#Nike is down 30%+ YTD (wiping $60B+). A former Nike branding exec wrote a viral post and blames it on three decisions Nike made in 2020 under incoming CEO John Donahue.
The plan prioritized the direct-to-consumer (DTC) business but backfired:
ELIMINATE CATEGORIES: Mckinsey advised Nike to get rid of categories (running, basketball, soccer) and re-classify everything into “Women”, “Men” and “Kids”.
The logic was that Nike was duplicating resources and a pivot to DTC would provide enough customer data to inform product decisions instead of relying on the category experts (eg. a basketball vet that spent 20+ years at Nike). A lot of these experts were fired and Nike lost their insights.
This was a clear L because Nike quietly brought back categories at end 2023.
END WHOLESALE LEADERSHIP: Nike ended hundreds of relationships with wholesales partners and prioritized Nike website over retail.
The change looked genius during COVID but as customers returned to brick ‘n mortar, Nike’s product were nowhere to be found. It had burnt bridges with partners, who were happy to give shelf space to upstarts (this wasn’t covered but I think On and Hoka took advantage of this for running).
There was also a lack of feedback from retailers, which led to inventory issues (the “data-driven” insights from online sales proved to not be a panacea).
PRIORITIZE DIGITAL MARKETING: Nike changed its marketing budget to focus on driving users to Nike digital properties and membership platforms.
For decades, Nike spent 10% of sales on brand advertising to create an aspirational halo. The prioritization of programmatic ad spend meant Nike went from “create demand” (new customers) to “serve and retain demand” (re-targeting existing ones). The result was a slowdown in sales.
“Because of that,” writes Massimo Giunco (who spent 21 years at the company), “Nike invested a material amount of dollars (billions) into something that was less effective but easier to be measured vs something that was more effective but less easy to be measured. In conclusion: an impressive waste of money.”
***
The focus on DTC is not surprising. Donahue was formerly CEO of B2B SAAS firm ServiceNow.
Nike’s DTC business is now 44% of sales (vs. 30% before the strategy change).
The digital focus seems to have commoditized the product, impacted Nike’s brand perception and created an opening for competitors. But Giunco does think it’s fixable if Nike gets back to its marketing prowess and get off the digital ad drop (obviously take it with the grain of salt that he’s a brand guy).
Maybe as a p4 trial they could perform a small scale fresh ERT head 2 head? I think that would be super compelling for prescribers!
I also still have wondered about the once a month dosing protocol. Like every article says "may be able to do that" but what does the data say for the once monthly dosing? Was the drug effective enough? Is there NDA/EMA submissions gunning for a once a month dose protocol in labeling discussions? My guess is not as they wanna stay conservative for initial approval then work towards getting additional labelings down the road for once a month... guess time will tell but if the once a month dosing comes to fruition thats a huge advantage too.
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Correlation Between Social Media Chatter And Nike's Stock Plunge
Saw this and thought it made a lot of sense:
#Nike is down 30%+ YTD (wiping $60B+). A former Nike branding exec wrote a viral post and blames it on three decisions Nike made in 2020 under incoming CEO John Donahue.
The plan prioritized the direct-to-consumer (DTC) business but backfired:
ELIMINATE CATEGORIES: Mckinsey advised Nike to get rid of categories (running, basketball, soccer) and re-classify everything into “Women”, “Men” and “Kids”.
The logic was that Nike was duplicating resources and a pivot to DTC would provide enough customer data to inform product decisions instead of relying on the category experts (eg. a basketball vet that spent 20+ years at Nike). A lot of these experts were fired and Nike lost their insights.
This was a clear L because Nike quietly brought back categories at end 2023.
END WHOLESALE LEADERSHIP: Nike ended hundreds of relationships with wholesales partners and prioritized Nike website over retail.
The change looked genius during COVID but as customers returned to brick ‘n mortar, Nike’s product were nowhere to be found. It had burnt bridges with partners, who were happy to give shelf space to upstarts (this wasn’t covered but I think On and Hoka took advantage of this for running).
There was also a lack of feedback from retailers, which led to inventory issues (the “data-driven” insights from online sales proved to not be a panacea).
PRIORITIZE DIGITAL MARKETING: Nike changed its marketing budget to focus on driving users to Nike digital properties and membership platforms.
For decades, Nike spent 10% of sales on brand advertising to create an aspirational halo. The prioritization of programmatic ad spend meant Nike went from “create demand” (new customers) to “serve and retain demand” (re-targeting existing ones). The result was a slowdown in sales.
“Because of that,” writes Massimo Giunco (who spent 21 years at the company), “Nike invested a material amount of dollars (billions) into something that was less effective but easier to be measured vs something that was more effective but less easy to be measured. In conclusion: an impressive waste of money.”
***
The focus on DTC is not surprising. Donahue was formerly CEO of B2B SAAS firm ServiceNow.
Nike’s DTC business is now 44% of sales (vs. 30% before the strategy change).
The digital focus seems to have commoditized the product, impacted Nike’s brand perception and created an opening for competitors. But Giunco does think it’s fixable if Nike gets back to its marketing prowess and get off the digital ad drop (obviously take it with the grain of salt that he’s a brand guy).
***
Check out the whole piece on $NKE: Nike: An Epic Saga of Value Destruction
The New Consumer chart below: Is Nike actually good at digital? Or is it just lucky to be Nike?
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Maybe as a p4 trial they could perform a small scale fresh ERT head 2 head? I think that would be super compelling for prescribers!
I also still have wondered about the once a month dosing protocol. Like every article says "may be able to do that" but what does the data say for the once monthly dosing? Was the drug effective enough? Is there NDA/EMA submissions gunning for a once a month dose protocol in labeling discussions? My guess is not as they wanna stay conservative for initial approval then work towards getting additional labelings down the road for once a month... guess time will tell but if the once a month dosing comes to fruition thats a huge advantage too.
I'm bullish on $PLX.