Every sneakerblog and major news outlet is either tweeting or retweeting the information shared by Sportswear analyst Matt Powell. Today the NPD Group released data that stated, “Adidas has overtaken Jordan as the #2 brand in U.S. sport footwear. This is an achievement I never thought I would see in my lifetime.” – Matt Powell
I never, never take anything anyone says as fact. I always take a close look at the analysis or information and then I apply my own research. It’s clear the major news outlets and sneaker blogs haven’t taken the initiative to ask one question, Why?
Last week I posted a discussion with a bevy of information pulled directly from the public record of Nike. All companies that are traded on the stock market have to make public their financial statements. This information may take a bit of digging to locate on the websites, but it’s there. Here is the article I posted last week:
In this article there is a video. I’m sharing the video and it starts where I begin to discuss the Nike layoffs and why I think the layoffs happened and the fact that DTC has played into a lot of the issues with Nike in the last year and a half:
If you watch this then you will understand the points I’m going to raise that should really place an asterisk next to the adidas surpassing Nike information Matt Powell has shared. First, I have to clarify that I haven’t asked Powell about his data. I am making an assumption that a brand like Nike does not need Matt Powell to analyze their data in relation to the retail outlets the data is pulled from for his analysis. I don’t know anything about his data. I am assuming that his data does not include retail outlets like City Gear, DTLR/Villa, or Jimmy Jazz. In other words, I think the data is probably from major chains like Finish Line, FootLocker, and Dick’s. I don’t think Matt Powell is utilizing information from Nike. If you watched the video above you know that Nike’s DTC grew from
2014 (768 Nike stores)
2015 DTC 6.6 Billion (832 Stores)
2016 DTC 7.9 Billion (919 Stores)
2017 DTC Revenue 9.1 Billion (985 Stores)
Now, I repeat I don’t know the source of Powell’s data. What I do know is that Nike grew the number of their physical stores from 919 to 985 stores since 2016. THIS IS IMPORTANT: I don’t need to know Powell’s data to understand that as Nike grew e-commerce, and in store sales via Nike Factory, Nike Clearance and Nike Employee Stores that the natural progression for Nike footwear at retail would be a decrease in sales.
Has adidas taken shares of the retail market from Nike? YES
Did Nike lose money overall last year to this year? NO
A few FACTS from Nike’s last quarterly report:
• Fourth quarter revenues up 5 percent to $8.7 billion; 7 percent growth on a currency-neutral
• Fiscal 2017 revenues up 6 percent to $34.4 billion; 8 percent growth on a currency-neutral
• Inventories up 4 percent as of May 31, 2017
Pay close attention to the growth of Nike and all of this is from global growth and DTC primarily and you begin to see a picture that isn’t quite presented with Powell’s numbers. Although I am not privy to the information NPD Group has, it really doesn’t matter when you consider that Nike grew their revenue 1.2 Billion from 2016 Q4 to 2017 Q4 on the strength of DTC.
“Adidas has overtaken Jordan as the #2 brand in U.S. sport footwear. This is an achievement I never thought I would see in my lifetime.” This quote from Powell is great retweet material, but maybe instead of jumping on the retweet train sneaker blogs and newspapers should have asked the question of Matt, “Well, have you ever seen a company as powerful as Nike have more stores than the wholesale accounts they sell their shoes in?” Maybe this statement should have been made, “Maybe you haven’t seen an achievement like this because e-commerce has completely changed the way companies are doing business.”
This does not come as a surprise to me at all. As a matter of fact I’ve said on this site several times that every brand not named Nike should be forging relationships with retail outlets to take advantage of Nike removing themselves slowly from the reliance on Futures. Then again, Nike has the playbook and maybe every brand should be looking and saying, “DTC is where it’s at.”