BEAVERTON, Ore., Dec. 20, 2021 — NIKE, Inc. (NYSE:NKE) today reported fiscal 2022 financial results for its second quarter ended November 30, 2021.
Source: NIKE, INC. Reports Fiscal 2022 Second Quarter Results
- NIKE Direct sales were $4.7 billion, up 9 percent on a reported basis and up 8 percent on a currency-neutral basis.
Nike’s Direct sales growth shows how powerful Nike’s brand is. During a time when sneakers are stuck in shipping ports and stores barely have any Jordan Brand on shelves, Nike continues to grow their Direct sales strategy, but they do so while completely disrespecting small store owners who adhered to rigorous requirements to keep their Nike.net wholesale accounts. Small family-owned store, Looking Good in Cleveland, Mississippi was informed that they would no longer be able to buy Nike product. This happened after the store was informed in 2016 that they needed to modernize their store as Nike initially took products from the shop. After spending over 500,000 to remodel their entire building, the owners went above what was required hoping to make a lasting impression, this month they received a letter telling them once again they would no longer be able to carry Nike.
For the fans of Nike in the small town, there is a still a Jimmy Jazz and a Hibbett Sports which leaves Looking Good in a similar position as bigger retail outlet EbLens who lost their account last year. An interesting thing happened for EbLens however. They didn’t collapse without Nike. I received an inbox on EbLens stating, “we recently opened in Westfarms Mall – just signed deals in East Boston, Danbury Fair Mall and Garden State Plaza. Here we grow!!!!!” The surprising addition of stores post-Nike account hints at a shift in consumer behavior for urban retail. It’s very similar to a discussion I had when visiting a City Gear and seeing CROCS merchandised on the main wall for line of sight where Jordan Brand used to sit:
If Crocs Were in the UFC the Brand Would be Ngannou Against the Field
I’ve long stated that Nike is bulletproof. I’ve also stated that Nike has a moat which allows the company to take risks other brands can’t afford. Nike has the heart and wallets of the cash customer. The cash customer props up “urban” retail and stores like EbLens and Looking Good. In these locations the consumer buys apparel on impulse in many instances, every weekend. Nike has yet to integrate the cash customer into digital. It’s a battleground I continue to stress is up for grabs. EbLens has been able to counter the loss of Nike by doubling down on apparel. There are issues with this dealing with fast fashion, but the cash consumer isn’t concerned with sustainability. That’s an important discussion topic for the future.
Nike probably doesn’t think about how removing their product from Looking Good hurts the family behind the small business. Nike is a machine. Machines don’t feel. However, if EbLens isn’t an anomaly, Nike has an entirely different problem brewing. It’s a quiet issue which can be viewed through the lens of small business strategies. When a small business takes a hit, the adjustment must be swift to survive. The business has to become lean and efficient. Small business tightens the belt and scrapes by trying different strategies in short term bursts. When the small business finds something that clicks, it refines that aspect. The cash consumer at urban retail is brand loyal, until what they want is gone. They will drive the extra miles initially to find what they are looking for, until one day that customer tries something different. It’s in that space where Nike’s cracks become apparent. Distance the brand from this customer too much and that moat begins to drain. It takes time, but mistreating small business, after small business… Nike is creating its own Winter War (Finland vs Russia).
