Despite weaker North American sales in their wholesale business, Nike’s revenue increased in its international business and direct-to-consumer sales after reporting third-quarter earnings last Thursday.
China also represents a strong area of growth for Nike. Management reports China is leading in digital sales on Nike.com and Alibaba’s Tmail, a major partner of Nike in China.
Recent Management Changes
Last week, Nike announced the resignation of Trevor Edwards, Nike brand president, and the exit of the VP and GM of global categories, Jayme Martin.
With no news yet released of the exact nature of these departures, they did come at nearly the same time Nike CEO Mark Palmer transparently revealed that a review of the human resources practices of reporting complaints was underway after alleged misconduct in the workplace.
Parker, touched briefly on the changes and the strength of the leadership going forward, “I’m committed to ensure that we have an environment where every Nike employee can have a positive experience and reach their full potential. As you know, I publicly committed to serve as Chairman, President and CEO of NIKE, Inc. beyond 2020. Trevor Edwards and I both agreed to a change in leadership structure in the Nike brand. At this time as we transition to our next phase of growth and continue to evolve our culture. Trevor will work with me as an advisor through this transition until he retires in August. And I’d like to thank him for his important and significant contributions in growing and strengthening the Nike brand around the world. We have a deep leadership bench at Nike and I’m confident that our restructured leadership team will continue to strengthen our culture and drive the Consumer Direct Offense.”
The Consumer Direct Offense mentioned by Mark Parker is Nike’s initiative to connect with customers digitally and sell through e-commerce. The thought is the initial investments in the Consumer Direct Offense will increase North American sales and lead to more positive results in the fourth quarter.
Nike and the NBA
The relationship between Nike and the NBA is improving after early season incidents all over the league of jerseys tearing during games. Parker told CNBC that “we’ve isolated the issue and we feel like we’ve got command of the situation and feel good about where we are.” Fortunately for Nike, the tearing of the jerseys wasn’t an issue with the consumer side of the business.
The releases of the city jerseys introduced a type of jersey the players and fans had never seen before. The uniqueness of the jersey’s provided a boost in consumer sales and all signs point to this project ending in success for Nike
Heavy Investment in Performance Shoes Unsuccessful
Nike, as well as other top brands, invested millions of dollars into marketing for performance footwear. Senior industry advisor for sports with the NPD Group, Matt Powell references the Nike Tanjun, a midmarket shoe, as a surprise as Nike’s bestselling shoe in 2017.
“It’s just a great shoe at $65,” Powell told Footwear News. “It speaks to the modern runner trend that’s very much driving the marketplace right now. I think it also illustrates how good the midmarket business was last year. Shoe trains and national chains really drove most of the sales in the last year.”
Powell also points out that no performance shoe is currently in Nike’s top 10.
While performance shoes have dominated the top spot on Nike’s best seller list for years, the change shows consumers are shedding the expensive, athlete driven footwear, for more sensible, reasonable priced styles that fit their lifestyle.