Nike shares plummeted on Friday after the company reported quarterly results that beat profit expectations but warned of weak sales amid weak consumer demand for the brand’s shoes in North America and China.
Sales were down 2% year over year, with direct-to-consumer sales down 8%, and the company appears to be losing market share to competitors that are doing a better job of keeping their finger on the pulse of consumers and not alienating their customer base with far-left political ideals.
The sports apparel company’s shares have fallen 29 percent so far this year.
Full-year sales fell short of expectations. The company reported sales of $51.4 billion for its recently ended fiscal year, below analysts’ expectations of $51.6 billion. The company reported fourth-quarter adjusted earnings of $1.01 a share on sales of $12.6 billion, beating the 84 cents expected but missing the $12.9 billion bottom line estimate.
Nike’s aggressive direct-to-consumer push has been costly for the company as many consumers favor a return to in-person retail shopping in the post-pandemic era. The company, like many other technology companies, made the mistake of thinking that the rapid shift to online purchasing seen in 2020 and 2021 would continue. The company drastically reduced the number of brick-and-mortar retailers through which it sold its products, initially hurting those stores and ultimately causing it to lose market share.
The company also faces competition from upstart brands such as French sneaker maker Hoka Inc. Nike has also become politically toxic for many conservatives, who have pushed schools and club sports teams to abandon business with the brand and find alternative apparel makers.
Last year, Breitbart News reported on Nike Women’s odd and controversial move to hire Dylan Mulvaney to sell women’s sports bras and leggings after the company was already under fire for its association with anti-American racist Colin Kaepernick.
“When Kaepernick knelt for the national anthem, I said to myself, I’m a big military fan and that’s what my foundation is about, and it would be great for Nike to step up and honor this guy and what’s going on right now,” former Yankees pitcher David Wells said in an interview with Fox Business host Maria Bartiromo last year. “If I had a Nike jersey, I’d tape it up. I’d put holes in it.”
Four days after George Floyd’s death was captured on video, Nike released an ad attacking America for racism: “Don’t pretend there’s nothing wrong with America. Don’t turn your back on racism. Don’t accept that innocent lives are taken from us. Don’t make excuses anymore. Don’t think this doesn’t affect you. Don’t sit back and be silent. Don’t think you can’t be part of the change. Let us all be part of the change.”
June 2023 article by ThoughtLeaders.io explanation Nike’s deliberate strategy to lean towards left-wing politics:
In 2018, the company announced plans to promote more women and minorities to leadership positions. It also implemented diversity training for 10,000 managers and unconscious bias awareness training for all employees. However, recent reports indicate that there is still a lack of minorities in senior management. As of 2018, there were only 226 Black/African American employees serving as directors or vice presidents, and only 230 Hispanic/Latino staff in these roles. Yet Nike has been vocal and transparent about addressing these HR practices rather than investigating accusations of exploitative working conditions in its East Asian factories, marking another blemish on the brand’s social justice credentials.
But beyond just projecting a liberal stance, Nike is also using these marketing campaigns to demonstrate its support not just with words, but with actions as well. Kaepernick’s deal reportedly includes a donation to the player’s “Know Your Rights” charity. Following its latest “Don’t Do It” campaign, Nike announced it would be spending $40 million over the next four years to support black communities in the United States.
Despite these philanthropic efforts, Nike woke up to the realization that aligning its brand with liberal politics is good business practice. Today, consumers understand that ideological signals permeate even the brands we wear.
Nike’s recent sales slump suggests that pivoting the brand to left-wing politics may not have been as genius as it was hailed at the time.
