Nike is facing significant challenges in its digital transformation efforts, with online sales plummeting by 20 percent in the first quarter of fiscal 2025, ending August 31, 2024.
This sharp drop in digital revenues has contributed to an overall 10 percent decline in total revenue, falling to $11.6 billion for the quarter. Despite ongoing investments in digital channels, traffic across Nike Direct and online platforms has been weak, particularly in key markets like North America, China, and EMEA.
The below chart prepared by InfotechLead.com illustrates Nike’s digital sales decline in the first quarter of fiscal year 2025 across different regions, including the total decline of 20 percent. The chart highlights the sharpest drop in China (34 percent) and significant declines in EMEA (24 percent) and other regions.
A notable contributor to this decline is the strategic shift away from Nike’s classic footwear lines — Air Force 1, Air Jordan 1, and Dunk — which saw a sales drop of nearly 50 percent. While the company has been intentionally reducing reliance on these franchises to focus on newer products, the move has left a gap in consumer demand, particularly in digital channels. The lackluster performance during the critical back-to-school season only intensified the problem, with Nike’s online business underperforming the overall market.
The digital sales slump has hit Nike hard in China, where digital revenues fell by 34 percent. Other regions, including North America and EMEA, also experienced double-digit drops. In contrast, factory stores showed some improvement in traffic, suggesting that Nike’s physical retail presence remains more resilient.
Nike recently announced the appointment of Cheryan Jacob as Chief Information Officer (CIO) to drive its digital transformation initiatives.
Spending on Digital Transformation (DX) is forecast to reach almost $4 trillion in 2027, according to the latest update from IDC. “DX spending represents a bigger market compared to the non-DX portion of ICT spend. Digital business investments are ramping up even faster with the advent of Generative AI,” Angela Vacca, senior research manager with IDC’s Data & Analytics Group, said.
Nike’s leadership transition comes at a critical juncture, with outgoing CEO John Donahoe set to retire and Elliott Hill taking over as the new CEO on October 14. While Nike reported positive feedback from its partners during a summit in Paris, and the brand’s strong presence during the Paris Olympics campaign boosted visibility, these efforts have not been enough to offset the deeper digital sales challenges.
Nike said selling and administrative expense fell 2 percent to $4 billion. Demand creation expense was $1.2 billion, up 15 percent, due to an increase in brand marketing expense, reflecting investment in key sports events.
As Nike rebalances its product allocations to prioritize high-traffic channels, it remains to be seen whether the company can reverse the current downward trend in its online business. For fiscal 2025, Nike expects a continued double-digit decline in digital sales compared to the previous year, raising concerns about its ability to fully capitalize on the growing importance of e-commerce in the sportswear industry.
Nike’s digital sales were $12.1 billion for fiscal 2024 compared to $12.4 billion for fiscal 2023, reflecting reduced digital traffic. Nike’s total revenues for fiscal 2024 were $51.4 billion compared to $51.2 billion for fiscal 2023.
Despite these setbacks, Nike still holds a strong brand presence, particularly among Gen Z consumers, and remains a dominant force in global sportswear. However, the company’s struggles with digital transformation signal that its shift away from legacy franchises may take longer to bear fruit, leaving the future of its online business uncertain.
Baburajan Kizhakedath
