A Sluggish Nike Is Leaning Hard Into Wholesale, But The Competition for Shelf Space Has Never Been More Fierce

In a stark reversal of a previous strategy that saw Nike pivot away from wholesale, the athletic brand is now focused even more on building its retailer relationships as it works to turnaround the business.

On a Thursday call with analysts, Nike president and chief executive officer John Donahoe said that the company has spent “a lot of time leaning in with our wholesale partners” over the last fiscal year.

“We’ve had several wholesale partner summits,” the CEO noted. “We’re exposing our three-year product innovation pipeline to them, and feedback has been very strong. Our order book for holiday 2024 and spring 2025 is strong. And so our confidence is building, and we feel like we’ve made strong progress.”

The wholesale emphasis — one of few key areas Nike is looking to improve — marks an interesting reversal from Nike’s DTC-focused strategy (“Consumer Direct Acceleration”) that has been the brand’s North Star since June 2020. This plan involved zeroing in on DTC and digital channels and pulling out of some wholesale doors. But in recent years, market watchers became increasingly skeptical of Nike’s progress with this plan, as the Swoosh re-entered or reinvigorated its wholesale partnerships with retailers such as DSW, Macy’s and Foot Locker.

By channel, Nike direct revenues were down 8 percent to $5.1 billion in the fourth quarter of fiscal 2024, driven by digital and store declines. But wholesale was up 5 percent to $7.1 billion in Q4. For the full year of 2024, the company reported that both Nike direct sales and wholesale sales were up 1 percent for the year.

“We said we want to be where the consumer is whether that’s digital, or our own doors, or wholesale,” Donahoe said on Thursday’s call. “And so, we’re embracing a more balanced approach to growing the whole marketplace.”

But some analysts are not convinced that this renewed wholesale strategy will help Nike in the long run. According to Williams Trading analyst Sam Poser, Nike will likely pivot too quickly from DTC channels to wholesale, which could lead to saturation of its products in the marketplace, increased promotional activity and a hit to brand equity.

“Nike is not as great a company today as it was prior to 2020, in our view, and does not appear to be heading the right direction despite management’s claims to the contrary,” Poser said. “We remain unconvinced that Nike has the team in place to once again become a growth company.”

Still, Donahoe is banking on Nike’s new innovation pipeline to drive excitement with his retail partners in the future. “We will sell more into wholesale partners as we scale product innovation and newness across the marketplace and finalize second half order books,” the CEO said.

“We’ve said it now for a couple of quarters,” Donahoe added. “We are very excited about this multiyear innovation pipeline and cycle. We’ve seen some early examples of it in this past quarter with the Air Max Dn and Pegasus 41 [launches]. And as we move into the end of this second half of this fiscal year, which we talk about as the spring ’25 and summer ’25 seasons, the amount and breadth and depth of the innovation is just accelerating significantly. And at our size and scale, we know we need to both innovate broadly and deeply but also provide innovations that can scale.”

The CEO added that the wholesale partner feedback the company has received so far on what is coming in the second half of this year and down the three-year road map is positive. “In many cases, [like what’s coming] around running, basketball and lifestyle, the wholesale feedback has been strong,” Donahoe said. “And their order books are reflecting that.”

But the innovation may not be enough to reclaim the top spot Nike held in the market for years, as more competitors move in on the company’s territory. Even online, Nike is falling behind running shoe competitors when it comes to website traffic growth. Between March 2022 and March 2024, traffic to Nike.com’s running shoe category has declined steadily, according to web traffic data complied by Similarweb. Whereas the Swoosh’s running segment had double the amount of traffic of its competitors in March 2022, other brands have since caught up, with Brooksrunning.com now rivaling Nike’s total traffic to its running category.

“Nike has been in a rut in the last year, after years of dominating sportswear and footwear in general, while challenger brands like Hoka or Brooks have done a good job at highlighting their value proposition for running,” said Ines Durand, Similarweb’s advisory services solution business manager, in a statement.

This update comes as the athletic giant reported on Thursday that revenues in the fourth quarter were down 2 percent to $12.6 billion over the same quarter last year. Overall, Nike Inc. revenues for fiscal year 2024 were $51.4 billion, up 1 percent from the prior year and in line with the company’s guidance.

Nike now expects revenues for fiscal year 2025 to be down in the mid-single digits, with revenues for the first half of the year down in the high single digits. In Q1, revenue is expected to be down 10 percent, reflecting muted wholesale order books with newness not yet at scale, a softer outlook in China, as well as other quarter-specific timing factors.