Nike is going to pull off turnaround, says Jan Kniffen on struggling athleisure stocks

Key Concepts

• Athleisure Decline: A shift in consumer preference away from athleisure wear (clothing suitable for both athletic and everyday wear) towards more traditional clothing styles.
• Direct-to-Consumer (DTC) in China: Nike’s challenges with its DTC strategy specifically within the Chinese market.
• Brand Competition: Increased competition within the athletic apparel and footwear market, with new and established players vying for market share.
• Nike’s Rebound: Discussion of Nike’s potential for recovery and the key indicators of a successful comeback.
• Emerging Brands: The rapid growth of brands like Hoka and On Running, disrupting the established market leaders.
• Retail Channel Strategy: The importance of a balanced retail strategy, including independent sellers, Foot Locker, and Dick’s Sporting Goods.

The Shift Away From Athleisure and Industry-Wide Losses

The athletic apparel market is experiencing significant headwinds, with major players like Lululemon, Under Armour, Adidas, and Nike all reporting substantial losses in 2025. This isn’t isolated to a single brand; Jan Kniffen, CEO of J Rogers Kniffen WWE, attributes this to a broader consumer trend – a move away from athleisure and back towards “real clothes.” He describes 2023 as a “Ralph Lauren Christmas,” indicating a surge in demand for traditional apparel instead of workout or casual athletic wear. This represents a backlash against the athleisure dominance seen during the COVID-19 pandemic, where comfort and casual wear were prioritized. Western wear is also filling the space previously occupied by athleisure.

Competitive Landscape and Emerging Players

The market is becoming increasingly crowded. Lululemon faces competition from over a dozen brands including Alo Yoga, Nike, Adidas, Athleta, Fabletics, Gymshark, and Sweaty Betty. Similarly, the men’s athletic wear space, traditionally dominated by Under Armour, is now much more competitive.

Notably, new brands are gaining significant traction. Kniffen highlights the rapid growth of Hoka and On Running as examples of disruptive forces. He personally transitioned from exclusively wearing Nike to exclusively wearing On Running, demonstrating a personal shift reflecting broader market trends. These brands didn’t even exist in the past, showcasing the dynamic nature of the industry.

Nike’s Challenges and Potential Recovery

Nike is facing specific challenges, but Kniffen believes a turnaround is possible. The primary issue currently is Direct-to-Consumer (DTC) performance in China. While acknowledging this is a significant hurdle, he anticipates it will be resolved, leading to renewed enthusiasm and market share gains.

Key signs of a successful comeback, according to Kniffen, include:

• Successful New Product Pipeline: He cites his recent purchase of “Amero” (likely referring to a Nike product) as a positive indicator.
• Reinvigorated Foot Locker: A strengthened partnership with Foot Locker is expected to boost sales.
• Strong Performance at Dick’s Sporting Goods: Dick’s Sporting Goods is anticipated to be a major driver of new Nike product sales.
• Return to Independent Sellers: Re-establishing relationships with independent retailers is seen as crucial.

Kniffen believes Nike “lost its way” but that current leadership, specifically mentioning “Elliott,” is steering the company back on the right track.

The Question of Declining Shoe Demand

The interviewer questioned whether a decline in overall shoe demand could be contributing to the industry struggles. Kniffen dismissed this idea, drawing on his personal experience as a lifelong endurance athlete. He emphasized that consumer preferences are shifting between brands, rather than disappearing altogether.

Historical Context and Valuation

Kniffen provided historical context, noting that Nike’s current stock price of $61 per share is around the same level as it was in Halloween 2015 – over ten years ago. This highlights the recent underperformance and the potential for growth if the turnaround strategies are successful.

Logical Connections & Synthesis

The conversation establishes a clear connection between broader societal shifts (post-COVID return to traditional clothing), increased competition, and the specific challenges faced by major athletic apparel brands. The decline in athleisure is presented as a primary driver of the industry-wide losses, while the rise of new brands and Nike’s DTC issues in China are identified as key contributing factors. The discussion ultimately suggests that while the market is tough, opportunities exist for brands that can adapt, innovate, and effectively manage their retail channels.

The main takeaway is that the athletic apparel market is undergoing a significant transformation. Success will depend on understanding evolving consumer preferences, navigating increased competition, and executing effective strategies in key markets like China. Nike, despite its current challenges, is positioned for a potential comeback if it can successfully implement its turnaround plan.