Nike’s new CEO Elliott Hill stepped into his role on October 14 facing a complex, intertwined number of challenges, not least of which is restoring the company to growth mode after dropping 10% in revenues in its most recent quarter and seeing its stock price plunge nearly 30% this year.

In this Olympic year, Nike’s fortunes should be rising. Nike president of consumer, product and brand Heidi O’Neill told Reuters, “This Olympics will be our biggest. This will be the most investment and the biggest moment for Nike in years.”

However, Nike’s Olympic big-moment backfired. Its brand reputation started to tank immediately after the Olympics, according to RepTrak, a corporate reputation tracking company and advisor on brand reputation.

Based on a 100-point index, Nike’s reputation score dropped over seven points from August to September, reported Stephen Hahn, Reptrak global executive vice president. The downward shift was most pronounced among high-income, well-educated consumers, Nike’s highest-potential customers.

The good news is Nike has historically faced ups and downs in its reputation, exhibiting more reputation volatility than many of the major brands tracked.

But in the past, Nike has taken hits on only a couple of the seven reputation drivers Reptrak measures – citizenship, conduct, innovation, leadership, performance, products & services and workplace. This time all seven drivers took a statistically-significant downward shift.

More Reputation Challenges

And since the Olympics, Nike has faced other potentially reputation-damaging issues. In September, the board voted against a proposal to address potential human rights violations throughout its global supply chain, challenging its much-vaunted social responsibility commitments.

Nike is getting bad press for fighting to pay legal fees incurred by Lontex, a small Pennsylvania sporting-goods company that won a suit against Nike for stealing its trademark technology.  

And it’s gotten another blackeye from Jennifer Sey, former U.S. national gymnastics champion and now founder of XX-XY Athletics, who has made it her personal and corporate mission to protect women’s and girls’ sports.

She’s proclaimed Nike as public enemy number one where women in sports are concerned and gone viral. As of posting, Nike has not responded to her challenge and did not answer my request for comment.

Regarding Nike’s reputation fall, Hahn said, “It’s an acute but not a chronic issue,” noting that Nike has built up much positive, emotional equity over the years. “Yet, there seems like a new set of challenges, but in many ways, it presents new opportunities.”

Since consumers are increasingly voting with their dollars for a brand’s values – an Epsos survey this year found 69% of consumers agreed with the statement, “I tend to buy brands that reflect my personal values” – CEO Hill must put restoring Nike’s brand reputation at the top of his to-do list since revenue growth depends on it.

Reputation Shortfall

In reading Reptrak’s data, Hahn believes that Nike’s recent fall had less to do with the leadership change. “Nike’s reputation has declined across the board.”

He identifies these key factors in Nike’s reputation downfall:

Marketing Missed Its Mark

The Olympic “Winning Isn’t For Everyone” marketing campaign backfired. “Nike missed its message about winning. It was intended to be encouraging, but for some people, it turned out to be a discouragement. The data suggests that some people who might consider buying Nike in the future were really turned off,” Hahn said.

What was intended to present a positive message about elite athletes’ fierce determination to win was negatively received with statements such as: “I have no empathy. I don’t respect you. I have an obsession with power. I think I’m better than everyone else. I have no remorse. I have no sense of compassion.”

In effect, those words could easily be interpreted as how Nike views the competition, i.e., stealing Lontex’s trademark, its employees and even its customers. No company that expresses those values can hope to earn the respect of consumers.

It may have been a Freudian slip of the worst kind. How could anyone on the marketing team not have seen it and stopped it? It suggests that the Nike culture lives in a bubble of its own making and hasn’t the empathy or emotional intelligence to treat others with the respect they deserve.

Dysfunction In The Workplace

Of the seven drivers of Nike’s corporate reputation index, workplace was the one that dropped the most. Workplace measures how well the company cares for its employees’ well-being and its willingness to offer fair rewards and equal opportunities in the workplace.

It’s easy to see that the statements in the Olympic ad could reflect on how Nike treats its employees.

Allegations about Nike mistreating female employees continues to linger, as do rumors of bad labor practices in its supply chain, which the recent board vote did nothing to quell. And its most recent announcement of 2% corporate layoffs has hurt as well.

“Nike as a workplace and as an employee brand majorly declined,” Hahn observed. “Society says, ‘You’ve got to treat your people well,’ and people are saying, ‘It doesn’t seem like a workplace that I necessarily want to be part of.’ That wasn’t always the case for Nike.”

Last year, Nike ranked number 13 on Forbes World’s Best Employers list. Maybe that #13 ranking was a bad omen for a fall to come next year.

