Shares of Nike plunged on Friday after the company released quarterly results that beat earnings estimates but warned of weak sales amid soft consumer demand for the brand’s shoes in North America and China.
Sales were down two percent year-over-year, driven by an eight percent fall in direct-to-consumer sales. The company appears to be losing market share to competitors who have done a better job of staying on top of consumer trends and not alienating their customer base by embracing far-left political causes.
Year to date, shares of the athletic apparel company are down 29 percent.
Full-year sales fell short of estimates. The company said it took in $51.4 billion in revenue in the fiscal year recently ended, short of the $51.6 billion analysts had forecast. The company reported adjusted earnings of $1.01 per share on $12.6 billion in revenue for the fourth fiscal quarter, beating the bottom line estimate of 84 cents but missing on the top line forecast of $12.9 billion.
Nike’s aggressive push into direct-to-consumer sales has been costly for the company as many consumers have shown a preference to returning to in-person retail shopping in the post-pandemic era. The company, like many tech firms, made the mistake of thinking that the rapid shift toward on-line purchases seen in 2020 and 2021 would continue. It cut deeply into the number of traditional retailers through which it sells its products, initially hurting those stores but eventually costing it market share.
The company is also facing competition from the likes of French sneaker maker Hoka and other emergent brands. As well, Nike has become politically toxic to many conservatives, who have sworn off the brand and pushed school and club sports teams to find alternative apparel makers.
Breitbart News reported last year that, in a bizarre and divisive move, Nike Women selected Dylan Mulvaney to sell women’s sports bras and leggings. The company was already under fire for its association with anti-American race-baiter Colin Kaepernick.
“When Kaepernick took the knee against our national anthem, and I’m a huge, huge military supporter, that’s what my foundation is all about, and for Nike to jump on board and reward this guy for that and the things that are going on, I told myself if I was playing in today’s game,” former Yankees pitcher David Wells said in an interview with Fox Business host Maria Bartiromo last year, “and we had Nike jersey, I’d tape it up. I’d cut a hole in it.”
Four days after George Floyd’s death was caught on video, Nike released an ad attacking America for racism: “Don’t pretend there’s not a problem in America. Don’t turn your back on racism. Don’t accept innocent lives being taken from us. Don’t make any more excuses. 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’s all be part of the change.”
A June 2023 article by ThoughtLeaders.io explained Nike’s deliberate strategy to lean into leftwing politics:
In 2018 the company announced plans to put more women and minorities in leadership positions. They also set up diversity training for 10,000 managers and unconscious bias awareness training for all employees. However, recent reports suggest that minorities are still underrepresented at higher management levels. As of 2018, only 226 Black/African American employees were filling roles as directors or VPs, and only 230 Hispanic/Latino staffers occupied these positions. However, Nike has been more vocal and transparent in addressing these HR practices than they are investigating the accusations of sweatshop conditions in their East Asian factories, which serves as another stain on the brand’s social justice credentials.
However, beyond the liberal signaling, Nike has also used these marketing campaigns to put their money where their mouth is. Their deal with Kaepernick reportedly included a contribution to his Know Your Rights charity. The latest ‘Don’t Do It” campaign was followed by Nike’s announcement that they are committing $40 million over the next four years to support the Black community in the US.
Despite these charitable initiatives, Nike got woke because it saw that aligning its brand with liberal politics was good business practice. These days, consumers understand that ideological signaling trickles down to the brands we choose to wear.
Nike’s recent sales flop suggests that centering the brand around leftist politics may not have the genius it was praised for at the time.
