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Nike, Inc. Message Board

  • stocksforlife stocksforlife Mar 11, 1998 6:04 PM Flag

    Mr Valuemart

    Sorry, Just curious,

    You mentioned that consumer tastes change quickly - I agree with you. Sorry this is sort of like my last statement, but I'm just curious how can Levis keep being so popular year after year, while some other brands vanish. Do you think Nike is destined to follow in Levis footsteps or that of La Gear?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • you asked an excellent question and your concerns regarding fashion related companies are wise concerns. levi strauss built
      it's brand name and image around the core product of blue denim jeans. basic blue denim jeans are not really a fashion product
      but more of a bread and butter basic which nearly every consumer owns. coca cola is not really a fashion product either but
      rather a core beverage product which nearly every consumer drinks. gillette co. makes shaving related products which nearly every
      adult male consumer needs. the three companies i listed above are examples of rock solid corporations whose near and longterm
      revenue growth is nearly guaranteed. coke and gillette are treated by wall st. as "sure thing blue chips" because of the entrenched,
      rock solid nature of their product lines. nike management likes to see their company as "in a class with coke and gillette"
      however it just is not so. sure nke has excellent management and nke has grown steadily over the past twenty years. nke has a brand
      name recognized worldwide and the brand will definitely be around for many many years to come. however i do not necessarily
      believe that nke will continue to enjoy the shoe market percentage dominace that it currently holds. the "barriers to entry" are not
      that tough in the shoe industry. for example visit a shoe store and you will see shoe products from nke, reebok, timberland,
      addidas, skechers, vans etc.. and many many more. all of these other brands are much smaller than nke yet they have the potential to
      chip away at nikes sales. for example you might have purchased three pairs of nike shoes last year yet this year you might
      purchase only one pair of nikes and two pairs of something else.if millions of people do this then nikes sales will suffer. nike is
      not going away but it is really, really hard for them to keep getting people to buy only nike. the other brands look good too.
      the "fashion" aspect comes in to play because the other brands ( say timberland with their brown shoes) have nice looking shoes
      that consumers want to try. coke does not have this problem because most consumers feel coke tastes best, period. the competition
      just doesn't taste as good. this is why i feel coke has justification for trading at a premium pe multiple, especially when you
      consider that coke can grow overseas easily by selling 50 cent coca colas. nike is going to have a tougher time growing overseas
      because nike products cost $50 and up. alot of foreign consumers can afford a coke but cannot afford expensive shoies. right now i
      think wall st. is pricing nike shares as though nike was as "sure a thing" as coke. i just don't see it that way. i think it is
      quite possible that timberland, addidas and others can chip away at nikes business. it has already started to happen and i am
      betting things won't turn around real quickly for nke. nke mangement has stated that they currently have an inventory problem (too
      much of last seasons styles) and that kind of situation hurts their ability to sell brand new styles. it is difficult to predict
      the longer term future but in the near term i am not expecting much positive news to come from nike. hope this helps. by the way
      la gear was pure sex, sizzle and fashion. they were hot for a few years and then ran into inventory problems which killed the
      brand image. nike is twenty times the size of la gear (in their peak years) and nke has much more professional management. don't
      worry nke is not going to go away like la gear.

    • Fashions come and go. Functional footwear and apparel stay in demand forever.

      Levi's are traditional casual wear and doesn't follow fashion fads but sticks to the basics, blue jeans will live forever.

      Nike needs to focus on quality sports equipment, which will always be in demand, and they can rest assured that they won't follow LA Gear.

      • 2 Replies to s21519
      • I think that this is the most common misconception about Nike. Nike does not exist to be the latest fashion sneaker for
        teenagers. Nike's existance (read their Annual Reports on this one) is to create equipment which will help athletes perform better.
        Now, running shoes and bball shoes happen also to be very popular amongst teenagers sometimes. But, Nike has clearly set its
        sights on markets beyond the shoe business as there is low growth potential due to increased competition. But, Nike sees its future
        in soccer (the world's most popular sport that has only caught on recently in the US), hockey (very popular in Canada and
        Europe and the sport rising in popularity amongst spectators in the US), golf (the fastest growing sport in the world), and women's
        athletics (a virtually new serious market). Sure people will want them to create fashionable equipment, but I think the real loyalty
        will be built on how the equipment performs. I personally do not wear anything but Nike in all sports I play because of comfort,
        performance, and durability. The company has a tough job in the near future, but the long-term outlook is very good and management is
        very capable in guiding it to their goals.

        Dave

      • i say 47.25.
        they will tube all optioners.
        puts or calls.
        yyou cannot win!..!!
        sign me.

 
NKE
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