In this edition of the Glossy+ Research Briefing, we analyze Nike’s projected sales performance ahead of the company’s earnings call later today, as well as the brand’s shifting focus to direct-to-consumer sales.
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Today’s sportswear market struggles with weakened demand and stale design innovation
Breaking news: Today, Nike will report its third quarter fiscal 2024 financial results, which analysts expect will continue to show the downward trend the sportswear company has been on. Last quarter’s earning results marked the fourth quarter of decelerating growth for the company, indicating Nike’s strategy of focusing on direct-to-consumer channels like Nike-owned stores and e-commerce sites is struggling in today’s sportswear market.
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Spotty consumer demand and stale product innovation have exacerbated Nike’s sales issues, allowing new entrants like On and Hoka to steal market share from Nike and other legacy sportswear brands that have also been affected by weaker customer demand. Adidas, for example, struggled to revive its 2023 financial numbers, reporting its first annual loss in over 30 years during a March earnings call. The costly dropping of artist Kanye West’s Yeezy line hurt Adidas’s sales, while the company’s tax bills increased. Puma also saw a decline in fourth-quarter 2023 results and placed soft expectations on the first half of 2024.
Research dive: The sportswear industry has been under the spotlight with major CEO moves from brands including Under Armour, Brooks, Allbirds, Deckers Brands, Crocs and Fila. Companies are seeking new leadership to help their brands recover from poor 2023 sales performances. All eyes are on Nike to see if similar shuffles in leadership will occur. For now, Nike has turned to a DTC-first strategy to revitalize the brand’s footprint and cut inventory costs by pushing its owned sites and stores. According to the company’s most recent earnings reports, Nike has the highest percentage of DTC sales compared to competitors Adidas and Puma.
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To survive a financial downturn, brands and retailers like Nike have continued to expand their e-commerce businesses and in-store fulfillment capabilities for digital orders. Glossy+ Research’s new e-commerce playbook details retailers’ e-commerce strategies and compares the different ways retailers cater to customers’ online needs. Some of these strategies include investing in emerging technologies such as AI and extending customer touchpoints with third-party partnerships and loyalty programs.
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