0:00 Intro Nike may have reached a peak in 2023 but their redeeming quality is an ability to lock down real estate in the right areas. The data in SNKRS and the Nike app provides considerable insight into where the brand should open physical doors. While footwear and apparel are the obvious drivers of revenue, the company must pull back on the creation of sneakers to create FOMO once again. With retailers’ walls covered in Nike clothing and sneakers leading to markdowns, once coveted products are not selling through. This creates pressure on margins although with Nike it does not hurt like it does other brands.
6:43 Nike’s comp is Apple. I wrote an entire chapter on what I labeled Nike’s Apple Play. In that discussion, I explained how Nike pulled back from distribution in creating their Nike Direct channel. Apple did the same. As Apple products began to slow in sell-through, they moved more products into small computer stores and big box. More importantly, they allowed computer repair locations to become Apple Certified repair locations again. What does this have to do with Nike? You can expect smart real estate purchases allowing Nike to open Nike Training and Nike Strength fitness and gym locations supported by product.
https://www.nikestudios.com/studios/
11:46 Planet Fitness has a 6.3-billion-dollar market cap. Nike Strength allows Nike to enter the fitness and gym space with product. A recent example is the announcement of nike shox grey and blue paint colors as a Nike Fitness instructor in the app, which was introduced on New Year’s Eve when she wore her Nike Tech Dance Gear (that was also worn in a Planet Fitness ad). This will undoubtedly lead to new equipment being either bought by gyms or Nike opening competing gyms. If Nike can get 5-10% of the fitness marketplace they add a-billion-dollars to their market cap with a stronger footwear and apparel marketplace that can sell footwear and apparel products at a more premium price. All the above is frothy, cream rises to the top prediction.
15:36 After Nike and Tiger Woods shared the end of their 27-year partnership, it reminded me that Nike simply is not operating as it once did. While Tiger Woods is a more expensive partner, the brand still has Charles Barkley and Penny Hardaway under contract. Even John McEnroe is popping up in Travis Scott collabs. Keeping Tiger on the roster as a legacy athlete seemed like the Nike thing to do. As I wrote in a recent post, Nike just does not seem like the Nike of old. https://www.tennis.com/baseline/articles/nike-purge-appears-to-hit-sloane-stephens
19:22 Nike has long controlled every sport and with influence not being as understood as it once was, stepping away from everything to recover those major dollar investments in individual sponsorship could be foresight, but it is certainly allowing other brands to make cool and interesting moments in sport. New Balance is making serious strides: Coco Gauff in tennis, Femke Bol and Sydney McLaughlin-Leverone in track, considerable partnership in soccer. On Running’s OAC contributed to USATF Champions like Yared Nuguse. Other brands are gaining ground on Nike. Consider this, the Paul George basketball line from Nike is defunct. Kyrie is with Anta. The Russell Westbrook line is defunct. Nike did add the Luka and Tatum shoes, but athletes on the decline do not seem to be in high regard at the Swoosh. But, even with Nike divesting from individuals they still won the medal count at last year’s World Championships:
The NFL, NBA and MLB champions will wear Nike. USATF will wear Nike. While Nike allowed Tiger to walk, as they did with Roger Federer, remember adidas had to sell Taylor Made Golf and Callaway has had to invest in Top Golf to see growth again:
22:50 Well, it’s now 2023, and Callaway Golf has officially changed its name to Topgolf Callaway Brands. The company also just released its 2022 earnings report that shows Topgolf (locations, Toptracer technology and shox) made up 39% of the brand’s total revenue.
Callaway’s Topgolf acquisition? Here’s how that’s working out
Which allows me to pivot and finish this discussion. Fitness and Nike Strength is a niche category that captures a sport that is always available to fans. Nike’s sponsorship of all the important leagues automatically makes Nike a part of every major moment in sports. The micro-moments and viewership of the Olympics (where brands cannot advertise their athletes and products during the event) will all feature Nike Swooshes on the gold medal stand for the U.S. and other countries. Nike is so woven into the fabric of sport that losing Tiger is not a loss. Golf was dying until an infusion of new blood by Top Golf, but Jordan Brand sponsors Eastside Golf and Jordan Golf shoes are now just as coveted as any item Tiger made famous. Even when Nike is not Nike, they are still Nike.
