By Mike Millett · Founder, Digilu · October 2, 2026 Essay

Nike is five years into a decline, not two years into a recovery.

Three record years followed the decisions that weakened the brand. The numbers that warned first were not the ones on the scoreboard.

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October 2, 2026 · 9 minute read

Nike reported its fiscal 2027 first quarter on October 1, 2026. Revenue fell 4 percent to $11.2 billion. The company told investors to expect a high-single-digit decline for the full year and announced a new operating model called Pace, with about a billion dollars in charges that are mostly employee costs. Ten days earlier it left the S&P 100. Start the clock in the fall of 2024, when Elliott Hill became chief executive, and this is a turnaround running late. I think that clock starts three years too late. Nike is not two years into a recovery. It is about five years into a decline, and revenue was the last number to report it.

When did Nike's decline actually start?

I date Nike's decline from 2021, and the anchor is a set of decisions, not a sales number.

Fortune's reporting on the company describes a leadership team that, soon after the spring of 2020, set a goal of earning half of Nike's revenue through its own website. To get there, Nike cut ties with long-standing wholesale accounts, moved marketing money from brand storytelling to search and digital ads, and shifted its product focus from innovation to nostalgia: more versions of the Air Jordan, the Air Force 1 and the Dunk.

The plan was set in 2020. 2021 was the first full year the brand ran on it, and that is where I start the clock. Every interval in this essay is measured from there.

None of this is my discovery. Fortune reported it, and the idea that the direct push hurt the brand is close to the standard account by now. My argument is only about the date, and what the date does to the word "late."

The market noticed in the same year. Fortune puts Nike's peak at $264 billion in market value in November 2021. It was worth roughly $57 billion in early September 2026, a loss of more than $200 billion.

Revenue did not notice. Nike reported $46.7 billion for fiscal 2022, $51.2 billion for fiscal 2023 and $51.4 billion for fiscal 2024. The first annual drop came in fiscal 2025, the year ending May 2025: $46.3 billion, down 10 percent. Three fiscal years of records sat between the first year of the plan and the first bad annual number.

Which Nike numbers warned before revenue fell?

Three Nike numbers moved before annual revenue did, and they moved in an order.

November 2021: market value peaked, by Fortune's account, and never came back.

Fiscal 2024, the year ending May 2024: revenue came in at $51.4 billion against $51.2 billion the year before. That is growth of less than half a percent. Flat before inflation is a decline after it. A record by $0.2 billion is still a record, the way a tie is still not a loss (haha).

The last quarter of that same fiscal year: Nike Direct revenue fell 8 percent while wholesale grew 5 percent. The channel the whole plan was built around was shrinking. The channel Nike had walked away from was growing.

Then fiscal 2025: annual revenue down 10 percent, to $46.3 billion. One year took it below where it stood in fiscal 2022. Slow to show, quick to land.

I call that stretch relevance decay: the years when a brand matters a little less to its customers while the results still look healthy. Revenue goes last because it is fed by habit, contracts, product already shipped and customers who have not gotten around to switching yet. That is stored trust being spent. Trust creates momentum, and at Nike's size the momentum ran three fiscal years past the decisions that stopped renewing it.

Is Nike's share price evidence that customers left?

Nike's $57 billion market value is a forecast. It is what investors with their own money at stake think the company's future cash is worth. Nike's $46.4 billion in fiscal 2026 revenue is a record of what customers already paid. The gap between them says investors expect a much smaller Nike than the sales line describes. On its own, it does not say why.

The S&P 100 exit is the same forecast written into an index. After nearly 18 years in the S&P 100, Nike no longer made the cut. On the income statement it still looks like one of the biggest companies in its industry.

Using the share price as proof that customers moved would be circular, so I won't.

Why did Nike's revenue hit records while the brand was losing relevance?

Every decision that weakened Nike's brand also raised its sales in the short run. That is how revenue hit records in the same years the brand was losing relevance, and it is what made those decisions hard to argue with.

Selling direct captures the retailer's margin. Search ads convert people who already want the shoe. Reissuing a famous sneaker sells to the customer you already have. Each of those shows up as growth in the next quarter. None of them creates a new reason to want a Nike.

There is a rival explanation for the records: pandemic demand and higher prices. I think it is partly true, and it helps my case. Revenue that rises because shoppers are flush and prices went up says nothing about whether more people want the product.

