Ceding market share: Nike CEO on the clock

Eighteen months into chief executive Elliott Hill’s mandate to resuscitate Nike Inc., the sportswear behemoth is ceding market share and facing a wave of short-selling as Wall Street loses patience with its sluggish inventory clearance and a perceived innovation vacuum.

Nike’s share of the global sports footwear market tumbled 3 percentage points to 22.9% in 2025, according to Euromonitor International data obtained by Reuters. The decline marks the third consecutive year of erosion for the Oregon-based company.

In a symbolic blow to Nike’s historical dominance in high-performance gear, a runner sporting ultra-light footwear from German rival Adidas AG shattered the two-hour marathon barrier last week. The feat underscored Nike’s struggle to maintain its lead in the "innovation race," as Adidas saw its market share climb to 12.2% last year, up from 11.7% in 2024.

The deteriorating fundamentals have invited aggressive bets against the stock. Data from S&P Global Market Intelligence reveals that 4.67% of Nike’s outstanding shares were on loan—a key proxy for short selling—as of May 1. This represents a more than elevenfold increase from the 0.41% on loan when Hill took charge in October 2024. The bearish sentiment significantly outstrips that of smaller, faster-growing rivals; On Running sees 1.68% of shares on loan, while Hoka-owner Deckers Outdoor Corp stands at a mere 0.52%.

Upon taking the helm, Hill cautioned that a turnaround would be a protracted process but committed to restoring Nike's pricing power. However, with operating margins continuing to contract, Hill recently conceded the recovery is moving slower than anticipated. Markets have reacted sternly, with Nike shares closing at $43.09 on Monday, a level not seen since 2014.

Morningstar analyst David Swartz noted that the persistence of these issues suggests a lack of meaningful progress under the current leadership. Inventory gluts have plagued the brand as consumer appetite for legacy lines like Dunk and Air Jordan cooled, even as Nike was slow to counter the rise of specialized players.

A Nike spokesperson, in a statement to Reuters, defended the timeline, noting that Hill’s initial months were dedicated to "diagnosing" systemic issues. The company argues that its core-sports strategy only began execution late last year, suggesting that an 18-month window is an inappropriate metric for evaluating the current trajectory.

While under Hill’s tenure the Vomero 18 running shoe generated $100 million in sales within three months, such isolated successes have failed to calm broader investor anxiety. Nike is now pinning its hopes on new iterations of the carbon-plated Alphafly and the wider release of "Nike Mind," a sensory-focused shoe.

Despite leadership reshuffles and increased marketing spends, the financial impact remains muted. Data from retail analytics firm M Science indicates that while the volume of discounted items on Nike’s website has dipped slightly since late 2024, the depth of those markdowns has intensified, further squeezing margins. Regulatory filings show inventory as a share of revenue stood at 16.1% last quarter, virtually unchanged from the start of Hill's term.

The company spokesperson maintained that Nike is aggressively "culling obsolete inventory" through a combination of retailer returns and discounts, which may impact promotional data. The pressure on Hill comes as the tenure for retail CEOs continues to shrink globally. With Nike’s operating margins dipping below 6% last quarter, the margin for error on pricing and inventory has vanished, leaving the board vulnerable to activist pressure.

While some investors, such as Simon Jaeger of Flossbach von Storch, remain supportive of Hill's direction—citing double-digit growth in North American running and soccer segments—the consensus suggests that the grace period is nearing its end. Progress must permeate other categories this year, or the patience of the "biggest dog in the fight" will likely be exhausted.

(With inputs from Reuters)