Last week, Nike released its financial results for the fiscal year ended May 2025 (FY25), reporting a 10% drop in revenue — from US$51.3 billion in FY24 to US$46.3 billion. This US$5 billion contraction is equivalent to more than half of Puma’s annual revenue.
Despite the challenging environment, the market reacted with optimism: Nike's stock rose 20% immediately after the announcement. The boost was driven by confidence in the recovery plan led by Elliott Hill, who came out of retirement in 2024 to spearhead a strategic “reset” at the company.
Nike Still Dominates
Even with the decline, Nike maintains a commanding lead over its competitors: Nearly double Adidas' revenue, which ended 2024 with US$26 billion; five times the size of Puma, which posted US$9.7 billion for the same period.
This gap is the result of a global brand built through scale, distribution, and consistent consumer connection.
The Strategic “Reset” Is Starting to Show Results
Since Hill’s return, Nike has rolled out several key changes:
- Back to performance: Technical innovation and sport are once again the core of the strategy, with lifestyle taking a supporting role.
- Recalibrating DTC-first: Nike has slowed its digital push and reopened partnerships with major global retailers to strengthen its wholesale presence.
- Leadership overhaul: Nearly the entire executive team has been replaced, signaling a new internal direction.
- Inventory and channel optimization: With fewer excesses and a leaner distribution network, Nike is operating with greater agility.
Profitability and Margins Remain Strong
Despite the revenue drop, Nike delivered resilient performance:
- Net income of US$3.2 billion — nearly 4x Adidas and 10x Puma;
- Net margin above 6%, even amid structural adjustments.
Cost control and financial discipline ensured profitability in what was the toughest year for Nike in over three decades.
Risks on the Horizon: U.S. Market and Tariffs
The United States accounts for 43% of Nike’s revenue. With Trump administration tariffs back in effect, the company may face up to US$1 billion in additional costs. In response, Nike has already initiated selective price adjustments, supplier diversification beyond China, and a review of its global logistics strategy.
Even in a difficult year, Nike delivered strong profits, sustained healthy margins, and kicked off a clear strategic repositioning.
Adidas and Puma continue to grow, but Nike is playing on a different level — and the market has recognized that.
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