Nike CEO: Too Many Discounts Ruined Our Premium Brand Image (Just Do It to Just Fix It)

Nike’s new CEO, Elliott Hill, is stepping into his role like a seasoned coach inheriting a team that’s been underperforming (think any unfortunate soul that gets hired by Jerry Jones). Sure, the talent is there, but the strategy? Ehh not so much. Hill's mission from the get-go has been to clean up a mess that’s been years in the making—and somehow repair a brand, synonymous with innovation and athletic dominance, that’s managed to lose its way. Meaning, the  company that once convinced the world to “Just Do It” now has to convince investors it can “Just Fix It.”

At first glance,  Nike’s Q2 earnings report looks like a win. Earnings per share hit $0.78, blowing past the expected $0.63. Revenue came in at $12.35 billion, ahead of Wall Street’s $12.13 billion estimate. But peel back the layers, and things start to look less attractive. 

(Source: Yahoo Finance) 

For instance, revenue dropped 8% year-over-year (down from $13.39 billion and net income  fell 24%, landing at $1.16 billion compared to $1.58 billion a year ago. Ooof. Beating expectations is nice, but when those expectations are set low enough to trip over, it’s hard to call this a true victory. It’s like celebrating a bronze medal when you used to win gold without breaking a sweat.

For this reason, Hill didn’t mince words during the earnings drop. Nike, he said, has become “far too promotional.” The company has been leaning on discounts and markdowns to clear inventory, creating a vicious cycle that’s eroded margins and cheapened the brand (100%). Nearly 50% of digital sales are now at promotional prices—a stark contrast to the premium image Nike spent decades cultivating.

(Source: Giphy) 

Hill's plan is to take a page out of Starbucks’ Messiah, Brian Niccols, playbook and dial back the discounts, focus on full-price sales, and rebuild relationships with wholesale partners like Foot Locker and JD Sports. In other words, stop acting like a friggin’ overstretched DTC startup and start acting like the global powerhouse Nike is supposed to be.

For those of you not clear on what that truly means, it all points to Nike trying to reverse-engineer its way back to authenticity. The brand that once symbolized aspiration and cutting-edge performance now has to convince both consumers and partners that it’s more than just a discount bin for lifestyle sneakers. Especially since one of Nike’s biggest challenges right now is inventory. For context, the company  is sitting on $8 billion worth of product, flat compared to last year but still uncomfortably high. Hill acknowledged that clearing this backlog will require more markdowns, which means margins are likely to stay under pressure for at least another quarter.

(Source: CNBC) 

What’s more is that the inventory bloat underscores a deeper problem: Nike’s recent reliance on a handful of overproduced, overhyped silhouettes (looking at you, Air Force 1s and Dunks) has made the brand predictable and, worse, boring. The company flooded the market with “must-have” sneakers until they became “meh-have” sneakers. The take-away?  Nike’s inventory problem isn’t just about logistics—it’s about identity. A brand built on innovation and exclusivity can’t afford to be seen as stale or overexposed. 

See, for years Nike has prioritized direct-to-consumer sales at the expense of wholesale partners, a strategy that Hill is now walking back. Wholesale revenues were down just 3% last quarter, compared to a 13% decline in DTC sales—a clear sign that retailers like Foot Locker still play a critical role in Nike’s ecosystem. In fact, Hill pretty much made things clear on the new maneuvers by saying “We’ll do more than just sell our products. We’ll actively support mutually profitable sell-through.” Translation: Nike knows it needs to play nice with wholesale if it wants to stabilize its business.

(Source: CNBC) 

Now with that said, one piece of undeniably good news (other than the fact Converse, Nike’s $305 million acquisition from 2003 has shat the bed with a 17% sales drop last quarter), Nike renewed its exclusive uniform deal with the NFL through 2038, cementing its status as the go-to brand for America’s biggest sports leagues. Add this to its existing partnerships with the NBA and MLB, and it’s clear that Nike still owns the pro sports space. But still, even with that, jersey deals are a nice PR boost, not a revenue driver. They don’t fix the core issues plaguing Nike’s sneaker and apparel business.

In the end, regardless of what investors take away from Nike’s numbers, Nike’s not just battling inventory bloat or margin pressures—it’s battling an existential question: What does it mean to be Nike in 2025? Nike’s turnaround is less about flashy new strategies and more about getting back to basics. Stop overproducing. Rebuild trust with partners. Invest in innovation. And maybe, just maybe, rediscover the magic that made the swoosh iconic in the first place.

(Source: Giphy) 

Obviously, the road ahead won’t be easy. Margins will stay under pressure, sales are likely to remain volatile, and competitors aren’t slowing down. But if Nike can stick the landing, it won’t just be a comeback—it’ll be a case study in how even the biggest brands can lose their way and find it again. And I, for one, am here to see it (hopefully).

In the meantime, do what you will with this information and place your bets accordingly friends. As always stay safe and stay frosty! Until next time…

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Stocks.News holds positions in Starbucks as mentioned in the article.