In December, Nike announced its decision to lower its sales outlook for fiscal 2024 to 1% growth, down from mid-single digits, along with plans to cut $2 billion in costs over the next three years. This forecast, which would mark the lowest year-on-year growth since 2010, excluding the pandemic slump of 2020, remains unchanged as confirmed by Nike. The company plans to reallocate much of the $2 billion in cuts to marketing spend, signaling a renewed focus on innovation.
Market response to Nike’s cost-cutting plans has been positive, with Bank of America upgrading Nike shares from ‘neutral’ to ‘buy’ for the first time in over two years. This upgrade led to a 2.5% increase in Nike’s shares. Analysts believe that the bump in shares was not due to the upcoming Olympics, but rather a result of the proactive cost-cutting measures and preparation for new product launches.
In Paris last week, Nike unveiled its plans for the future with a focus on reinventing the Nike Air sneaker. The brand showcased new iterations of the sneaker to be worn by athletes at the Olympics, as well as a new Pegasus Premium model for consumers set to launch in 2025. Nike also introduced an AI-generated interpretation of Air technology co-created with athletes. This innovation was framed within the historical significance of the Air sneaker since its launch in 1978 and its recent collaborations with brands like Sacai and Comme des Garçons.
Nike is gearing up for a big marketing push starting on July 26th. The International Olympic Committee has relaxed its rules through a Rule 40 pilot program, allowing non-official Olympic sponsors like Nike to have a greater presence during the games. This includes the ability to interact on social media in real-time and use Olympic IP and athlete imagery, which was previously prohibited. The aim is to expand the Olympic brand’s reach to younger consumers, drive more traffic, and provide more opportunities for athlete endorsements.