The Kicks You Wear, Vol. 409 — Nike's long road to recovery 😬
Nike ain't out of the woods yet.
Good morning, folks! Welcome back to the Kicks You Wear. Thanks so much for rocking with me today. Appreciate your time.
Happy March Madness! The women’s NCAA tournament starts today. The men’s tourney started yesterday. Pretty sure my men’s bracket is busted. My women’s bracket probably will be soon enough. Whatever. Embrace the chaos.
Let’s hop in.
Nike’s still got a long way to go
The Nike comeback we’ve all been waiting on isn’t happening yet. Elliott Hill held the brand’s third-quarter earnings call on Thursday evening and things are still looking quite grim.
The numbers: Revenue is down at the company across the board.
Nike’s overall revenue is down nine percent for the quarter at $11.3 billion.
Nike Direct revenue dipped by 12 percent to $4.7 billion. That wouldn’t be so bad if wholesale revenue didn’t also dip by 7 percent to $6.2 billion.
The brand’s gross margin has also decreased to 41.5 percent. Gross margin is revenue retained after costs for labor, production, materials, and other operational matters. Nike has basically been producing more but bringing in less.
This news follows investment banking firm Raymond James's revelation that downloads for Nike’s mobile apps were down 35 percent for the quarter and foot traffic in Nike’s stores dipped 11 percent in the same time period.
What’s the read: I just threw a lot of numbers at you there and not a single one is good.
The picture they paint demonstrates that consumers just simply aren’t that into Nike right now. They’re not willing to spend on the brand without steep discounts. Those discounts are still impacting Nike’s bottom line, as well as the bottom lines of industry partners that depend heavily on it.
This is the case for Nike despite all of the awesome commercials and incredible spots we’ve seen over the last few months since Hill took over. Consumers are ready to be shown that Nike is back — not told. The brand is still working on it, and clearly, there’s a lot of work left to do.
Between the lines: Nike is still in the middle of its “Win Now” initiative, which Hill started when he took over for John Donahoe in October.
We’ve seen the brand recenter its athletes and use them to promote its product instead of relying too heavily on influencers.
Nike is still pushing out old and steeply discounted retro inventory while working on creating energy around new silhouettes like the Air Max DN8.
The brand is using marketing dollars at big events like the Super Bowl and the NBA All-Star game to leave big impressions on consumers.
Be smart: It takes time for all of these things to add up and work. Donahoe has only been in the lab for a few months here. It’d be unfair to expect the turnaround to be in full swing already. Especially considering the conditions of the current market.
Every footwear brand faces an uphill battle to get people to spend money on non-essential things like footwear.
The global trade war the United States is currently involved in is only working to raise the price of footwear and other essential goods along with it.
With that being the case, consumers are pocketing their cash and saving for the rainy days they expect to be ahead.
Every brand isn’t experiencing these headwinds the same. For example, Adidas seems to be doing better than usual these days, but rivals like Nike and Puma aren’t handling things as well.
The silver lining: While things weren’t great for Nike on this call, there was a bit of light at the end of the tunnel. Analysts on Wall Street expected the brand’s results to be much worse than they currently are. The returns aren’t huge yet, but the brand’s strategy is working.
Nike has reasons to keep its chin up.
The brand’s dominance in women’s basketball should take hold through spring and summer with March Madness and the start of the WNBA season.
The NikeSKIMS partnership is also set to begin its limited launch this spring.
The bottom line: Things aren’t perfect. But don’t bury Nike just yet. It’s too soon for that.
Kith’s love letter to Japan
Kith opened up its new flagship location in Osaka, Japan with a bang this week.
What happened: Ronnie Fieg and Kith released two new collaborations with New Balance to celebrate the store’s opening.
The first pair is a 991v2 in a steel blue/oyster colorway.
The second pair — and more popular pair of the bunch — is a 992 in a light blue pastel tone with a bright outsole.
The look: Both pairs look incredible. I would love to have either in my collection.
Go deeper: What makes this so special is the fact that these pairs — particularly the 991v2 — are a love letter to sneaker culture in Japan and the country’s relationship with New Balance.
