NIKE's Classic Franchises Fade: Can Fresh Launches Drive Recovery?

NIKE Inc. NKE is at a turning point as some of its most iconic franchises, like the Air Force 1, Dunk and AJ1, are fading in consumer demand. The company has deliberately taken steps to rightsize these franchises, even as it created a nearly $1 billion revenue headwind in fiscal 2025. In the fourth quarter of fiscal 2025, classic footwear declined by more than 30%, forcing NIKE to accelerate markdowns and inventory cleanup. While painful in the short term, this strategy reflects the company’s intent to reset its brand positioning and focus on a healthier, more innovative product portfolio.

To fuel recovery, NIKE is betting heavily on fresh launches and sport-led innovation. The company’s performance categories are showing encouraging signs, with products like the Vomero 18 already crossing $100 million in sales within 90 days, and A’ja Wilson’s signature basketball line selling out in minutes. NIKE is also expanding into women’s basketball, training apparel and global football with new kits and upgraded boot lines ahead of the World Cup. By aligning its business into sport-specific teams, the company hopes to deepen athlete connections and roll out a consistent stream of innovative, coveted products.

The challenge lies in whether these new franchises can scale quickly enough to offset the drag from fading classics. Wholesale partners are showing renewed confidence, with holiday order books improving, and NIKE’s direct-to-consumer channels becoming more premium-focused. Still, digital traffic remains pressured, and China’s recovery is expected to take longer. Success will depend on the company’s ability to keep its launches relevant, scale new products at speed and rebuild consumer excitement across performance and lifestyle categories. If executed well, NIKE’s fresh wave of innovation could write the next chapter of growth while the brand gradually reduces reliance on its aging icons.

NKE’s Competition in the Global Arena

adidas AG ADDYY and lululemon athletica inc. LULU are the key companies competing with NIKE in the global market.

Like NIKE, adidas is also facing the challenge of fading momentum in some of its long-standing franchises, most notably the Superstar and Stan Smith, which have lost cultural heat after years of strong demand. The company has responded by leaning into innovation and partnerships, highlighted by the success of its performance-driven Adizero running line and the energy surrounding collaborations in Originals. The rebound of adidas’ business has also been aided by a strong pipeline of sport-led launches, particularly around global football, where it is capitalizing on major tournaments with updated kits and boot innovations.

lululemon’s growth story is less about managing fading classics and more about continuously expanding its product innovation engine. The brand has maintained strong consumer demand through category extensions like footwear, men’s apparel and its fast-growing international business. While its core franchises in women’s leggings and athleisure remain resilient, lululemon is pushing to diversify its portfolio with technical performance wear and lifestyle products. The company’s ability to blend performance innovation with premium positioning has enabled it to maintain pricing power.

NKE’s Price Performance, Valuation & Estimates

Shares of NIKE have gained 0.7% year to date against the industry’s decline of 1.6%.

From a valuation standpoint, NKE trades at a forward price-to-earnings ratio of 40.37X compared with the industry’s average of 30.25X.

The Zacks Consensus Estimate for NKE’s fiscal 2025 earnings implies a year-over-year decline of 21.8%, while that for fiscal 2026 indicates growth of 53.7%. The company’s EPS estimate for fiscal 2025 and 2026 has remained stable in the past seven days.

NIKE stock currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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