Innovation Waning

Reptrak’s data suggests that prospective consumers “don’t necessarily believe as strongly in the products or the services of the company,” Hahn said.

Earlier this year, Nike announced it would invest nearly $1 billion toward innovation in 2025. But fixing its product innovation problem won’t address its underlying reputation issues.

“Nike needs to regain corporate brand equity as much as it needs to rebuild product brand equity,” Hahn said.

“Product brand equity are the things you sell but the company behind Nike is equally a big part of the challenge. To get more people to buy Nike, you have to get more people to buy back into the corporate brand of Nike and what it stands for,” he continued.

Challenging Nike On Women

And now Nike faces a mounting reputational challenge from a campaign launched by Jennifer Sey and her XX-XY Athletics brand. It could compound its workplace issues and have an even greater negative impact on Nike’s reputation than the Olympics ad.

In an Instagram post following the September announcement of then-CEO John Donahoe retirement, she said, “Nike has never respected women. Despite all their Women’s History Month campaigns, they treat women with astonishing disregard, and always have,” as she cataloged a long list of alleged mistreatment of female employees and women in sports. She closed with, “Ladies, don’t buy Nike.”

Sey ratcheted up the campaign on October 10, which she christened “XX-Day” for the Roman numerals, with a “Dear Nike” ad. The tone, imagery and voicing is modeled after an ad that Nike ran in 1995 entitled “If You Let Me Play,” which brought attention to the value of girls participating in sports. Nike’s ad garnered overwhelming praise and support.

In XX-XY’s “Dear Nike” commercial, young girls ask Nike to stand up against trans athletes competing in girls’ sports. This issue has become a cultural flash point. Some 69% of Americans agree that athletes should play only on sports teams that match their birth gender, according to a recent Gallup poll. And support for that position is growing, up from 62% in 2021.

“Nike deserves to be called out for their hypocrisy,” Sey shared with me. “For decades they have profited off pretending to champion female athletes and women more broadly, while doing the exact opposite.”

The “Dear Nike” ad has received over 10 million views on social media and Sey has made the rounds on Jason Whitlock, Outkick HotMic and Megan Kelly podcasts, Fox Business Network, Fox News and even an appearance on Gutfeld!, the highest-rated late-night TV show.

“Nike is the biggest player in sports. It’s a $50 billion brand. It’s bigger than the NFL and the NBA,” she said on Fox and Friends. “If they stood up for women and girls, the NCAA and the U.S. Olympic Committee would change their tune. I’m just calling on them to do the right thing here, and I’m also calling on consumers to vote with their dollars. So if Nike’s not going to do right by your daughter, choose another brand.”

Sey is a thorn in the side of Nike and she is not going away.

Reputation Repair

To date, Reptrak data hasn’t measured the impact of Sey’s “Dear Nike” campaign, but given Gallup’s latest public opinion polling and the attention the trans athlete controversy is getting in this political cycle, Nike’s reputation could take another hit.

Repairing Nike’s reputational decline comes down to a return to core values. “If you talk about conduct and good ethics, integrity, transparency, equality, behaving fairly – all the things that matter to people – that’s the quickest way to reverse your reputational decline,” Hahn said.

And Nike must do more than talk-the-talk; it must walk-the-walk. “Nike needs to reinstall the values that made it great in the first place, but in many ways, Nike has lost its way.”

“True to the heritage of Nike, some of the inner feelings about Nike being a champion of the underserved has gotten lost,” he continued. “It needs to reinstall those values that promote egalitarian behaviors, a sense of honor and integrity in terms of its belief systems.”

Hahn sees the loss of influencer support also playing a role in Nike’s reputation decline. A number of elite female athletes, including Simone Biles, Alysia Montaño and Allyson Felix, have abandoned Nike sponsorship and they haven’t gone quietly. Felix has since established her own running shoe brand, Saysa, which just made it to “Oprah’s Favorite Things 2024” list.

“It’s clear that many people have fallen out of love,” Hahn said and stressed, “This reputational issue is not just perception based. It’s a consumer purchase behavior issue that is impacting Nike sales worldwide.”

New Leadership, New Day

The reputational challenges Nike faces represent a unique opportunity for it to return to the core values and principles that made it a great brand and company in the first place.

As a 32-year veteran of Nike from 1988 to 2020, Hill was there when it became a great brand and can bring it back to past glory as long as he institutes the changes to restore its reputation on which revenues depend.

Ultimately, revenues will follow reputation recovery, not the reverse, as Christian Sarkar and Philip Kotler observed, “We are seeing the emergence of the dawn of the reputation economy – reputation is now the currency on which everything else will depend.”