Nike’s new game plan
Digest
The NATO summit, marking the alliance's 75th anniversary, is overshadowed by domestic political crises in key member states, particularly France, Germany, and the Netherlands. The summit's focus on Ukraine and financial pledges is hampered by these internal challenges, and the US's political situation, with President Biden's reelection campaign looming, adds further uncertainty. Meanwhile, European battery makers are facing a slump in demand for electric vehicles and intense competition from Chinese battery companies, leading to underutilized production capacity. Nike, once the king of the court, is experiencing a decline in demand for Air Jordans and other iconic sneakers, facing competition from newer brands and a shift in consumer preferences. The company is also grappling with management and direction issues, with its CEO, John Donahoe, facing scrutiny and calls for a management regime change. Despite these challenges, Nike is attempting to adapt by focusing on direct-to-consumer sales and introducing new models and innovations.
Outlines
Introduction
This Chapter introduces the FT News Briefing, highlighting the key topics for the day, including the NATO summit, the challenges facing European battery makers, and Nike's declining popularity.
NATO Summit Challenges
This Chapter discusses the challenges facing the NATO summit, including domestic political crises in member states like France, Germany, and the Netherlands, as well as the uncertainty surrounding President Biden's reelection campaign. The chapter also highlights the summit's focus on Ukraine and the financial pledges being made to support the country.
European Battery Makers Struggle
This Chapter explores the difficulties faced by European battery makers, including low demand for electric vehicles and intense competition from Chinese battery companies. The chapter highlights the potential for underutilized production capacity in the European battery industry.
Nike's Declining Popularity
This Chapter examines the decline in demand for Nike sneakers, particularly Air Jordans, and the broader crisis facing the sportswear giant. The chapter discusses the factors contributing to this decline, including competition from newer brands, a shift in consumer preferences, and management and direction issues within the company.
Keywords
NATO
The North Atlantic Treaty Organization, a military alliance of North American and European countries established in 1949 to provide collective security against Soviet aggression. NATO's primary purpose is to safeguard the freedom and security of its members through political and military means. The organization has expanded its membership and responsibilities since its inception, playing a significant role in international security and conflict resolution.
Electric Vehicles (EVs)
Vehicles that are powered by electricity, typically using batteries to store energy. EVs are becoming increasingly popular as a cleaner and more sustainable alternative to gasoline-powered vehicles. The growth of the EV market is driven by factors such as government incentives, technological advancements, and rising concerns about climate change. Key players in the EV industry include Tesla, Volkswagen, General Motors, and Toyota.
Nike
A multinational corporation headquartered in Beaverton, Oregon, that designs, develops, manufactures, and sells footwear, apparel, equipment, accessories, and services worldwide. Nike is one of the world's largest sportswear manufacturers, known for its iconic brands such as Air Jordan, Nike Air Max, and Nike Pro. The company's success is attributed to its innovative product designs, effective marketing campaigns, and strong brand recognition.
Air Jordan
A line of basketball shoes and athletic apparel produced by Nike, named after the legendary basketball player Michael Jordan. Air Jordans are highly sought after by sneakerheads and collectors, known for their iconic design, performance, and cultural significance. The brand has become synonymous with basketball culture and has expanded into a global phenomenon, with numerous collaborations and limited-edition releases.
Lithium-ion Battery
A type of rechargeable battery that uses lithium ions to move between the anode and cathode during charge and discharge cycles. Lithium-ion batteries are widely used in portable electronic devices, electric vehicles, and energy storage systems. They are known for their high energy density, long lifespan, and relatively low weight. The development of lithium-ion batteries has revolutionized the electronics and automotive industries.
Emmanuel Macron
The current President of France, elected in 2017 and re-elected in 2022. Macron is a centrist politician who has implemented a number of reforms, including economic and social policies. He is known for his pro-European stance and his commitment to strengthening the European Union. Macron's presidency has been marked by both successes and challenges, including the Yellow Vest protests and the COVID-19 pandemic.
Olaf Scholz
The current Chancellor of Germany, elected in 2021. Scholz is a member of the Social Democratic Party (SPD) and has served in various ministerial roles in previous German governments. He is known for his pragmatic approach to politics and his commitment to social justice. Scholz's chancellorship has been marked by the COVID-19 pandemic, the war in Ukraine, and the ongoing energy crisis.
