressure, thanks to a 3% reduction in overheads.
Meanwhile, Nike increased its marketing spend by 15% in the fourth quarter to $1.3 billion, signaling confidence in the long-term power of its brand even amid short-term disruption.
“The results…are not where we want them to be,” said CEO Elliott Hill, adding that Nike is now realigning its teams around a “sport offense” strategy.
The goal: regain momentum by leaning into core athletic categories, diversifying the product portfolio, and rebuilding consumer loyalty.
Much of Nike’s operational friction over the past year can be traced to the company’s evolving distribution model.
Under former CEO John Donahoe, Nike aggressively cut back on wholesale partnerships to boost its Direct-to-Consumer (DTC) business.
From 2017 onward, retailers like Urban Outfitters, Zappos, and Dillard’s were dropped in favor of a more tightly controlled channel ecosystem.
Initially, the strategy worked: Nike’s DTC business soared to $18.7 billion in FY2022. But FY2025 exposed the model’s limits.
In the fourth quarter, Nike Direct sales fell 14%, and digital sales plunged 26%. Wholesale revenue also declined, but at a smaller rate of 9%, suggesting that Nike’s traditional retail channels are proving more resilient than expected.
CFO Matthew Friend acknowledged the trade-offs, noting that while the DTC push added “tens of millions” of new customers, it also introduced inefficiencies.
As macroeconomic uncertainty lingers, the company is now rebalancing toward a more flexible, consumer-first distribution model.
Nike’s decision to resume selling directly on Amazon in 2025 is emblematic of this pivot. The move reverses years of policy aimed at curbing brand dilution and counterfeit risk by avoiding third-party marketplaces.
The rationale this time is both defensive and opportunistic. Amazon remains where over 60% of U.S. consumers begin product searches.
By reestablishing a presence, Nike reclaims visibility and ensures its products appear prominently, rather than ceding the space to gray market sellers.
More importantly, selling on Amazon provides Nike with performance data that was previously unavailable.
Marketing attribution becomes clearer: when a consumer sees a Nike ad on Instagram and later purchases via Amazon, the company now has a better shot at linking the dots.
That level of cross-channel visibility is critical for measuring return on marketing investment—especially as Nike ramps up brand spending during a revenue downturn.
The ability to integrate conversion data across digital, retail, and marketplace environments positions Nike to better understand halo effects and optimize media spend accordingly.
Nike’s realignment offers multiple lessons for CFOs, CMOs, and chief digital officers navigating the intersection of brand, data, and distribution:
For all its recent struggles, Nike remains one of the most valuable brands in global retail.
FY2025 was a course correction rather than a collapse. The willingness to confront execution missteps, recalibrate channel mix, and reinvest in brand strength demonstrates a level of corporate discipline that should resonate with long-term investors.
Looking ahead, the focus will shift to execution:
Fiscal 2026 won’t be without challenges. But if Nike can turn its omnichannel visibility into operational clarity, it will emerge from this reset stronger—and potentially more profitable—than before.