Nike's S&P 100 exit: How its once-successful growth model faltered

Nike's latest numbers reveal a reversal, with wholesale recovering while Direct and digital remain under pressure, forcing the sportswear giant to rethink its growth strategy

Nike won't be a part of the S&P 100 from September 21. A sharp decline in its market value has led to the sportswear giant's removal from an index that tracks the 100 largest companies in the S&P 500. After 18 years, S&P Dow Jones Indices will remove Nike from its indices before the US market opens on September 21 as part of its quarterly rebalancing, S&P Global announced on Friday. Nike will remain in the broader S&P 500.

 

Nike’s shares closed at $38.40 on Friday (September 4), valuing the company at about $57 billion, down significantly from about $280 billion at its peak in 2021.

 

 

For years, Nike built its growth strategy around selling more directly to consumers, particularly through its own stores (Nike Direct) and digital platforms (Nike Digital), while reducing its dependence on traditional retailers. That strategy was meant to give the company greater control over customer relationships and drive growth. Instead, direct and digital sales have weakened, while wholesale has begun to recover. So, what happened to Nike’s once-successful growth model?

The growth model that stopped delivering

In 2020, the company described its Consumer Direct Acceleration strategy as a digitally enabled phase of its growth plan, with Nike Digital and its own stores at the centre of the marketplace, alongside selected strategic partners. According to the company, selling directly gives a brand greater control over pricing, customer data, presentation and the consumer experience. It can also reduce dependence on retailers.

 

The problem was that the direct model did not continue to generate the growth Nike had expected. Nike’s revenue fell to $46.3 billion in FY2025 from $51.4 billion in financial year 2023-24, a 10 per cent decline. Nike Direct revenue fell 13 per cent to $18.8 billion, while Nike Brand Digital declined 20 per cent. Wholesale revenue also fell, but by a smaller 7 per cent. Gross margin fell 190 basis points to 42.7 per cent, with Nike citing higher discounts, changes in channel mix and inventory obsolescence reserves.

 

The deterioration continued into FY2026, although the picture became more mixed. Revenue was broadly flat at $46.39 billion. Wholesale revenue increased 6 per cent to $27.5 billion, while Nike Direct fell 6 per cent to $17.7 billion. Within Direct, Nike Brand Digital declined 12 per cent.

 

The financial disclosures show that the company that once wanted to put greater distance between itself and traditional retailers is now rebuilding wholesale distribution.

Meanwhile, rivals changed the game

Nike’s problems have come as the sportswear market itself has become more fragmented. Specialist brands have carved out strong positions in individual categories, particularly running, where Nike once had a dominant presence.

 

On, the Swiss sportswear company, reported net sales of Swiss franc (CHF)3.01 billion (about $3.8 billion) in 2025, up 30 per cent from a year earlier. It expects sales to grow by at least 23 per cent in constant-currency terms in 2026. Its growth has been built around a premium positioning, a focus on running-led product innovation and a mix of direct and wholesale sales.

 

Hoka, owned by Deckers Brands, has also continued to expand. Its revenue rose 15.9 per cent to $2.59 billion in FY2026, with wholesale sales up 18.2 per cent and direct-to-consumer sales rising 12 per cent.

 

New Balance, the privately held US sportswear company, reported global sales of $9.2 billion in 2025, up 19 per cent from a year earlier, marking its fifth consecutive year of double-digit growth. Its products have gained traction across both performance and lifestyle categories, while the company has continued to invest in running, wholesale partnerships, and its direct-to-consumer business. New Balance’s growth is significant because it shows that Nike is not only being challenged by smaller, newer brands such as On and Hoka, but also by established rivals that have managed to strengthen their relevance with consumers.

 

In China, meanwhile, Nike faces increasingly strong domestic competition. ANTA Sports, one of China’s largest sportswear companies, reported revenue of Renminbi (RMB)80.2 billion (about $11.2 billion) in 2025, up 13.3 per cent from a year earlier. The company said its market share in China reached a record level during the year.

 

While this does not mean On, Hoka, New Balance, or ANTA Sports caused Nike’s decline, their growth highlights the competitive landscape Nike is now operating in. Smaller, more focused brands have gained traction with consumers through specialised product offerings.

 

Nike’s response has been to put sport and product innovation back at the centre of its strategy. According to the company's filings with the US Securities and Exchange Commission, it is accelerating new product launches while cutting supplies of some existing footwear to rebalance its portfolio and make room for newer products.

China has become a persistent weakness

Greater China has become one of Nike’s biggest obstacles to a broader recovery. The company reports its business across four geographic operating segments: North America, Europe, Middle East and Africa (EMEA), Greater China, and Asia Pacific and Latin America (APLA). Greater China comprises mainland China, Hong Kong, Macau and Taiwan.

 

Nike’s Greater China revenue fell from $7.55 billion in FY2025 to $6.59 billion in FY2026, a decline of 13 per cent on a currency-neutral basis. Footwear revenue fell 15 per cent, and Direct revenue declined 12 per cent, while digital sales dropped 29 per cent. Nike attributed the pressure to lower store traffic, heavier discounting and higher inventory levels across the market, weighing on both sales and profitability.

 

Nike is also operating in a more competitive Chinese sportswear market with ANTA Sports rapidly growing in its home market.

What's next? Nike’s growth strategy is being reset

The company’s latest annual report says it is repositioning Nike Brand Digital as a full-price platform while reinvesting in wholesale distribution. It is also investing in the presentation of its brands in physical retail and increasing marketing around products and major sporting moments.

 

The numbers suggest this shift is already visible. In FY2026, Nike Brand wholesale revenue rose to $27.5 billion from $25.9 billion, while Direct fell to $17.7 billion from $18.8 billion. In North America, wholesale revenue rose 14 per cent while Direct declined 6 per cent.

 

The company is now trying to combine its direct consumer relationship with wider physical distribution, stronger product innovation and greater emphasis on sport.