Nike reported its 2Q earnings yesterday afternoon, posting up revenue of $8.8 billion for the period, an increase of 6.2 percent over the prior year. Reflecting some of the challenges the brand has faced from its own multiple years of success combined with rising competition, its future orders came in at just two percent globally and were down four percent in North America.
One of the categories that has been a struggle for Nike has been signature, performance basketball shoes, some of which saw price drops last year. However, on the call, Nike president Trevor Edward declared emphatically, “Nike basketball is back.”
Commenting on the category, Edward admitted, “Last year, we knew we didn’t perform to our potential in basketball whilst we have a diverse portfolio across Nike basketball, Jordan and sportswear. We recognized that two of our signature styles were not resonating with consumers to our expectations.”
Edward went on to say the company went back to the drawing board and made better product. He also described Jordan as continuing to “electrify the market place with products that generates excitement through vibrant storytelling,” and said positive things about demand for Air Force 1 (and those AF1 field boots were fire) and Foamposite styles, both classified as basketball shoes.
There has been a lot of talk over the past year on sneaker blogs and social media regarding slowing demand for Jordan sneakers. As well, there have been multiple sightings of deeply-discounted retro product in chains like off-price retailers like Ross and Marshall’s.
On the call, Nike admitted there was an overflow of inventory during the first half of 2016, but said it now had product under control. In the world of high-priced sneakers, much success is built on the simple economic formula balancing supply versus demand. As such, if Nike has a better handle on pairs in the marketplace that’s a positive.
Still, Jordan is no longer the only game in town and is facing unprecedented competition from Adidas and even Puma (a lot of the girls buying creepers used to buy Js), both brands whose biggest appeal is simply that they’re offering brand new design stories.
And yet, whatever headwinds Nike is experiencing, it still retains its spot as not just king of the sneaker hill, but also one of the greatest brand’s worldwide. In other words, don’t count it out just yet.
