Nike's market cap hit a peak of $280B in November 2021. It's now down to $57B (a $223B drop) and will be delisted from S&P 100.

Former Nike branding exec Massimo Giunco wrote a viral post in 2024 laying it all out. He blamed CEO John Donahoe (2020-2024) for going all in on direct-to-consumer (DTC)...with a cameo from McKinsey:

▫️ELIMINATE CATEGORIES: McKinsey advised Nike to get rid of categories (running, basketball, soccer) and re-classify everything into “Women”, “Men” and “Kids”.

The logic was that Nike was duplicating resources and a pivot to DTC would provide enough customer data to inform product decisions instead of relying on the category experts (eg. a basketball vet that spent 20+ years at Nike). A lot of these experts were fired and Nike lost their insights.

This was a clear L because Nike quietly brought back categories at end 2023.

▫️END WHOLESALE LEADERSHIP: Nike ended hundreds of relationships with wholesales partners and prioritized Nike's website over retail.

The change looked genius during COVID but as customers returned to brick ‘n mortar, Nike’s product were nowhere to be found. It had burnt bridges with partners, who were happy to give shelf space to upstarts (this wasn’t covered but I think On and Hoka took advantage of this for running)

There was also a lack of feedback from retailers, which led to inventory issues (the “data-driven” insights from online sales proved to not be a panacea).

▫️PRIORITIZE DIGITAL MARKETING: Nike changed its marketing budget to focus on driving users to Nike digital properties and membership platforms.

For decades, Nike spent 10% of sales on brand advertising to create an aspirational halo. The prioritization of programmatic ad spend meant Nike went from “create demand” (new customers) to “serve and retain demand” (re-targeting existing ones).

The result was a slowdown in sales.

“Because of that,” writes Massimo Giunco (who spent 21 years at the company), “Nike invested a material amount of dollars (billions) into something that was less effective but easier to be measured vs something that was more effective but less easy to be measured. In conclusion: an impressive waste of money.”

The quality of advertising was also...not great.

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The focus on DTC is not surprising. Donahue was formerly CEO of B2B SAAS firm ServiceNow.

Nike’s DTC business peaked at 44% of sales in 2024 (vs. under 30% before the strategy change).

The digital focus seems to have commoditized the product, impacted Nike’s brand perception and created an opening for competitors.

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Original post: www.linkedin.com/pulse/nike-epic-saga-v…