Nike's ongoing $2bn cost savings plan is reaching Converse, with job cuts and restructuring. It's not surprising really, as Converse has been severely underperforming and has seen sales decline very sharply in recent quarters. The brand is losing out to products like Adidas’ Samba and other sneaker brands and there is a sense that Converse just hasn’t innovated enough and isn’t doing many interesting things to stimulate consumer demand. As such, Nike is cutting jobs as part of a wider package of cost savings. Converse isn’t the only part of the business impacted, but Nike clearly expects it to play a role in the wider streamlining process. However, where cutting is a reaction to a problem, most retailers and brands, including Nike and Converse, cannot cut their way to success. Ultimately, the main issue at Converse is on the sales line – cuts do not automatically fix that. Thanks to Just Style for including more of my views in the article linked in the comments... #retail #retailnews #sneakers #fashion #footwear
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The truth is that Nike needs more innovation. ** With a market cap of around $140 billion, the company is down 50% from its all-time high price of $178 per share in 2021. **Nike's Operating income has fallen around 17% since 2021 **Nike's recent report shows a company struggling to implement its turnaround strategy. **Footwear sales, which account for more than 60% of total revenue, were down 5% in a recent Q3 report, and apparel sales were down 13%. ** However, it reported a slight increase of 0.03% in revenues to $12.4 billion for Q3, with gross margins improving to 44.8%. ** History has taught us that no brand is too big to fail, but given the depth of Nike products, the company still has what it takes to come back stronger. **Let's hope the Nike Air Max DN launch can provide much-needed growth. #Nike #growth #US #NikeAirMaxDN #annualreport #profit #income
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Nike is due to release its latest results tomorrow. Unfortunately, it is expected to be another weak quarter as the sportswear giant grapples with a softer sneaker market and increasing competition from rival brands. For a while now, Nike has been losing market share to On, Hoka and other smaller brands that are nimbler and have been capturing consumer attention. There is a sense that Nike just hasn’t been on the front foot with innovation or pushing out products that stimulate interest with either the fashion-focused or technically minded sneaker crowds. As it’s the final quarter, Nike will also have to set guidance for the year ahead. Management has claimed that the innovative spirit is returning, and it is pinning its hopes on lines like Alphafly 3 and Pegasus to boost sales. Whether this optimism is reflected in the future revenue forecasts is a real test of how convinced management is by its own words. Basically, Nike needs to put its money where its mouth is. I spoke with Reuters about the company – link to article in the comments. #retail #retailnews #sneakers #sportswear #brands #footwear
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Nike reported a modest revenue rise in Q3 FY24 to $12.4 billion, with a 2 per cent rise in Nike brand revenues. Converse faced a 19 per cent drop to $495 million, primarily in North America and Europe. Gross margin improved to 44.8 per cent, but net income fell by 5 per cent to $1.2 billion, and EPS decreased to $0.77. Inventories declined by 13 per cent. #Fibre2Fashion #f2f #apparel #textile #fashion #textileindustry #f2fnews Read more here: https://lnkd.in/d86T3C2h
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Sportswear giant Nike has reported a 2% rise in revenue year on year to $12.9bn (£10.5bn) for its first quarter to 31 August 2023, driven by a 6% increase in Nike Direct revenues. Read more here. #fashion #fashionnews #retail #retailnews
Nike hails 'another quarter of brand momentum' as sales edge up
https://www.drapersonline.com
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Sportswear giant Nike has reported a 2% rise in revenue year on year to $12.9bn (£10.5bn) for its first quarter to 31 August 2023, driven by a 6% increase in Nike Direct revenues. Read more here. #fashion #fashionnews #retail #retailnews #sportswear
Nike hails 'another quarter of brand momentum' as sales edge up
https://www.drapersonline.com
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Nike reported a big beat on quarterly profit, as higher prices helped the No. 1 sportswear company cushion the blow from softer demand and lingering cost pressures. The company also said it would build its portfolio of running shoes and lean on series like Air Max 1, Infinity and V2K to capitalize on the growing demand for performance sneakers - shoppers are increasingly gravitating toward running shoes and competition is heating up for Nike as newer brands like On and HOKA see robust growth. Nike is also managing its inventories tightly, helping ease investor worries that the company would need to offer steep discounts in the holiday season to clear excess stock and, in turn, hurt its profit margins. Nike said markdowns would continue to improve and that its current-quarter gross margins would grow for the first time after six straight quarterly declines so far. For Reuters with Kate Masters. #nike #earnings #companynews #reuters #footwear #sportswear #retail
Nike beats profit estimates, pledges to boost focus on running shoes
reuters.com
