Goodbye Nike Air Jordans, hello Asics's chunky dad sneakers.
Nike is losing the fashion battle to Japan's Asics. That is potentially a fraught win for Asics and a quiet victory for Nike.
Running's growing popularity has helped catapult shares in Asics, a favorite among runners. It is by far the top-performing sneaker stock, having grown more than fourfold over the past three years.
Nike cruised on popular lifestyle sneakers -- Air Jordan 1s, Air Force 1s and Dunks -- for too long and fell behind on running. It is the worst-performing sneaker stock, declining 62% over the same period.
It might be time for a role reversal.
Nike's forward earnings multiple has shrunk to 23 times, 22% below its historical average. Asics's has grown to 26 times, overtaking Nike's earlier this year.
With expectations low for Nike, it might be time for investors to give the company another chance. Although near-term growth expectations are downbeat, Nike's fortunes appear to be turning. Importantly, there are signs that Nike's lifestyle-sneaker business is moderating to a healthier size and that its performance segment is improving. That should bolster the shares.
Since taking the top job at Nike about two years ago, Chief Executive Elliott Hill has been working to pivot the company back to performance footwear, a more durable category than fad-prone lifestyle sneakers. Nike's previous leadership had leaned too heavily on popular lifestyle sneakers, such as Dunks, a strategy that backfired when those basketball silhouettes lost heat in favor of the running-shoe aesthetic.
Investors tend to like brands that are more performance-focused because that segment is what gives the brand its DNA, said Monique Pollard, equity analyst at Citi. Nike is trying to get back to its historical mix of about 60% performance and 40% lifestyle, according to Randal Konik, equity analyst at Jefferies.
There are signs this strategy is working. Nike's market share on the sneaker-resale platform StockX has declined, a sign its lifestyle-sneaker business is right sizing. Nike made up about 70% of total sales volume as of June, down from roughly 77% in late 2023, according to Citi Research's analysis of StockX data. At the same time, the prices of Air Jordan 1s and Air Force 1s on the platform have recovered, a sign the market is no longer oversupplied.
Meanwhile, Nike's performance segment is improving. Nike has posted five consecutive quarters of double-digit percentage growth in the running category, adding roughly $1 billion in sales over that period, according to its latest earnings call.
The company said it gained 5 percentage points of market share in running across Western Europe and North America in its fiscal year ended May 31. Google search interest for Nike's running shoes -- Vomero and Pegasus -- has increased since Hill's turnaround effort began.
Asics is headed in the opposite direction. The brand's traditional bread and butter is performance running. But its lifestyle-sneaker business -- including its luxury Onitsuka Tiger brand -- has been outpacing the growth of performance running in recent years. Asics plans to spin off Onitsuka Tiger in early 2027.
Asics's sneakers have been a beneficiary of the "dad sneaker" trend, which favors chunky, mesh-paneled running sneakers from the early 2000s. These are taking market share from Nike's retro basketball shoes, which dominated the lifestyle-sneaker market earlier in the 2020s. Nike also has its own versions of this chunky running shoe.
Asics's performance and sports categories now make up 55.4% of revenue, down from 64.5% in 2022. Its lifestyle segments have higher margins, so this shift has been great for Asics's bottom line. Its net income rose by roughly 70% on a compound annual growth rate basis over the past three years.
Asics might still have some runway ahead of it. It is still a fraction of Nike's size, and running shoes are very much in vogue.
On StockX, Asics sneakers command an average premium of about 20% over the retail price on a trailing 12-month basis, higher than any of its competitors, according to data analyzed by Citi. That is a sign that Asics isn't oversupplying the market with its lifestyle sneakers.
Still, its rising reliance on trendy sneakers is something for investors to watch. No brand is safe from the risk of fads -- not even the mighty Nike.
As for Nike, its recovery might not show on the top line for a couple of quarters. Right sizing the lifestyle business has been cutting deep into its revenue, and Wall Street expects another two quarters of constant-currency sales declines, according to Visible Alpha.
By the time its revenue growth returns, though, its shares might not be cheap. Better to get ahead of it.
Write to Jinjoo Lee at jinjoo.lee@wsj.com
(END) Dow Jones Newswires
July 24, 2026 05:30 ET (09:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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