Nike (NKE: Charts, News, Offers), the world’s largest manufacturer of athletic shoes and active apparel, seems almost impervious to scandal. So much of the company’s success lies with marketing and brand recognition, yet damaging revelations about key spokesperson do nothing to knock the brand off the rails. First, there was the allegation that Air Jordan basketball shoes, named after the Chicago Bulls superstar were manufactured in sweatshops. The Michael Jordan image also suffered from publicity regarding gambling and marital problems. Then there were several Jordan retirements -– Nike stuck with him through it all. Years later, another Nike superstar, Kobe Bryant found himself the target of well-publicized rape charges. Nike had just signed Kobe away from Adidas shortly before the incident and other brands immediately fled the married basketball star. Nike reduced Kobe’s exposure on behalf of Nike, but continued to honor their endorsement contract with him.
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Then we come Tiger Woods, another Nike superstar who was plunged into scandal beginning in November of 2009, when a series of sordid details regarding the golfer’s extra-marital affairs we widely publicized. Most Tiger Woods endorsement clients could not drop him fast enough — except for Nike. Nike has built their entire golf equipment and apparel business around Woods and while there were rumors that some wives were telling their husbands to avoid Nike golf apparel because of the Woods scandal, Nike golf sales seem to be unaffected. Conventional wisdom suggested that the Nike golf brand was dead. However, according to data gathered by SporsScanInfo, sales of Nike brand golf products in the 13 weeks prior to revelation of the Wood’s scandal matched sales in the 13 weeks following the outing of the scandal. It seems that the only way out of a Nike endorsement deal is poor performance on the field.
The Nike brand continues to build market share around the world. Expansion was a key move that produced a 43% jump in emerging markets revenue during Nike’s most recent quarter. Sales in North America, Western Europe, the emerging markets and Greater China, rose by 1%, 4%, 43% and 10%, respectively in the fiscal third quarter. Conversely, sales in Japan and Central and Eastern Europe fell 7% and 8%, respectively. The Q3 report also revealed that the sales increases allowed Nike to more than double analyst estimates.
The next few months also look strong for Nike as orders for goods that will be delivered between March and July increased by 6 percent. Summer outlook is also bolstered by the largest sporting event in the world: soccer’s World Cup where nine of the thirty-two national teams will be competing in Nike gear. The list of World Cup clients includes the United States national team as well as, tournament favorite, Brazil and the world’s best soccer player, Christiano Ronaldo. World Cup footballers will be wearing Nike’s new fabric made from recycled plastic. Each shirt will use up to eight recycled plastic bottles taken from Japanese and Taiwanese landfill sites.
Now that Tiger Woods has announced his intent to make his professional golf return at the prestigious Master’s tournament, it is likely that the central figure of one of the most compelling sports stories of the year, competing in the sport’s largest event will be wearing Nike gear. Of course, Tiger could register a terrible performance at the Masters, in which case Nike Inc. will likely have to content itself with merely sponsoring the World Cup champion.
Other stories about Nike:
- Nike World Cup jerseys – Nike teams to wear recycled plastic.
- Nike endorsement – Christiano Ronaldo inks 6 million euro contract
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Joshua Caucutt is long-time market follower and finance writer. Debt management, entrepreneurship and government economic policy are areas of emphasis. He regularly contributes to the Stock of the Day analysis.
