Footwear Insight - Business Report Quarterly

4 Footwear Insight Business Report Quarterly ~ Q2 July 8 2024 Bob McGee, Editor footwearinsight.com LETTER FROM THE EDITOR NO STRANGER TO THE TURNAROUND There are many institutional and individual investors and undoubtedly some retailers here and abroad who are not happy with the Swoosh today given Nike's difficult stock performance this year-to-date and dismal outlook for the next six months. But I say the brand's doomsayers should not forget history or lose sight of all Nike has done for the sporting goods, retail and footwear industries over the last 50+ years. Sure, there have been bumps in the road on a path to more than $51.3 billion in annual revenues (up 85% from $27.8 billion in FY14). But for the most part, Nike's aggression in growing its reach and global dominance has benefitted the industry as a whole and many of its rivals. As smaller competitors Deckers-owned Hoka and On Holdings out of Switzerland find themselves in the enviable position of connecting effectively today with consumers with their array of unique styles, Nike is playing defense to maintain market share and expand its business by promising an array of new innovative performance products and under $100 retail offerings for budget-conscious consumers. e brand, like at least five others in this space (retailers Journeys and Sportsman's Warehouse, and Wolverine Worldwide, Under Armour, and Adidas North America), is clearly in "turnaround mode." But for all its mightiness and clout over the years, as it continued a path of dominance across the sports world, Nike is no stranger to the turnaround or the need to significantly ramp up its gameplan. Old shoe dogs like me can't forget what happened 38 years ago in 1986, two years aer Nike signed Michael Jordan (Jordan Brand sales rose 6% in FY24 to $6.99 billion.). Reebok surpassed its Beaverton, OR rival in annual revenues thanks to the aerobics craze. Nike would again regain the top mantel by introducing the cross-training category and "Bo Knows" marketing among other strategies and has rarely looked back since. Until maybe now. Nike will have to engineer its latest "turnaround," or ramp up, if you will, with a different senior management team, which does not include company founder Phil Knight or longtime brand veterans. ere is more industry competition for the feet of consumers that now reaches around the world and includes a mature U.S. market. The company is promising to push performance and innovation in key new introductions, with features that should spark consumer interest and excitement, li average price points (ASPs) and margins, and give retailers the world over a new story to pitch to their customers. And that's a turnaround worth pursuing even if clarity on its success rate won't be evident until late 2025. Q2

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