Nike shares are down more than 30 per cent this year, and the company expects sales to fall 2 per cent to 4 per cent in the current quarter. Into that mess walks the World Cup, a tournament where Adidas, not Nike, holds the official sponsor’s badge.
Reuters reported on June 11, the day the tournament opened, that the timing could hardly be tougher for chief executive Elliott Hill. He is two years into a turnaround, market share has slipped, and investors are growing impatient. The World Cup is partly staged in the United States, Nike’s home market, so the company has plenty of reasons to want a big showing.
What Nike is doing
The “Rip the Script” campaign sits at the center. It is built around a film that features footballers and celebrities, from Kylian Mbappe to Kim Kardashian. Reuters saw it plastered across the window of a Champs Sports store in midtown Manhattan. Inside a Pele Soccer shop in Times Square, mannequins wore Nike’s kits for the United States, Brazil and France.
Nike is outfitting 12 national teams. It has launched two new Mercurial cleats in June, teamed up with local street-wear designers, and refreshed its football range at more than 5,000 Nike and wholesale stores around the world.
The shelf space itself counts as progress. Nike spent years cutting ties with retailers under former CEO John Donahoe, who pushed the company toward selling directly to consumers. Camilo Andrade, Nike’s vice-president of global football, said the wholesale approach “has been first and foremost to make sure that we restore those relationships”. Champs Sports, a Foot Locker subsidiary, giving Nike jerseys prominent display suggests some of that repair is working.
Where Adidas has the edge
Adidas sponsors 14 teams and supplies the match ball, which anchors displays in many stores. British retailer JD Sports told Reuters that the Mexico and Argentina shirts, both made by Adidas, are the best-selling team kits so far. Analysts at Telsey Advisory Group wrote this week that Adidas products look more visible at Dick’s Sporting Goods and Foot Locker.
Louis Carrillo, 30, was browsing the Mexico shirts at Pele Soccer before the opening match against South Africa. He wanted to back his native team, he said, and he liked the three stripes on the shoulders. He used to buy Nike’s Mercurial boots as a younger man, “but I feel that it’s not the same anymore”.
Analysts told Reuters that which brand comes out ahead will depend partly on which teams go deep in the tournament.
Doubts from the analysts
RBC Capital Markets cut its rating on Nike stock one day before the first match. Analyst Piral Dadhania pointed to a slower-than-expected turnaround and said the World Cup boost and new products are “not sufficient to offset clean-up actions elsewhere in the business”.
Morningstar analyst David Swartz was blunter about the limits. “The problems that Nike has are not going to just go away because of the World Cup,” he said. “But it’s certainly an opportunity to get the brand back in front of people.”
