In 2018 Nike put Colin Kaepernick in its most talked-about campaign of the decade. There were calls for a boycott, videos of people burning trainers and predictions of disaster. What actually happened was that the company's market capitalisation rose by around six billion dollars in the following days and the financial year closed with growth. Six years later, in 2024, Nike reached its all-time revenue high with just over 51 billion dollars. And it is from that point on, not before, that the collapse begins: revenues fell ten per cent the following year and net profit dropped from 5.7 billion to just over three billion in two financial years.
The timeline alone is enough to rule out the ideological explanation. If a campaign destroys a company, it does not destroy it six years later, after the company's best ever year.
Even so, the 'go woke, go broke' narrative has one enormous advantage over boring explanations: it is simple, it fits in a tweet and it allows every bad quarter to be turned into confirmation of a pre-existing thesis. The disadvantage is that it predicts nothing, and that the rivals eating into Nike's market share are not positioned on the opposite side of the debate. On and Hoka have not taken share from Nike through ideology, but by making shoes that people find better for running.
There is one case where a cultural boycott did work, and it is worth examining because it explains why the same did not happen with Nike. Bud Light lost between eleven and twenty-six per cent of sales in the month following its campaign with Dylan Mulvaney, and two years later it was still forty per cent below its previous level. The difference with Nike is not the intensity of the controversy: it is that switching beer costs nothing. The product is interchangeable, the price identical and the alternative is twenty centimetres away in the same fridge. In that scenario, being annoyed is as good a reason as any to switch.
Trainers did not work that way. And there lies the first decision that actually explains what has happened to Nike.
From 2018 onwards the company made a strong bet on selling directly to consumers. The logic looked impeccable on paper: if you sell through your own website and stores, you keep the middleman's margin. So Nike began pulling product from multi-brand retailers and specialist shops. For a while margins rose and everyone applauded.
What was not in the plan is that those shelves did not stay empty. They are the place where someone who walks in to buy running shoes tries on five models and discovers brands they had never heard of. Nike handed that space to its competitors just as brands with very good technical products were emerging. Hoka and On grew by filling a gap that Nike had vacated, and New Balance won the lifestyle footwear battle with designs that resonated.
Nike did not lose customers because of what it said. It lost them by ceasing to be where people shop.
The second mistake is of the same kind. While consumer spending was shifting towards technical footwear, Nike leaned on its archive: re-editions of Air Force 1s, Dunks and Jordans. It is a wonderful business, because it requires no invention and the margin is excellent. It is also the most effective way to turn a performance brand into a nostalgia brand. When competitors arrived who were genuinely innovating in cushioning and weight, Nike discovered it had stopped being the benchmark in the very category it had created.
The company's own response says more than any analysis. Nike is now doing the exact opposite of what it did before: in the latest financial year its direct channel fell while wholesale grew strongly in North America, and the company itself speaks of reinvesting in wholesale distribution. If the problem had been ideological, the remedy would not be reconciling with the shops it abandoned.
The cultural theory is not supported by what is happening outside the United States either, which is where the bleeding is worst. The China business has been falling for several years and has lost around a third of its volume since 2021, while Anta and Li-Ning gain ground with local product. Explaining that through American culture wars requires a considerable effort of imagination.
And there is one territory where the explanation collapses with particular force, and that is football. Nike has watched Barcelona move to Adidas after more than two decades, Lamine Yamal become tied to Adidas and Mbappé sign with On. It is hard to construct a narrative in which European football fans are punishing Nike for an advert from eight years ago. What can be seen, rather, is rivals paying more and moving more effectively for the assets that matter.
It is worth not swinging to the opposite extreme. Saying that cultural noise has no effect at all is just as simplistic as saying it explains everything. What the data suggest is that it rarely kills a brand on its own, but it can accelerate a drift that was already under way. When a customer has product-based reasons to leave, the controversy gives them the nudge and the excuse. The anger does not create the exit: it signposts it.
That is why lumping Nike together with Disney under the same label explains very little. Disney is dragging billions in accumulated streaming losses, the collapse of traditional television and the weight of its acquisitions. Nike is dragging a distribution mistake and a product drought. The only thing they share is having run campaigns that upset someone, and that is precisely the variable that does not distinguish companies that fall from those that do not.
The uncomfortable version is more boring than the culture war story. Nike made two decisions that improved the quarter and destroyed position over five years: charging more per pair by selling direct, and making easy money re-releasing its own catalogue. Both worked for a while. Neither had anything to do with ideology.