In June 2022 the company announced record annual revenue, and its chief executive said Nike's competitive advantages "prove that our strategy is working." By the numbers on the page, he was right. Nobody calls an emergency meeting about record revenue.

By January 2025, Fortune's profile of the company was describing upstarts like On and Hoka as the ones exciting sneaker buyers. A customer who tries another brand does not send a notice. They buy one pair somewhere else, like it, and the Nike purchase that would have happened next year does not happen.

Revenue measures what customers already did. Relevance is about what they do next. For three fiscal years at Nike those two pointed in opposite directions, and the company was reading the one that looked better.

Is it fair to date Nike's decline to 2021 instead of 2024?

The strongest case against dating Nike's decline to 2021 goes like this. The stock peak was a market-wide high. Revenue set records for three more years. China, tariffs and a cautious shopper are causes outside the brand. Nike was fine until 2024 and then hit a wall.

Start with the stock. Late 2021 was a high for plenty of stocks with nothing wrong with them, and a share price is not a survey of sneaker buyers. If the stock were my only evidence I would drop the year. It is not the anchor. The decisions are, and they are dated by reporting. What a market-wide high cannot explain is the distance since: more than $200 billion gone, and a place in the S&P 100 lost in September 2026. Companies leave that index when others have grown past them.

China has a cause of its own, and it lands in my year. In March 2021 Nike was among the Western brands Chinese shoppers boycotted over Xinjiang cotton. The direct strategy did not create that. Nike reported Greater China revenue down 22 percent this quarter, and as of early September Fortune counted eight consecutive quarters of declining sales there. The same article points to competition from Chinese brands like Anta and Li Ning, and from Hoka and On. A boycott in 2021 explains a bad 2021. The part still getting worse is customers choosing something else.

Tariffs and a cautious shopper are real. They also land on every company selling shoes. For fiscal 2026, Fortune reports Nike's direct revenue down 6 percent and wholesale up 6 percent. A weak consumer does not buy less from Nike's own site and more from Nike's retailers.

What I can't show you is a 2021 number from customers themselves. The date comes from the decisions and from the order of what followed.

How long should Nike's turnaround take?

Nike's turnaround has to run the same course as the decline, in the same order: decisions first, customers second, revenue last. Elliott Hill became chief executive in the fall of 2024, during fiscal 2025. The decline took three fiscal years to reach annual revenue.

The newest numbers do not flatter that reading. Wholesale grew 6 percent in fiscal 2026, by Fortune's count, which looked like the retailers coming back. In the quarter just reported, wholesale slipped 1 percent and Nike Direct fell 8 percent. Both channels are falling at once, and the guidance is a high-single-digit decline for the year. That is a point against the repair, not a sign of it.

Nike's release says its performance business is making measurable progress under what it calls the Sport Offense, and it admits there is more work to do in sportswear, Jordan and Greater China.

I have no proof the trip back is the same length as the trip down. My reason for expecting it to be no shorter is the customer. Someone who drifted to another running shoe in 2021 or 2022 has had time to buy a second and third pair. The retailer gave that shelf to someone else and it is selling. The first time around, Nike only had to stop showing up. Now it has to beat a brand the customer already likes.

So here is the test. Give the repair the same three fiscal years the decline took. Wholesale should be growing again before annual revenue does, and annual revenue should be growing in fiscal 2028, the year ending May 2028. If fiscal 2028 comes in down, I am wrong, and the turnaround really was late.

What can a business owner check before revenue falls?

Nike's revenue was the last number to move, so an owner watching revenue is watching the slowest gauge on the dashboard. Two numbers move sooner, and most businesses can pull both this quarter.

The first is the share of sales that came from customers who had never bought from you before. Reissuing a famous sneaker sells to the customer you already have. Revenue counts that sale the same as a new one. This number does not.

The second is how much of what you sold went at full price. A brand people want sells without a discount. When the same revenue takes more promotion every quarter, the demand is rented.

If both are sliding during a record year, the record is the lag.

Revenue measures what customers already did, and relevance is about what they do next.

I am not betting against Nike. It has the money and a chief executive who spent his career on the retail relationships that were cut. What I would change is the scoreboard. A company that dates its trouble from the first bad revenue number will always think its problems are newer and smaller than they are. The date that matters is the one when customers started having a reason to look elsewhere, and that date never appears in an earnings release. If you run a business, the useful question from Nike is an uncomfortable one. What did we decide during our best year?