For decades, Nike built one of the most powerful brands in the world by doing something deceptively simple: create products people wanted, market them relentlessly, and make sure consumers could find them everywhere.
But over the past several years, Nike has moved away from that formula.
The results have been painful.
Nike’s market capitalization peaked at roughly $280 billion in November 2021. Today, it has fallen to roughly $57 billion, wiping more than $220 billion from the company’s market value. The stock has lost roughly 78% from its 2021 peak. (BigGo Finance)
And now Nike is losing another symbol of its former status.
Nike Is Being Removed From the S&P 100
On September 4, S&P Dow Jones Indices announced that Nike will be removed from the S&P 100, effective before the U.S. market opens on September 21, 2026. The S&P 100 is a narrower index representing some of the largest and most established companies within the broader S&P 500. (Morningstar)
Importantly, Nike is not being removed from the S&P 500. It will remain a member of the broader benchmark. The change is therefore not a delisting or an indication that Nike is no longer a large-cap company. (Morningstar)
Still, the writing on the wall is tough to ignore.
Nike is leaving the S&P 100 at the same time that four technology companies—Dell Technologies, Palo Alto Networks, Arista Networks and SanDisk—are joining the index. (Morningstar)
A company that once represented the pinnacle of American consumer branding is being pushed out of an index reserved for the country’s largest corporate names.
And that decline has happened alongside a staggering loss in market value.
The question for investors is no longer simply what happened to Nike’s stock, it’s: What happened to Nike’s business?
One of the most compelling explanations came from former Nike branding executive Massimo Giunco, who spent 21 years at the company. In a widely circulated 2024 post, Giunco laid out what he believed went wrong inside Nike.
His argument centered on three major strategic changes: eliminating product categories, pulling back from wholesale partners, and shifting marketing dollars toward digital performance advertising.
Together, they created a business that was increasingly optimized for what could be measured online—but potentially less effective at building the brand and products that consumers actually wanted.
The McKinsey Influence: Eliminating Nike’s Categories
One of the most consequential changes was Nike’s decision to reorganize its business around Women, Men and Kids, rather than traditional product categories such as running, basketball and soccer.
According to Giunco, McKinsey advised Nike on this restructuring.
The thinking was relatively straightforward.
Nike’s traditional category structure required significant resources across individual sports. A shift toward DTC, however, would give Nike unprecedented amounts of customer data through its website, apps and membership programs.
Why rely so heavily on category specialists when the company could theoretically use consumer data to determine what customers wanted?
The problem was that product categories aren’t simply marketing labels.
A veteran basketball executive who has spent decades understanding basketball footwear, athletes, consumers and culture possesses a type of knowledge that isn’t necessarily captured by an online transaction.
According to Giunco, many of these experienced category experts were ultimately pushed out of the company.
And Nike eventually appeared to recognize the problem.
At the end of 2023, Nike began bringing its traditional categories back.
That reversal is significant. It suggests that the company’s attempt to organize the business around broad consumer segments had failed to produce the desired results.
Nike’s Breakup With Wholesale
Nike’s relationship with wholesale retailers was another major casualty of the DTC strategy.
For years, Nike products could be found virtually everywhere: Foot Locker, sporting-goods stores, department stores and countless independent retailers.
But Nike increasingly wanted to own the customer relationship itself.
That meant selling directly through Nike’s stores, website and apps rather than relying on third-party retailers.
During COVID-19, the strategy looked brilliant.
Consumers were stuck at home, e-commerce exploded and Nike’s digital business benefited enormously. Nike could sell directly to consumers while collecting valuable data about their purchasing behavior.
But the environment eventually changed.
Consumers returned to physical stores, and Nike’s products weren’t as widely available as they once were.
More importantly, Nike had damaged relationships with some of the very retailers that had helped make the brand ubiquitous.
And those retailers had alternatives.
Companies such as On and Hoka were rapidly gaining momentum in running. With Nike reducing its presence in parts of the wholesale channel, competitors had an opportunity to capture valuable shelf space and consumer attention.
The loss of wholesale distribution also meant the loss of something that can’t easily be replicated through an app: direct feedback from retailers.
Retailers see what customers pick up, try on, ask about and ultimately purchase. They know which products are sitting on shelves and which ones are flying out the door.
Nike’s digital data could tell the company what consumers bought online.
It couldn’t necessarily tell the company everything consumers were thinking when they walked into a store.
That distinction became increasingly important as Nike struggled with excess inventory and products that failed to resonate with consumers.
When Marketing Became Too Focused on the Click
Perhaps the most interesting part of Giunco’s argument involves Nike’s marketing strategy.
Nike has historically been one of the world’s greatest brand marketers.
