The Kaepernik Effect

Nike bet big on Colin Kaepernik and Black Lives Matter. They made their stance a major part of their marketing strategy. Like many in the corporate world, They forgot one simple thing, got woke, and are going broke. That simple thing? It’s the product that’s important, not a political message that may insult the customer.

Sales down 46% is not a good thing.

Nike Reports Profit Loss of $790 Million in Q4 and a Year-Over-Year Sales Decline of 38% (46% in U.S.)…

Nike saw the COVID-19 economic contraction as a way to hide a top-line and bottom-line  collapse that has very little to do with the coronavirus.

COVID-19 is their cover, not the principal cause.

Evidence to support my review found in the action that Nike takes after releasing their $790 million profit loss.  Remember, this bottom line loss is the direct result of the top line collapse.  The raw material doesn’t cost more (it’s actually less); inflation didn’t chew up their import pricing (it’s actually less); they are buying in dollars which are actually stronger; energy costs are not higher (they are actually less) and Nike has not been hurt by tariffs because Chinese devaluation of currency (beyond the tariff cost) has actually helped raise the profit equation for many importers.  This loss is all about the top line.

https://www.cnbc.com/2020/06/25/nike-nke-reports-q4-2020-earnings.html

 

 

Of course the solution to the problems is: layoffs. The problem is that the people that are not going to be the people that caused the problem in the first place. That is if they aren’t the people that pitched the idea of going all in on the woke stuff in the first place.

https://www.yahoo.com/entertainment/nike-announces-layoffs-790-million-030859291.html

The layoffs won’t solve a sales collapse. In fact. laying off the people who the company will probably lay off will only make things worse. It isn’t hard to see that the people that will take the hit will not be the C-suite where the debacle was created. It is unlikely that Kapernick’s big ad contract will be canceled, nor will the company lose the clowns who thought that going all in on the Black Lives Matter would boost sales are going to lose their jobs. At least not until the company itself goes down the tubes. Nike should have remembered one thing. Whatever somebody’s politics, nobody really likes a jackass. If the jackass is wearing your logo on his shirt and becomes your jackass, then he becomes your problem.

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