Can Nike Turn It Around? Caitlin Clark Could Be the Key.

Even if you're just a casual sports fan, you've probably heard of Caitlin Clark. The basketball star shattered records in college in scoring, three-pointers, and assists, among other categories, and has dazzled fans in her rookie year in the WNBA, bringing a surge of attention and record audiences to women's basketball, much like Tiger Woods did in golf a generation ago.

Arguably, Clark is the biggest female athlete since Serena Williams, and she's gotten more interest on Alphabet's Google over the last year than Lebron James or Steph Curry. Her brand has extended beyond basketball and into pop culture, as she's appeared on Saturday Night Live in a Weekend Update segment and was dressed by Prada for the WNBA draft, the first time the luxury brand took such a step for the NBA or WNBA draft. In the meantime, she's set records for attendance and merchandise sales in what's become known as the Caitlin Clark effect.

In other words, her marketability is self-evident.

Nike (NYSE: NKE), the world's largest sportswear company, was smart enough to sign an endorsement deal with Clark. First, it did a name, image, and likeness (NIL) deal with her in 2022 when she was in college. Then, this April, it signed her to an eight-year, $28 million contract ahead of her debut in the WNBA. But what the company has done with her since then is a head-scratcher.

Image source: Getty Images.

Nike's airball

Nike won a bidding war against rivals like Under Armour, Adidas, and Puma to team up with Clark. But since then, the Swoosh has done almost nothing with Clark, despite her superstardom and the attention around her rookie season.

Nike hasn't produced a commercial featuring Clark or included her in a marketing campaign. Reportedly, Clark's signature shoe, which was part of the deal, won't be released until 2026 because Nike wants to prioritize A'ja Wilson's shoe, the reigning MVP. On social media, some fans took note that Nike didn't even bother posting to congratulate Clark on winning Rookie of the Year.

It's unclear why Nike has chosen to ignore what's arguably the sports story of the year, but politics seem to play a role. Other WNBA stars have been resentful of the attention Clark received even before she played in a single WNBA game.

By contrast to the delay with Clark's shoe, Lebron James wore his signature Nike sneaker in his first NBA game in 2003 and had a TV commercial to go with it. Michael Jordan, meanwhile, donned his debut signature shoe just a few weeks into his rookie season in 1984.

A familiar problem

Nike stock has plunged since its peak in 2021, as a strategic shift under outgoing CEO John Donahoe has backfired. Many of Nike's challenges seem to stem from the same issue it's facing with Caitlin Clark: ignoring customers.

Much of the transformation under Donahoe was built around Nike transitioning from primarily a wholesaler to primarily a direct-to-consumer brand. That shift made sense in some ways, as it gave Nike more control of its brand and image and allowed it to earn larger gross margins. But more importantly, it was not in customers' best interests.

It turns out that pulling back from retail partners like Foot Locker alienated Nike customers who shop there and simultaneously gave an opportunity to upstart rivals like On Holding and Deckers' Hoka brand to gain valuable shelf space. That's part of the reason they are growing much faster than Nike and rapidly taking market share from it in running.

Similarly, ignoring the Caitlin Clark mania is clearly not giving customers what they want, as many would be lining up for Clark's first shoe if it were available. Delaying it is to the clear detriment of the business, especially when Nike desperately needs a catalyst to turn the business around as it's forecasting a decline in sales for the current fiscal year. A resonating ad campaign around Clark could be just what Nike needs to create a halo effect for the larger brand and help it return to growth.

Hill's priority?

Elliott Hill will take over as Nike CEO on Oct. 14. The longtime company veteran, who's coming out of retirement for the position, will have his work cut out for him since Nike is struggling on multiple fronts.

But an easy way for Hill to engender some goodwill among Nike's customer base, tap a massive market of female athletes and fans, and hearken a new era for the brand is to put Clark center stage where she belongs.

The next WNBA season won't begin until May, but that should give Nike's new management team time to formulate a compelling strategy around Clark and get her signature shoe out by next season.

Doing so would be a slam dunk for the brand, for Nike stock, and for Clark.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Nike. The Motley Fool has positions in and recommends Alphabet and Nike. The Motley Fool recommends On Holding and Under Armour. The Motley Fool has a disclosure policy.