Nike Q2 2025

Nike’s Turnaround Plan: A Shift Away from Promotions and Toward Full-Price Sales

Customers shop at a Nike store in an outlet mall in Los Angeles, Nov. 8, 2024.

Nike’s turnaround will take a bit longer than expected under new CEO Elliott Hill, who outlined his strategy to return the company to growth on Thursday after the retailer blamed deep discounting for declining revenue and profit.

The sneaker giant has been relying on promotions to drive sales, and it plans to return its online business to a full-price model, but first, it will need to aggressively liquidate old inventory through "less profitable channels," said Hill and finance chief Matt Friend.

What Went Wrong

"What I’ve seen is traffic in Nike direct, digital and physical, has softened because we lack newness in product and we’re not delivering inspiring stories," said Hill. "The result is we’ve become far too promotional… Entering the year, our digital platforms were delivering roughly a 50/50 split of full price to promotional sales. The level of markdowns not only impacts our brand, but it also disrupts the overall marketplace and the profitability of our partners."

Expectations

As a result, Nike expects gross margins to be down between 3 and 3.5 percentage points during the holiday quarter. It also expects sales to be down low double digits, worse than what analysts surveyed by LSEG had expected.

Q2 Results

While expectations were low for Nike’s most recent quarter headed into Thursday’s release, the sneaker giant handily beat Wall Street’s expectations on the top and bottom lines.

Here’s how Nike did in its fiscal second quarter of 2025 compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: 78 cents vs. 63 cents expected
• Revenue: $12.35 billion vs. $12.13 billion expected

New CEO’s Plan

Hill, who started with Nike as an intern in the 1980s before leaving the company in 2020, is tasked with turning around the world’s largest sportswear company after it fell behind on innovation, ceded market share to competitors and botched its selling strategy.

"I have an irrational love for this company. I know Nike inside and out, take pride in what the brand stands for and want to see the company succeed," Hill said in his opening remarks to analysts. "In a moment where our team, brand and business are being challenged, my singular focus is to help get us back on track, to get back to winning."

Unwinding Previous Strategies

During his opening remarks, Hill delivered a resounding rebuke of the strategies that have come to define his predecessor John Donahoe’s tenure as CEO.

He said the company had spent too much of its resources focused on driving online sales, paying for performance marketing and isolating wholesale partners — strategies that he now plans to unwind. He acknowledged that key wholesale partners feel Nike has turned its back on those partnerships and said the company is now working to build back their trust.

Conclusion

Nike’s turnaround will require a significant shift away from promotions and toward full-price sales, as well as a renewed focus on innovation and product development. The company’s new CEO, Elliott Hill, has outlined a plan to return the company to growth, but it will likely take some time to see the results.

FAQs

Q: What is Nike’s plan to return to growth?
A: Nike plans to return its online business to a full-price model, aggressively liquidate old inventory through "less profitable channels," and focus on innovation and product development.

Q: Why did Nike’s sales decline?
A: Nike’s sales declined due to deep discounting, which impacted the brand and disrupted the overall marketplace and the profitability of its partners.

Q: What is the new CEO’s plan for wholesale partners?
A: The new CEO, Elliott Hill, plans to work to build back the trust of key wholesale partners, who feel Nike has turned its back on them.

Q: How will Nike’s shift away from Dunks and Air Force 1s affect Foot Locker?
A: Foot Locker’s sales were affected by the decline in demand for Nike products, particularly Dunks and Air Force 1s.