Mobb Deep once opened a song with the words:
There’s a war goin on outside, no man is safe from
You could run but you can’t hide forever
from these, streets, that we done took
You walkin witcha head down scared to look
You shook, cause ain’t no such things as halfway crooks
The song Survival of the Fittest is a reference to Darwinism as discussed by street disciples analyzing their landscape to better understand how to navigate in a small business environment rife with shady individuals, double dealing and limited access to the plugs. The survival is defined by the inability of crews to work in unison, cutting prices until eventually things bottom out and there is a hard reset wiping out those who never really had the strength to maintain control of their streets.
2017 NIKE, Inc. Investor Meeting | The Scale of Sport Highlights – A Detailed Breakdown – ARCH-USA
Nike’s full year reported revenue for 2021 was 44.5 billion. In 2017 Nike delivered their version of Mobb Deep’s classic in their Investor’s Day. The strategy has always been intended to make Nike a 50-billion-dollar company. As Nike began to remove accounts, lost in the discussion was this image:
80/20 in North America. Nike began removing accounts years ago. No one paid attention. Right now, there is a focus on Foot Locker’s announcement that they would be cutting their Nike allotment. In a recent note from Williams Trading analyst Sam Poser, he simplified the discussion, “In FY22 Nike (NKE-Hold-$125 PT) will represent ~55% of FL’s purchases, down from 75% in FY20, and 65% in 4Q21. Based on our estimates, FL’s 2022 purchases from NKE will be down over $800M.”
In this quote lies the essence of this discussion. While supply chain issues and Covid have weighed heavily on Nike, it hasn’t been 5 billion dollars of weight. Recapturing the 800 million from Foot Locker can be considered a 2-billion-dollar potential bump for the Swoosh. At the worst this will bring 1.2 billion back into Nike’s coffers. This would still place the Swoosh at 45-46 billion dollars. 4 billion dollars short of their target goal. Removing the last remaining small accounts accomplishes very little. Reducing allocation to every major chain Hibbett Sports, JD Sports, Dick’s Sporting Goods, Snipes and the multitude of stores carrying low-end Nike product allows Nike to hit the 50-billion-dollar target.
Foot Locker may look like they are in jeopardy, but the reality, in my opinion, is Foot Locker was just given a head start on adjusting to Nike’s video being shot in Queensbridge. RIP to Prodigy. Mobb Deep delivered an anthem for the streets rooted in Darwinism. Nike is the cartel and they’ve initiated a stress test. Not as manufactured as an episode of Bar Rescue, but definitely as intentional. Foot Locker was just the first of the big boys… cue The Infamous.