For a company as large as Nike, growth must be your primary focuses. Once you've reached the level of Nike, as the largest sportswear company in the world, finding places in increase revenue are sometimes hard to find. One area that Nike has been able to find a soft spot in the marketplace is in the "Action Sports" business.
Action Sports at Nike includes all things Nike SB, Nike 6.0 and snowboarding. The Action Sports segment at Nike was originally started in 1997 as the company began to manufacture a few skateboarding shoes, but it wasn't able to make an impact in the marketplace until 2002 with its introduction of the Nike SB brand. As a compliment to the new push into action sports, Nike also purchased Hurley in the same year. Since Nike SB's inception, the company has invested millions of dollars in the brand's marketing, research, sponsorships, and events.
The investments paid off for Nike too as the company saw exponential growth through its first decade of Nike SB. In 2010, CEO Mark Parker, stated that Nike expected to see its Action Sports business double in size from $390 million to $780 million by 2015. However, recently, those plans seems to come to a screeching halt with the announcement of Nike's first decline in revenue in the Action Sports segment since Nike SB was introduced. Nike reported revenue of $495 million for their Action Sports segment for Fiscal Year 2013, a decrease of $2 million from 2012 earnings.
Now $2 million dollars, or a decrease of .4%, might now seem like much to a $25+ billion company, but to Nike it means everything. Nike told its investors to prepare for an increase in revenue to $780 in 2015, only 2 years away, and they took a step back. In its progression, Nike should be seeing profits in the high $500 millions to reach their stated goal. So what did Nike do?
Walk into your nearest Footaction (a Footlocker owned company), and take a look around. You're most likely to see at least one Action Sports segmented item. You wouldn't have seen Braatas or P-Rods in the store so prevalent in the composition of the stores very long ago. Now, remember, Footlocker owns CCS too. CCS has historically been the be all, end all for skateboarding for Footlocker, but it isn't anymore. Coincidence that the company decided to change its business model after Nike started seeing its Action Sports sales decline? I think not.
Also, take a look at Nike's website. It currently has 71 different shoes listed under skateboarding shoes. For the first time we are seeing a larger number of Nike SB Dunks available on their website. In the past, if you wanted a premium Nike SB Dunk you used to have to go to your local skate shop, or scour around the internet looking for the phone number for possible locations. That's changing. There are four Premium level Nike SB models on Nike's website, and you can expect to begin seeing even more release online (*possibly* starting with the Jordan 1 x Nike SB).
Expect to see more in-house collaborations using Nike SB as the base. The company will be trying to draw as many cross-over customers as possible to catch back up to pace for their revenue projections. So don't get used to the way that you deal with Nike SB merchandise; the shift has begun, and it's not stopping anytime soon.
Thanks for reading--please feel free to comment and share!
@FunkMasterKicks
No comments:
Post a Comment