The steel blue colorway pays homage to the OG sneaker that kicked off New Balance fever in Japan.
The origin dates back to the New Balance 1300JP’s 1984 release that first popularized the greyish-blue hue in Japanese sneaker culture.
The 1300 blew up in Japan because of the sneaker’s high quality and price point. It cost $130 (39,000 yen) when it debuted. It wasn’t just a sneaker — it was a luxury item. If you had these, you had money.
When you look at that 991v2, that bit of history and culture is reflected in the shoe. As a sneakerhead, that’s something I can appreciate. Those are the details and little story bits that Fieg and company are always so good at hitting.
They’ve done special releases for specific stores before — the Kith Canada opening had the 1700 release, for example.
But this one takes the cake for me. This is a proper collab.
Sneaks looks fun!
I’m assuming by now that most of you have seen the trailer for the movie Sneaks, considering how many of you sent it my way for the newsletter. (Thanks, BTW!)
Quick synopsis: Sneaks is a movie about a pair of designer sneakers that was stolen from a kid who won them by a sinister sneaker collector aptly named The Collector. The pair of sneakers get split up in New York City and have to find their way back to one another.
Yes, the sneakers are alive. It’s not weird if you don’t think about it too much.
The essentials:
Anthony Mackie and Chloe Bailey play the pair of designer sneakers.
Laurence Fishburne plays The Collector.
The movie was directed by Rob Edwards — the same guy who wrote Treasure Planet and Princess and the Frog.
My take: I’m pretty excited about this.
The cast is fun. In addition to the names mentioned above, big names like Keith David, Martin Lawrence, Chris Paul, DJ Mustard, Quavo, and Kiana Lede are included.
Beyond the cast, I love the theme of the movie. The story is about a kid who gets a unique pair of sneakers. Although he doesn’t seem to have many, he cherishes this unique pair. That resonates with me. It’s something I think I need to be a lot better about — a lot of us do.
I’m hoping that theme imprints itself on the sneakerheads of tomorrow who will watch this.
The Bern ain’t feeling it
Sen. Bernie Sanders running into a group of sneakerheads in the streets sounds like a fever dream I may have had once or twice. But the real-life version is so much funnier than I could’ve ever imagined.
The senator stumbled upon a group of dudes who’d just bought the Jordan SB 4s. He liked them! … Until he learned how much they cost.
“How much do these things cost? What? $225?” Sanders said before walking off. “They’re nice sneakers, but they’re more than I would pay.”
Buddy. We know.
I’m unsure if the man has ever worn an outfit that cost $225. That is a nice jacket he’s wearing, tho! Those folks might be feeling the Bern, but the Bern is clearly not feeling these sneakers.
#TheKicksWeWear
First the homie Jess got us poppin with these drippy Superstars today. Again with the dazzling sock combo. Too fly.
The homie Saoirse came through the Caribana Fest Forces. These are AMAZING. I wish I didn’t look so stupid in Forces.
The homie Nico came through with the V-Day Air Maxes. These are so fly. I’m really surprised we don’t see em more.
The homie Guru reminded me how angry I am with myself for not getting these KOI Sunders. I am SO MAD y’all. These are too good.
The homie Asheley came through with the Air Tuned Max joints in a celery flavor. These will never ever ever get old.
Then the homie Kali brought us home with an absolute CLASSIC pair of AJ2s. This colorway. The lace job. Everything about this is phenomenal. Well done.
Smoked it. Y’all are too fly for me.
That’s a wrap, folks! Thanks so much for rocking with me today. Appreciate your time. Have a fantastic weekend.
If you have any questions, comments or concerns feel free to hit me up via email at mikedsykes@gmail.com or shoot me a message here via Substack.
Peace and love. Be safe, be easy, be kind. We out.
-Sykes 💯
Those numbers were not pretty!!!
Another little tidbit re: Sneaks: DJ Mustard is managing the whole soundtrack!
This, like Metro Boomin' handling it for Spiderverse, is a trend I'd love to see keep happening.