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And now for the main event…

It’s hard to distill the historic multidecade rise of Nike down to just a few sentences, but humor me. Back in the early ’70s, co-founder and former University of Oregon middle distance runner Phil Knight collaborated with his former coach Bill Bowerman on the so-called “Moon Shoe,” which quickly became the ne plus ultra product for serious joggers. Nike carefully expanded on its success in the performance running space by dominating the burgeoning sneaker industry and then subsequently moved into new categories, applying the same strategy each time: aligning itself with the professionals at the apex of each sport before moving downstream to capture all the value among the amateurs and hobbyists and other aspiring classes. In the process, Knight helped architect an oft-imitated brand playbook for seizing markets from the top down, a distinctly novel idea in the era of mass market corporate icons like McDonald’s and GE. In the ensuing decades, it’s been deployed by companies as varied as Starbucks and Uber, Amazon and Tesla.

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Nike expanded its purview from running to basketball to training, and then to pretty much every conceivable athletic activity and market sector—golf, tennis, baseball, football, fashion, swimming, even leisure. At the dawn of this decade, its market cap peaked at more than a quarter-trillion dollars, making it significantly larger than every other business in the space combined. And that, of course, is where this story takes a slightly interesting turn. In 2020, Knight’s disciple Mark Parker stepped down as C.E.O. He was replaced by John Donahoe, an unflinchingly qualified executive and company board member, who had previously run Bain and eBay. One of Donahoe’s first decisions—perhaps fueled by the pandemic-accelerated flight to e-commerce—was to end the company’s distribution relationship with several key partners (Zappos, DSW, Dillard’s, and Amazon) and go all-in on D.T.C. On paper, it was a logical idea: Donahoe’s plan would allow Nike to amass more data, control its channels, and dominate the end-to-end experience. And yet, as Lauren Sherman noted a few months ago in her excellent piece Sneakerheadaches, it was ultimately ill-fated. Unlike the luxury market, where multibrand retail continues to contract, venues like Dick’s offer an essential service for a company like Nike. Anyway, long story short, Donahoe had the wrong strategy, and implemented it too quickly. Nike’s market cap is now down to $113 billion as it rebuilds, and Donahue is gone. (The company’s annual revenue for the fiscal year ending in May 2024 was $51 billion—interestingly, a $6 billion-plus improvement from the pandemic peak years.) The good news, of course, is that Nike is still way larger than everyone else, as BMO analyst Simeon Siegel recently reminded me, and is already making the appropriate pivots under new C.E.O. Elliott Hill, a former company lifer who was brought out of retirement about two months after Lauren’s piece was published.

Perhaps most importantly, Hill needs to reestablish Nike’s deep relationships with retail partners and an understanding that great global brands require multiple channels to thrive. Hill, who previously led Nike’s consumer, sales, and North American businesses, knows that the next stage of growth can’t come from D.T.C. alone. While Nike’s D.T.C. push made sense on paper five years ago, retail is ultimately a business where you need to meet customers where they are shopping. Nike may have been forged as a performance brand, but it’s a company built on design and distribution. Sure, they have their own stores, but they ultimately act as massive marketing billboards and experiential retail. Their Well Collective concept stores, for instance, transform traditional retail spaces into wellness hubs where customers can explore fitness journeys through interactive digital experiences—and, of course, still pick up their online orders in-store. Hill gets this. He’s already rebuilding bridges with key wholesale partners, like Dick’s and Foot Locker. During a recent channel check, in fact, Nike still had more than 50 percent of the selling floor in Foot Locker, including an entire annex room, “House of Hoops,” that felt like a shrine to Jordans. After being notably absent for a spell from The Running Event, an industry-wide trade show in San Antonio, Nike strategically returned this year with a shoe that seems to have learned a thing or two from its competitors. The Zoom Fly 6 features Hoka-like cushioning, a move straight from the company’s historical playbook of observing, improving, and scaling successful innovations. After all, in Nike’s history, the company doesn’t always move first, but it almost always finds a way to offer a superior product. A perfect example, one former Nike insider pointed out, is the Nike Pro line, a $2 billion business that started as a response to Under Armour’s successful introduction of “spandex,” a.k.a. compression, into the men’s performance category. Under Armour may have pioneered compression wear, but Nike’s ability to scale and normalize the category turned an innovation into everyday athletic wear.