I don’t know about you, but I took no pleasure in Nike’s dismal Q4 earnings announcement. Even after taking down guidance last quarter, the company once again came up short and at this moment is priced at $76 and change, down 32 percent from a year ago.
People like to talk shit about the top dog, but lately with Nike it feels like the video above: the mighty king of the jungle being taken out by a clan of hyenas—more tragic than anything and compelling me to internally scream at the screen, “Do something!”
If ever there were a time to replace CEO John Donahoe, at least a year ago would seem to be that time (he officially hits five years on January 13, 2025), and yet from what I’ve heard the company is committed to a smooth executive transition with no ugliness or finger pointing. The line being pushed is that the CEO doesn’t stand alone in the company’s failures, everyone owns some blame.
And anyone thinking Phil Knight must be appalled by what sounds like a thoroughly Gen Z take on executive leadership, he is not. Following the brand’s recent earnings, the 86-year-old founder told CNBC in a statement, “I have seen Nike’s plans for the future and wholeheartedly believe in them. I am optimistic in Nike’s future and John Donahoe has my unwavering confidence and full support.”
If you want to be super fair to Donahoe, you could argue that he grew the company…a lot: Year-end revenue for fiscal year 2020 was $37.4B and the recently announced fiscal year 2024 revenue total was $51.4B, so 37% percent growth over four years, which is not a joke. Still, as far as Wall Street is concerned, you’re only as good as your next pool game, so what Nike’s done over the past four years doesn’t matter if it now appears to be slowly rolling down a hill.
What’s The Matter With Nike
There’s a lot of chatter out there about what’s the matter with Nike, but for a massive, global company it’s always multiple things. Using the Q4 transcript, I put together some items and categorized them in a “good,” “bad” and “interesting” chart (above).
On a free format I don’t want to get into my opinions on what specifically is wrong with Nike and what needs to happen for it to recover, but I do think it all began with the July 2020 reorganization when the company shifted from activity and lifestyle-based divisions to a pared-down structure consisting of men’s, women’s and kid’s. The news was announced with an article titled “Nike Announces Senior Leadership Changes To Unlock Future Growth Through The Consumer Direct Acceleration,” a move that’s blown up in the brand’s face in spectacular fashion.
A lot of talent was let go at that time, as well as Nike’s former way of creating things, and in my opinion, everything slowly unraveled from there. Whether there will be a lion like Tartu who enters from stage right to save Nike from a slow and ugly demise at the hands of a pack of hyenas is at this moment very much an open question.
helluva headline ;-)