As the calendar flipped to October, Nike announced its Q1 earnings for fiscal year 2027, reporting continued revenue weakness. Nike Inc. reported revenues of $11.2 billion, down five percent on a currency-neutral basis (NIKE, Inc., 2026). The wholesale revenues for the Nike brand were $6.8 billion, down just one percent, as growth in North America helped offset declines in Greater China . The biggest declines in overall revenue came from Nike Direct, which reported $4.1 billion in revenue, down 8%, and Converse, which saw a 28% decrease.
This lag largely stems from Nike’s strategic shift toward direct-to-consumer sales, away from its previous business model. In 2020, when CEO John Donahoe took office, he prioritized a direct-to-consumer and e-commerce-driven strategy to sell through Nike’s website and apps. The motivation behind this strategy was to improve gross margins by eliminating intermediaries, strengthen relationships with consumers, and reduce reliance on third-party retailers, which, at the time, seemed like a great idea. When Donahoe took over in the wake of the COVID lockdown, storefronts were closed, and consumers did most of their shopping online directly through Nike’s online platforms. Business was booming, and it seemed Nike’s prominence in the apparel and footwear industry would keep customers coming back without relying on products sold to distributors and placed in storefronts with lower gross margins, or on advertising to promote new products. In theory, it was a great plan, since selling wholesale would reduce profit margins, and unnecessary advertising spending would cost the company a lot of money. But the plan backfired, and Nike’s new CEO, Elliot Hill, plans to reverse the tech-centric strategy by returning to sport-specific gear, reclaiming shelf space in wholesale retailers, and restoring the PACE operating model, which will likely lead to large-scale layoffs.
Other apparel and footwear brands, like Vans and Bonobos, have also seen losses due to prioritizing e-commerce over storefronts. Vans reported an 8% decrease in revenue and also cited its lack of wholesale commerce (VF Corporation, 2026). The company is pursuing a similar strategy to Nike, hoping its return to the wholesale market will increase revenue again. On the other hand, brands like New Balance were able to greatly increase sales by doing the opposite of Nike and Vans. As companies pulled out of the wholesale market, New Balance soaked up the increased shelf space in stores like Footlocker, and Dick’s Sporting Goods, while also expanding their online presence, helping keep their product directly in front of consumers’ faces instead of hoping that the image of their brand would lead consumers to their website. In addition, their continued collaboration with high-profile athletes like Kawhi Leonard, Cooper Flagg, and Coco Gauff further put New Balance’s product in front of consumers.
In an ever-changing world shifting toward technology and e-commerce, these companies’ different paths show that wholesale commerce may never go out of style.
