Nike Inc. and its Jordan brand might need to do more promotions and markdowns if second quarter earnings from Dick’s Sporting Goods are any indication of what’s to come.

Nike’s stock is now trading in the $38.42 a share range. That’s slightly off the $40 range last week, which was 78 percent below its November 2021 high. As Footwear News has covered over the years, Nike’s turnaround is taking more time than initially expected. Its troubles date back to 2020 when a former chief executive decided to pull Nike out of some wholesale channels to focus on direct-to-consumer. And the lack of innovative products allowed Hoka and start-up On Running to grab some of that shelf space.

Now new CEO Elliott Hill has the daunting task of re-establishing Nike’s wholesale presence, as well as work with the design team to have a game plan that includes a steady stream of new and innovative products flowing on a steady basis.

Hill said in July when Nike reported fourth quarter results that in the second half of fiscal year 2027, which starts next January, Swoosh will introduce “more than a dozen new footwear styles.” And he emphasized that the styles will leverage innovation, along with some “newness and freshness” in new silhouettes. Nike’s first focus under Hill was Nike Running, and other areas that could be next in footwear include basketball and team sports.

But meanwhile, there are still some lingering matters — think legacy styles and inventory — to work through.

Dick’s executive chairman Ed Stack told investors Tuesday during a conference call that the footwear lifecycle among sports brands is experiencing a “hangover right now,” particularly their legacy lifestyle models. Stack also said that some suppliers with inventory that were promoted on their sites “spilled over into the marketplace,” meaning that retailers followed suit with discounting to remain competitive and garner some market share. Even worse, “I think the market is going to continue to be promotional through the balance of the year,” the executive chairman added.

The Nike and Jordan brands have a big presence at both Dick’s and Inc. Dick’s acquired the chain last September for $2.4 billion. Nike Inc. — it owns the Nike, Jordan and Converse brands — was expected to be the big beneficiary of that transaction. The thinking also was that Foot Locker serves consumers in neighborhoods where Dick’s would be hard-pressed to find suitable doors, giving the big-box retailer another channel to expand its consumer reach.

Last year, Jefferies analyst Randal J. Konik noted that Nike leads footwear sales at Dicks, with 28 percent of the sporting goods retailer’s business coming from the Swoosh at the time, while the brand represented half of Foot Locker’s sales. That means the two retailers play a significant role in Nike’s wholesale strategy. (Konik has not released updated estimates of share of business.)

Jefferies analyst Jonathan Matuszewski, Konik’s colleague, said this week after Dick’s posted second quarter earnings results that the bloated vendor partner inventories are now putting a spotlight on the footwear cycle. More specifically, “Nike’s issues are rippling across” the competitive landscape, he concluded.

Matuszewski noted that while low-profile and minimalist silhouettes have been additive to growth over the years, they are “quickly falling out of favor.” And Nike’s wider wholesale distribution and markdowns are “leading competing brands to replicate those tactics.” That cycle is sparking what the analyst describes as a “domino effect of pricing pressure on styles of yesterday.” It’s an unfortunate scenario for Dick’s, given its “high reliance” on Nike and “growing reliance on other emerging brands in recent years.” And as consumers gravitate more toward the new dress shoe trend, it becomes a tough selling environment for Dick’s and even Foot Locker, given the high athletic focus.

Most insiders believe that while there’s no quick fix, it’s not a permanent problem. it’s really just a question of how long will it take for Nike, Dick’s and Foot Locker to work through their current issues.

In fact, there might even be some good news ahead. That’s because Stack said new styles from Nike, like its Mind shoe range and the latest offerings from its Vomero and Pegasus franchises, are “doing extremely well.” And Stack also cited the product pipeline for Nike basketball as another area that’s also promising.