For years, Nike (NKE) was my default whenever I needed a new pair of tennis shoes.
But recently, I switched to On Cloud (ONON) sneakers on the court, largely because my favorite player, Switzerland’s Roger Federer, endorsed them.
Though it’s clearly a small personal decision, it captures a challenge facing the world’s best-known athletic shoe company. Nike is pulling back on some Jordan Retro releases after acknowledging it put too many iconic sneakers into the market.
The goal is to restore the sense of scarcity that once made those shoes special.
The move may help Jordan regain its appeal. It could also leave retailers looking for another premium brand to fill shelf space. And Wells Fargo thinks that one of the biggest beneficiaries could be On, the fast-growing Swiss shoemaker backed by one of the greatest athletes of our time, Roger Federer.
For Nike shareholders, that’s a tricky trade-off worth paying attention to.
Nike’s Jordan sneaker sales have a scarcity problem
Jordan sneakers weren’t built to be easy to find.
I remember that after watching Space Jam (1996), my father and I were always on the hunt for iconic designs and limited releases, chasing that feeling that getting the right pair meant something special.
But Nike’s steady stream of retro launches has begun working against that formula.
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Nike CEO Elliott Hill acknowledged as much on the company’s October 1 earnings call.
“We’ve been oversupplying our iconic retro product, asking them to do too much,” he said.
The numbers show why Nike is changing course. Jordan Brand sales dropped from $8.70 billion in fiscal 2024 to $7.27 billion in 2025 and $7.03 billion in 2026, a decline of nearly $1.67 billion over two years, as reported by Seeking Alpha.
In Nike’s latest quarter, Jordan accounted for about 13% of company sales, but its revenue declined at a mid-teens rate.
Even Nike’s broader performance business is growing, suggesting the weakness isn’t across the board.
There are signs shoppers aren’t feeling the same urgency, either. Needham analyst Tom Nikic found that six of seven Jordan Retro releases in September were trading below retail prices on the resale market, as reported by Retail Dive.
Moreover, sneaker publication Sole Retriever reported an average of about 10 retro launches a month over the prior year.
Hill is looking to now limit releases of certain Jordan Retros, following cuts to Air Jordan 1 production, to restore exclusivity and demand. While this could boost the brand’s appeal, it risks short-term sales and leaves retailers with fewer Jordans to stock.
Roger Federer’s fast-growing sneaker brand sees an opening
As Nike pulls back on certain Jordan releases, another major sneaker company is positioning itself to take advantage in On Holding, the Swiss brand that had Federer among its investors.
Founded in 2010 as a running-shoe company, On brought King Roger aboard in 2019. His involvement allowed the brand to marry its technical footwear with tennis and everyday style, while On expanded into apparel and other sports.
His estimated initial stake of 2.5% to 3% in On led Forbes to value his holdings at more than $375 million, pushing his estimated net worth to $1.1 billion and making him a billionaire for the first time in August 2025.
As a result, the company turned into a breakaway success. Annual sales climbed from 1.79 billion Swiss francs in 2023 to 2.32 billion in 2024 and 3.01 billion in 2025. In Q2 2026, sales shot up 21.6% in constant currencies, with direct-to-consumer sales up 34.3% and apparel up 56.2%. Moreover, its gross margin surged to 65.4%.
That said, Wells Fargo analyst Ike Boruchow thinks Nike’s retrenchment in Jordan creates an opening, as reported by Seeking Alpha.
Initiating coverage with an Overweight rating and $48 price target, implying 31% upside to the stock’s recent closing price, he wrote:
“On is well positioned to grow well above market levels and fill the hole left by a retracement from [Nike’s] Jordan.”
Boruchow argues On is protecting its premium image by controlling inventory and limiting discounts, even at the expense of near-term sales, ahead of a potentially important 2027 innovation cycle.
At the same time, Nike’s supply cuts could give retailers another reason to make space for On. And for a younger brand already growing quickly, more shelf space could matter.
Nike’s Jordan reset creates a difficult choice for stock investors
Nike’s struggles have taken a toll on shareholders.
At $40.49 on November 4, its stock was down roughly 36% this year, trading closer to its 52-week low of $31.97.
That might look tempting, particularly with Nike offering a 4.05% dividend yield. However, its pricing setup tells a more complicated story.
Nike trades at roughly 19.4 times trailing earnings, but 32.4 times the midpoint of its adjusted fiscal 2027 earnings guidance. Management expects revenue to decline by a high-single-digit percentage this fiscal year, with efforts to restrict supply weighing on sales into fiscal 2028.
The dividend deserves scrutiny, too. Nike’s $1.64 annualized payout exceeds its $1.25 midpoint for projected adjusted earnings per share. Management remains committed to the dividend, but maintaining it could become tougher if profits remain depressed.
That said, On reports earnings on November 10, followed by Nike’s Investor Day on November 17. For investors, those updates might reveal whether Nike’s retreat is creating a healthier sneaker business or simply giving competitors more room to grow.
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