The Kicks You Wear, Vol. 334 - A new era for New Balance 💰
New Balance is playing with the big boys now
Goooooood morning, folks. Welcome back to the Kicks You Wear. Thank you so much for rocking with me today. I appreciate you. Hope you had a great weekend and have an even better week ahead of you.
HOUSEKEEPING: I'll be out of pocket from March 6-9 for a bit of work travel, so no newsletter that Friday. It'll be back on the next Monday.
Alright. Let's jump in.
New Balance's rise by the numbers
We’ve all seen New Balance’s rise over the last few years through our own eyes. But now we’ve got some numbers behind it.
The numbers: New Balance’s revenue for 2023 reportedly hit $6.5 billion, Sneaker Freaker reports..
This is reportedly a 23 percent increase from the company’s 2022 mark, which is a massive jump.
But…while it is an impressive number, it’s still about $500 million from the $7 billion revenue goal set by CEO Rob DeMartini back in 2018.
The company was reportedly growing at a 10 percent rate annually at the time. That was before the COVID-19 pandemic.
Behind the scenes: This isn’t insight we’d usually get into the company. It’s difficult to keep track of New Balance’s finances because it’s not a publicly traded company. Considering that, there’s always reason to take news surrounding the company’s finances with a grain of salt.
Considering what we do know, though, that number is impressive. Especially considering the state of the sneaker market.
Despite the rough patch the industry seems to be going through, New Balance has reportedly found itself standing toe-to-toe financially with some of its peers.
Nike ($51 billion) and Adidas ($23 billion) still far outpace the company without a doubt. Those two are the tentpoles of the industry.
But it’s quickly gaining ground on brands like Puma ($9.5 billion) and Jordan Brand ($6.6 billion).
The how: A few things are working to New Balance’s benefit right now.
The company’s signature models are perfect for the Y2K mesh runner trend taking over footwear today.
It’s showcased those models well through creatives like Joe FreshGoods, Salehe Bembury, Ronnie Fieg and more with collaborations. There’s a halo effect on the rest of the brand’s general release models.
Speaking of those GR models, the brand has done lots of work in making those more colorful. Giving Aime Leon Dore’s Teddy Santis the creative keys to the Made in USA line was a good move that created a lot of interesting mainline stuff.
The brand has also done a solid job in turning around its sports department. It has key signature athletes across multiple sports (Kawhi Leonard, Coco Gauff, Shohei Ohtani) who are generally performing well.
Add all that together along with an intense marketing push, and New Balance is able to get where it is today.
The hard part: New Balance probably won’t grow to challenge Nike or Adidas anytime soon. It takes decades for that. But overtaking, say, Puma? Pulling away from Jordan Brand? Those are attainable goals that the brand will likely target moving forward. If it wants to continue to grow, it’ll have to do more.
Y’all know how that goes. Whenever the quantity of something goes up, the quality tends to get a bit worse. Let’s hope New Balance doesn’t fall into that trap.
Brands have abandoned BHM
Remember earlier this month when we were talking about how brands have pretty much abandoned Black History Month? We’ve got some numbers showing it’s true.
The news: There are Black History Month collections that exist, but you wouldn’t know it because brands aren’t telling you about it anymore.
An analysis done by The Business of Fashion shows just how far back brands have pulled from Black History Month collections over the last few years. The numbers are staggering.
Here’s BoF’s Sheena Butler-Young with more:
According to an analysis by Edited for The Business of Fashion, the number of marketing emails from US retailers explicitly mentioning Black History Month have been trending downward since an initial spike in 2021, the first observation following the murder of George Floyd.
They fell 38 percent from 2021 to 2022 between the months of January and February, and 40 percent again from 2022 to 2023 during the same period. February 2024 is on track to continue the trend: Of the 726 US retailers Edited tracked, only 51 sent emails mentioning Black History Month.
Folks. That last number is insane. Out of 726 retailers, only 51 have sent emails mentioning Black History Month at all. That’s…not a lot.
