Nike profit: It’s gotta be the shoes
By James Ledbetter
If this is a recession, it’s a bizarre one. Everybody was all gloomy about the phone business on Wednesday, figuring that buying fancy new phones is one of those luxuries that the cash-strapped consumer can easily kick into the next quarter or longer. But today comes news that Nike (NKE) - in some people’s minds the quintessential purveyor of unnecessarily expensive item - has seen a third-quarter net income leap of 32% over last year. The stock got such a pop that it had to suspend trading for a bit.
A closer reading of the numbers reveals something very intriguing, both about the Nike brand and the state of the world economy. U.S. sales were up a respectable but modest 5%, and orders for delivery between March and July up a meager 1%. But sales in Europe were up 23% and in Asia 27%, indicating that Nike has skillfully parlayed the Beijing Olympics this summer into sales. (Nike doesn’t always sponsor the Olympics directly, but spends heavily to associate itself with individual athletes, which in China seems to work.) Sure, when the dollar is tanking it’s especially helpful to be selling shoes abroad, but there’s more than currency fluctuation at work here. Even if Nike shoes aren’t manufactured in America any more, we’re still good at manufacturing brands, and it’s a lovely paradox that in an economic downturn, we’re still remarkably good at convincing the rest of the world that they want to dress like Americans.
They are a brand and image company. End of story. Great story tellers to connect the consumers to the athletes themselves. They sell an idea and image.
The issue was with their suppliers and contract manufacturers underpaying their workers. Its global market economics, labor market is no exception.
It is time NIKE pays it employees who make these boots a decent living wages - they pay them less than a dollar to make these shoes and they have no medical coverage and can afford a decent meal once a day.
I am a teacher at a continuation high school. Most of the kids come from single-parent homes with low incomes. Air Jordan’s, which retail for $175 and up, are a rite of passage for these kids. They are part of the bling. Their parents or guardians can’t afford the rent, but the kids have expensive shoes. They fight and kill each other over them, too. Nike, which tries to market itself as this gift to humanity, or Michael Jordan, refuse to recognize or address the situation. It would be a great opportunity for them to become good corporate citizens, but I do not see it happening any time soon.
Nike has never made shoes here. In the beginning Onitsuka made Nike designs. In Japan.
Anyway, Nike is simply the “coolest” shoe brand in the world. Everyone wants it. Sales in Europe and Asia or not surprising at all.
Only shows an addition on to the already trillions of dollars of credit card debts.
Even if Nike shoes aren’t manufactured in America any more,
Nike’s were never manufactured in America. At least, not for the last 25 years. They don’t even really manufacture shoes at all. They design and market shoes. The manufacturing is done by Asian suppliers.
we’re still good at manufacturing brands
Which is to say, we are still good at creating artificial monopolies.
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Nike doesn’t own any factories. Manufacturing is done by factories who manage their own employees. In fact, Nike tries to monitor factories to make sure that factory employees are treated fairly in regards to the country the factory is in.