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Nike released some shocking financial numbers. - Revenues advanced a mere 1% to $13.4 B - Expects the fiscal year 2024 to advance only 1% - Plans to cut costs by up to $2 billion over the next 3 years Net/Net: 2024 will be a tough year, and companies must get their houses in order. CFO Matt Friend warned, “We are seeing indications of more cautious consumer behavior around the world in an uneven macro environment. Hundreds of employees will be getting the pink slip, according to The Guardian. #leanmanufacturing #leangovernance #fashion #profits #headwind #restructuringjobs #brand #footwear #apparel #macroeconomy #globaltrade #market #consumerbehavior #logistics #innovation #storytelling #customers
Nike Stumbles In North America, Warns Of Global Headwinds And Massive Cost Cuts
forbes.com
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I bet you owned a pair of Converse shoes at some point in your life. Maybe you still do! But have you ever heard about the marketing spin that saved the brand? Converse was founded in 1908. It was initially successful, especially during the mid-20th century when its Chuck Taylor All Stars became the dominant basketball shoe. However, the brand faced challenges as competition grew in the athletic footwear market, particularly in the latter part of the century. Rising competition from brands like Nike and Adidas, along with shifts in consumer preferences and market dynamics, were brutal. By the turn of the 21st century, Converse found itself struggling to maintain its position in the market. While it was a cultural icon, the finances didn’t add up. In 2001, Converse faced bankruptcy. Things were so bad that they were acquired by Nike in 2003. And then… a key marketing moment… the “Made By You” campaign, launched in the 2010s. From everyday people to cultural icons like Andy Warhol, everyone had a tale to tell through their Chucks. Celebrities shared their colorful, handmade shoes, giving Converse a viral momentum once again. The results were clear: Converse experienced a resurgence. Sales skyrocketed, and brand engagement reached new heights. The rest is history :) What did you think about this campaign? Which product would you love to customize? Tag the brand! #branding #marketing #storytelling
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Exploring Market Dynamics: The Resilience of Adidas and Nike Amidst Competitive Shifts The recent turbulence in the sportswear industry, particularly the unsettling performance of giants like Adidas and Nike, prompts a deeper examination of market dynamics through the lens of the mean reversion theory. As Adidas reports its first annual loss in over 30 years and Nike grapples with a significant decline in its stock value, questions arise about the resilience of these industry leaders in the face of evolving competition. The mean reversion theory posits that historical returns tend to revert to the long-term average over time. This theory implies that companies generating high economic returns will inevitably attract competitors willing to enter the market at a lower, albeit still attractive, return on investment. Consequently, aggregate industry returns are expected to converge toward the opportunity cost of capital. The present scenario unveils a critical juncture where the strength of Adidas and Nike's economic moats (Warren Buffett famously referred to a moat as a metaphorical protective barrier around a company's economic castle, representing sustainable competitive advantages that defend against competitors and preserve long-term profitability.) is put to the test. While these industry behemoths have historically enjoyed substantial market dominance and profitability, the emergence of competitors such as Skechers and Asics signals a potential shift in market dynamics. These contenders are vying for market share and challenging the incumbents' supremacy in the sportswear landscape. As Adidas and Nike navigate through this period of uncertainty, it becomes imperative to assess the durability of their economic moats. A robust economic moat, characterised by factors like brand recognition, distribution network, and customer loyalty, serves as a bulwark against competitive threats. Companies endowed with such formidable moats are better positioned to withstand market disruptions and maintain their market leadership. However, the current landscape underscores the need for vigilance and adaptability. If Adidas (Struggles in North America, exacerbated by high inventory levels and the termination of the Yeezy sneaker line partnership with Kanye West.) and Nike (Struggles with lowered revenue growth projections and cost-cutting measures.) fail to fortify their moats and address the shifting preferences of consumers, they risk ceding ground to competitors. In conclusion, while the present challenges facing Adidas and Nike may appear daunting, they also present an opportunity for introspection and strategic recalibration. #Sportswear #Adidas #Nike #MeanReversion #EconomicMoat #CompetitiveStrategy #MarketDynamics #Skechers #Asics
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Nike posted earnings yesterday which marginally beat Wall Street expectations. That, along with the timely news that the brand had won the kit manufacturing contract for the German national football teams — prising it from Adidas after 70 years — made for a welcome boost after a rough start to the year for the American sportswear giant. But Nike is still grappling with challenges on various fronts, ranging from its over-reliance on retro sneaker sales, a lack of newness in its product pipeline and a deepening identity crisis spurred on by the ongoing exodus of long-tenured Nike insiders. Read the full story over on The Business of Fashion today. #nike #sportswear #sportsmarketing #retail
Pressure Eases on Nike, But Problems Remain
businessoffashion.com
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Managing Director and Retail Analyst at GlobalData Retail
1mo🔗 Link to comment: https://www.just-style.com/features/explainer-why-nike-is-targeting-converse-for-cost-cutting/