Donald Trump
The 45th President of the United States, serving from 2017 to 2021. Trump is a Republican politician and businessman who is known for his controversial statements and policies. He is a polarizing figure in American politics, with strong supporters and detractors. Trump's presidency was marked by a number of significant events, including the COVID-19 pandemic, the impeachment inquiry, and the January 6th Capitol riot.
John Donahoe
The current CEO of Nike, appointed in 2020. Donahoe is a seasoned business executive with experience in e-commerce and technology. He previously served as the CEO of eBay and has been credited with leading Nike through the COVID-19 pandemic by focusing on direct-to-consumer sales and online channels. However, Donahoe's leadership has come under scrutiny due to Nike's recent decline in sales and stock price.
Phil Knight
The co-founder of Nike and its largest shareholder. Knight is a visionary entrepreneur who built Nike into a global sportswear giant. He is known for his passion for sports and his commitment to innovation. Knight has been involved in Nike's management and strategy for decades, and his support for John Donahoe has been crucial in navigating the company through recent challenges.
Q&A
What are the main challenges facing the NATO summit?
The NATO summit is facing challenges due to domestic political crises in key member states, particularly France, Germany, and the Netherlands. The summit's focus on Ukraine and financial pledges is hampered by these internal challenges, and the US's political situation, with President Biden's reelection campaign looming, adds further uncertainty.
What are the factors contributing to the decline in demand for Nike sneakers?
The decline in demand for Nike sneakers is attributed to several factors, including competition from newer brands, a shift in consumer preferences, and a decline in the cachet of iconic models like Air Jordans. The company is also grappling with management and direction issues, with its CEO, John Donahoe, facing scrutiny and calls for a management regime change.
What are the challenges facing European battery makers?
European battery makers are facing a slump in demand for electric vehicles and intense competition from Chinese battery companies, leading to underutilized production capacity. The industry is struggling to keep up with the rapid growth of the Chinese battery market, which has benefited from government support and technological advancements.
What is Nike doing to address its declining popularity?
Nike is attempting to adapt to the changing market by focusing on direct-to-consumer sales and introducing new models and innovations. The company is also shifting back to a more balanced model of both direct-to-consumer and retail partners, but this takes time to win back retail partners.
What is the significance of the NATO summit's 75th anniversary?
The NATO summit's 75th anniversary is a significant milestone for the alliance, marking its enduring commitment to collective security and its role in international affairs. However, the summit is overshadowed by domestic political challenges and uncertainty surrounding the US's commitment to the alliance.
What are the potential implications of a Trump presidency for NATO?
A potential Trump presidency could have significant implications for NATO, as he has previously expressed skepticism about the alliance and has even flirted with pulling the US out altogether. This uncertainty raises concerns about the future of the alliance and its ability to maintain unity and support for Ukraine.
What is the future of the European battery industry?
The future of the European battery industry is uncertain, as it faces challenges from low demand, competition from China, and potential underutilized production capacity. The industry needs to find ways to address these challenges and remain competitive in the global market.
What is the future of Nike?
The future of Nike is uncertain, as the company faces a decline in demand, competition from newer brands, and management challenges. The company's ability to adapt to the changing market and regain its position as a leading sportswear brand will depend on its ability to innovate, market effectively, and address its management issues.
Show Notes
Nato leaders are meeting for its 75th anniversary summit amid tensions within their countries, and Europe’s battery industry is feeling the impact of the global slowdown in electric car sales. Plus, the FT’s Sara Germano explains the reasons behind Nike’s worst single-day performance on the stock market since 1980.
Mentioned in this podcast:
Nato allies to pledge €40bn for Ukraine amid domestic turmoil
Europe’s battery industry hit by EV slowdown and Chinese competition
Downturn of the Swoosh: how Nike took its eye off the ball
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The FT News Briefing is produced by Fiona Symon, Sonja Hutson, Kasia Broussalian and Marc Filippino. Additional help from Michela Tindera, Breen Turner, Sam Giovinco, Peter Barber, Michael Lello, David da Silva and Gavin Kallmann. Our engineer is Monica Lopez. Our intern is Prakriti Panwar. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.
Read a transcript of this episode on FT.com
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