The company didn’t simply sell shoes.
It sold aspiration.
It sold athletic achievement, culture and identity.
For decades, Nike invested heavily in brand advertising designed to create demand and maintain what Giunco described as an aspirational “halo” around the brand.
But the company’s marketing strategy increasingly shifted toward digital.
Instead of spending primarily on broad brand-building campaigns, Nike devoted more resources toward digital marketing, performance advertising and driving consumers toward its own digital properties and membership platforms.
The distinction is important.
Brand advertising creates demand.
Performance marketing attempts to capture and convert existing demand.
The second approach is much easier to measure.
Nike can determine how many people clicked an advertisement, visited its website and purchased a product.
It is much harder to quantify the value of a television commercial, an athlete endorsement or a culturally significant campaign that strengthens a brand over a period of years.
And that’s where Giunco believes Nike made a critical mistake.
Nike spent billions of dollars on something that was easier to measure but potentially less effective than the traditional brand-building activities it replaced.
In other words, Nike optimized for measurement instead of impact.
The Product Became the Commodity
The consequences extend beyond distribution and advertising.
Nike’s aggressive DTC strategy may have inadvertently changed how consumers perceived the product itself.
When Nike products were everywhere—retail stores, sporting-goods shops, department stores and specialty retailers—the brand constantly surrounded consumers.
The products were visible.
Consumers could touch them.
They could try them on.
Retail employees could recommend them.
And Nike competed for physical shelf space against other brands.
As Nike pulled back from wholesale, more of that interaction disappeared.
At the same time, Nike’s digital strategy increasingly focused on moving consumers through its own ecosystem.
The risk is that the company begins competing primarily on the product itself rather than the broader cultural identity surrounding the product.
And athletic footwear is an increasingly competitive market.
Nike no longer has the field to itself.
On has built a powerful position in running. Hoka has exploded in popularity. Adidas remains a major global competitor, while brands such as New Balance and ASICS have also captured consumers looking for alternatives.
The more Nike’s products become interchangeable with competitors’ products in the eyes of consumers, the more difficult it becomes for Nike to maintain premium pricing and market share.
Donahoe’s Background May Explain the Strategy
The emphasis on DTC wasn’t necessarily surprising given Nike’s leadership.
John Donahoe became Nike’s CEO in 2020 after previously serving as CEO of ServiceNow, a business-to-business software company.
His background was heavily rooted in technology, digital transformation and e-commerce.
Under Donahoe, Nike aggressively pursued its Consumer Direct Acceleration strategy, with digital becoming increasingly central to the company’s relationship with customers.
And initially, the strategy appeared to work.
Nike’s DTC business grew dramatically, eventually reaching roughly 44% of sales in fiscal 2024, compared with less than 30% before the strategy began.
On the surface, that looks like an enormous success.
But revenue mix isn’t the same thing as business quality.
A company can become more direct while simultaneously weakening its distribution network, damaging its brand and losing market share.
That’s the tension at the center of Nike’s story.
The Bigger Lesson
Nike’s problem may not have been DTC itself.
Selling directly to consumers is not inherently bad. Nike should absolutely own its digital customer relationships, collect first-party data and operate a strong e-commerce business.
The problem was how far the company took the strategy.
Nike appears to have treated DTC not as another channel, but as a replacement for parts of the ecosystem that had made Nike successful in the first place.
Categories were eliminated.
Wholesale relationships were reduced.
Marketing became more focused on measurable digital conversion.
And the company increasingly relied on data to replace some of the institutional knowledge that had historically driven its product development.
Each decision made sense in isolation.
Together, they may have created a much bigger problem.
Nike became exceptionally good at measuring customers—but potentially less effective at understanding them.
It optimized distribution—but weakened distribution.
It optimized digital marketing—but potentially underinvested in brand building.
And it optimized its organization—but may have lost some of the product expertise that made Nike different.
That is the irony of Nike’s DTC transformation.
The company set out to get closer to the consumer. In the process, it may have moved further away from what consumers actually loved about Nike.
The S&P 100 removal is not the cause of Nike’s decline. It is a consequence of it.
The company’s market value has fallen by more than $220 billion since its peak, and Nike will soon lose its place among the 100 largest companies represented by the S&P 100. (BigGo Finance)
The challenge for Nike’s next chapter is therefore not simply growing digital sales.
It is rebuilding the ecosystem around the brand: restoring product expertise, repairing wholesale relationships, strengthening its marketing, improving its product pipeline and giving consumers a reason to choose Nike over an increasingly crowded field of competitors.
Nike spent decades building one of the world’s most valuable brands.
Now, it has to prove that the brand is still strong enough to rebuild the business model that supports it.
