It’s hard to imagine how the city will fare during the Olympics. The charm of Paris – its narrow streets and exquisite little shops – means that even on a normal Tuesday, car traffic is pretty bad. (Hence the flood of electric bikes that nearly blew me away every time I crossed a street.) The Seine is beautiful, but open water swimming will probably be out E. coli. Paris Mayor Anne Hidalgo has already criticized how she handled (or failed to handle) the chaos leading up to the Games.
For Nike, too, the Olympic Games represent either an incipient crisis or an opportunity to turn things around. The company is struggling through a difficult few years, plagued by low sales and on its longest losing streak since it went public in the 1980s. In February, Nike CEO John Donahoe announced that the company would lay off around two percent of its workforce. The second wave of layoffs will occur within a few weeks of employees returning from this event.
As with any aging company, the reasons for this are complex. “Nike’s innovation is not where it should be … and the company has become distracted,” said David Swartz, a senior equity analyst at Morningstar, who cited a number of reasons why Nike’s business is no longer great. The company faces more competitors than ever, from Adidas and Puma to newer companies like On Running and Lululemon.
Like many other companies, the company continues to have problems managing its inventory after the Corona crisis. It’s also a lightning rod for controversy. As the dismay over the high-cut briefs shows, the company is mired in further accusations of sexism. A federal judge recently decided this The OregonianA Portland, Oregon-based newspaper can report previously sealed documents detailing decades of harassment at the company.
The company’s transition from wholesale to direct sales has not been as successful as hoped, and confidence in the new leadership team is uncertain. “It makes sense to hire someone with digital sales experience if you want to sell online,” Swartz said. Donahoe previously served as president and CEO of ServiceNow and eBay and is still chairman of PayPal. “However, [Donahoe] is not a sneakerhead.” As if that weren’t enough, the creative team behind some of the most successful Nike commercials of the last 20 years has quietly left the agency to work on smaller projects.
It’s not all bad news for Nike, however. Far from it. Any athlete Nike sponsors in the upcoming Olympics could lose; Any shoe the company launches in the next few months could flop. However, the company’s products remain best in class and have been for a very long time. The best athletes in the world wear Nike. It’ll just be a while before a competitor can equip a runner with Kipchoge’s star power. Even Caitlin Clark wore Nikes when she broke the NCAA shooting record. Not bad for a 60-year-old company – even one that clearly has some problems to solve.
“It still has the biggest marketing budget, the top athletes,” Swartz said. “I think it will come back. [The UEFA European Football Championships] and the Olympics are excellent marketing opportunities. [But] The outlook for the entire industry is simply bleak at the moment.”
Not all of us need an AI-designed prototype with TPU clips for the heels, but most of us could use a springy, comfortable everyday sneaker. Some of us (me) are also very interested in a skate shoe. In the next few months we will see whether this also applies to the rest of the world.
Correction, 04/18/2024: An earlier version of this article stated that Matt Nurse’s title was Executive Director of Nike’s Sports Research Lab. He is the Vice President and the text has been changed to reflect this.
Update: 04/22/24, 6:30 a.m. EST: This article has been updated to reflect Nike’s recent layoffs affecting 740 jobs.