The most twisted part, you ask? There’s been an uptick in BHM products this year. Here’s Butler-Young again:
At the same time, the analysis found a 31 percent uptick in the Black History Month-related products brands and retailers dropped for 2024 compared with last year. The increase, though, was driven primarily by multi-brand retailers — like Kohl’s and JCPenney. Nike and Adidas haven’t released BHM collections in at least three years.
Zoom out: While there have been more BHM products overall (outside of the sneaker space), most brands don’t seem all that interested in promoting it.
There are a couple of reasons I can think of.
First: The product isn’t selling well. Brands won’t promote what doesn’t work even if it is seen as altruistic.
That begs the question about why the product isn’t selling. I can’t speak for everyone, but how many Kente cloth designs or t-shirts about the ancestors does one need? Can we be more creative?
Second: Brands are backing away from taking stands. For the last few years, having a stance on political issues as a brand has been seen as a plus. But it hasn’t necessarily led to an increase in profit.
Some companies have gone in the complete opposite direction and made more money. Looking at you, Adidas.
Black History Month shouldn’t be seen as something “political,” but in today’s day and age where literal history books are banned? That’s certainly not off the table.
I don’t know what this means for the future of Black History Month in the corporate world, but if the brands aren’t interested in participating that’s just fine.
We’ll take care of it ourselves.
Firesale incoming
VF Corp is on the ropes to kick off 2024. Standard & Poor’s reduced the company’s credit rating last week and recommended it sell off one of its big properties to reduce its debt, Retail Dive reports.
The background: Despite having some notable classic brands under its belt (Vans, Timberland, The North Face, Dickies), the company has been struggling for quite some time.
The brand’s revenue has dipped by 16 percent year over year with staples like Vans, Timberland and Dickies seeing hefty double-digit declines.
The company has been working to revitalize Vans as a footwear staple since laying out a rebuild plan in October, Footwear News’ Shoshy Ciment reports. And it seems to believe it’s making positive progress.
But still… Even with that in mind, finance analysts believe the only way for the company to meaningfully reduce its debt in the short term is to sell off one of its meaningful assets. VF Corp reportedly has around $6 billion in debt and wants to cut that by at least $4 billion.
What’s on the table: The spotlight is on Dickies and Timberland. Neither are the healthiest at the moment, but both are recognizable, sizable and have a histor.
There are other options, but they don’t work as well.
The brand isn’t going to want to ship off The North Face. Though it’s seen a decline in revenue, it’s still VF Corp’s strongest brand at this point.
We can take Vans’ off the table, too. CEO Bracken Darrell seems to be invested in it despite the steep decline we’ve seen. The revitalization plan tells us that.
Supreme could be a candidate, but there are two problems: It’s not large enough or profitable enough to make enough of a dent. Unless VF Corp packaged some of its other smaller brands along with it, I can’t see it.
If a sale happens, expect VF Corp to go in that direction.
Under Armour talkin’ that talk
I didn’t think Under Armour could get any spicier than the Steph vs. Sabrina Twitter reply. I was wrong.
Here we go again: Under Armour is taking shots at Nike — again. This time with the MLB uniform debacle. The pants are thin enough to see through. Not a great look.
Nike and Fanatics have been catching flack from all angles on this for the last few days but that didn’t stop Under Armour from piling on.
The brand sent this tweet amid the chaos:
This is wild. I don’t know if I’ve ever seen Nike be this much of a punching bag for other brands before — especially not with Under Armour. Usually that works the other way around.
The shoe is on the other foot now, though. The Swoosh needs to get its house in order.
What's droppin’, bruh?
Nike Air Foamposite “Eggplant” — Thursday, February 29
Nike Field General 82 — Thursday, February 29
Adidas AE 1 “Stormtrooper” — Friday, March 1
Asics Gel-NYC Wide Mesh Pack — Friday, March 1
Air Jordan Spiz’ike Low — Friday, March 1
That's all, folks! Thanks so much for reading today. I appreciate your time. Have a fantastic week.
Let's chat again on Monday. Until next time. Peace and love. Be safe, be easy, be kind. We out.
- Sykes 💯
Great post this week Mike (as always). I was just about to write my own piece about NB and VF until I read yours. You nailed it.