Nike is evaluating the future of the Converse brand
Converse’s sales fell 30% to about $1.7 billion in the second quarter of its current fiscal year, notes Business of Fashion. At the same time Nike cut the brand’s marketing budget almost in half – to 24 million dollars, which analysts call an unprecedented step. Laurent Vasilescu from BNP Paribas emphasized that such a reduction rarely occurs without strategic reasons and may signal a search for ways to exit the asset.
Nike’s February reorganization plan calls for spending about $300 million over nine months, most of which will go to pay laid-off employees. The company laid off nearly 800 employees in January, and further action remains a possibility. In a report to the SEC, Nike mentioned potential “costs associated with the termination or sale of assets,” which analysts attribute to Converse.
In an official statement, Nike emphasized confidence in the brand’s potential, its intention to develop the brand and return it to growth with a new strategy and a revitalized management team.
From a market perspective, the possible sale of Converse could send an important signal to the sports and street footwear industry. On the one hand, it will allow Nike to focus on key brands such as Nike and Jordan. On the other hand, it opens up opportunities for new owners, who will be able to stimulate growth and strengthen the position of the brand. Experts note that both major competitors and investment funds that see the potential in rethinking the brand’s strategy may show interest in Converse.
Nike’s decision will be closely monitored by the industry: it will show how legendary brands require strategic restructuring or how a competently reorganized asset is able to regain consumer confidence and restore positions in the global market.
