Nike is reporting a loss of $790 million (51 cents per share) for its most recent quarter. This compares to $989 net income a year ago, just before they made their ill-advised business decision about Colin Kaepernick. Everyone remembers Nike went all-in on their social justice model to make Black Lives Matter activist Colin Kaepernick the image of their brand.
Nike has been trying various approaches to hide the absolutely devastating effect that decision has had on their business. Nike knows how bad a decision this was. How many times have you seen a Nike commercial this year that featured Kaepernick as their brand image?
Covid-19 gave Nike a way to deflect the bad financial numbers. Blaming Covid-19 is just hogwash! Year over year numbers are down 38% worldwide. If this quarter’s number were down 38% and the other quarters were even (not up or down from a year ago), then the year-over-year numbers would be down 9-10%, not 38%.
According to Sundance over at CTH,
In my opinion, having tracked MAGA and Anti-MAGA companies and effects, what Nike was doing in much of last year was hiding and deferring income losses due to sales declines. They did this because the larger goal was to hide the impact of their branding shift. Nike didn’t want people to know how much backlash they faced, so they used every mechanism possible including inventory manipulation to avoid showing losses.
Please note that sales in North America are down 46% from a year ago.
Sundance also reports,
Remember, this bottom line loss is the direct result of the top line collapse. The raw material doesn’t cost more (it’s actually less); inflation didn’t chew up their import pricing (it’s actually less); they are buying in dollars which are actually stronger; energy costs are not higher (they are actually less) and Nike has not been hurt by tariffs because Chinese devaluation of currency (beyond the tariff cost) has actually helped raise the profit equation for many importers. This loss is all about the top line.
This is a direct result of collapsing sales due to their decision to make Colin Kaepernick their brand image. Kaepernick is no Michael Jordan.
Nike blatantly lied in their branding. Nike thought people were too stupid to know different. The consequences from those incredibly stupid -and brutally political- mistakes have come home to roost. They are getting what they deserve.
Will there be job losses? It is hard to understand how job losses can be avoided. The CEO is spinning this as a business restructuring that has nothing to do with the loss of income. If you believe that, I believe there is a bridge in Brooklyn that we should talk about.
One needs to understand the political climate that businesses are operating in. That being said, this should be the mission statement for all companies.
“Our company is here to provide a product or service to all human beings. And that will remain our goal as a business. We hope and believe Americans can do their best to unite during these trying times through civil discourse. Thank you”.
Nike obviously missed the boat on that one.
Perhaps, Nike’s new slogan should be “Game over.”