Nike's Strategy for Winning the Footwear Game

On Nike's (NKE) F1Q conference call, CEO and President Mark Parker discusses the health of the footwear industry and strategies for attracting consumers:

Bob Drbul - Lehman Brothers

I guess the first question that I have is Mark, could you elaborate a little bit more around specifics in terms of the concerns that are out there around the health of the industry and the market?...

Mark Parker- CEO and President

... On the question on the health of the industry, I think there is always lots of concerns. We've lived through lots of these up's and down's within the industry. There's a lot of external factors that are creating some concern, economic pressures, pressures on pricing, bifurcation of the market around the world. The split between premium and value, for example. Some consolidation going on at different markets.

We feel, though, that our position here is one of strength because we are diversifying our portfolio. I have often said one of our key strategies is complete offense, and I have referred to that in terms of footwear and price points up and down the price point spectrum. It is a much bigger strategy for us in terms of sport performance, sport culture, and the sport categories. We really feel that we are in a much better position to pull the levers across the spectrum of the business that we do to really grow the marketplace.

We're seeing some challenges here in the U.S. Charlie mentioned the athletic specialty, the differentiation that needs to take place in the mall business. We are on that, working very closely with Foot Locker and Finish Line, our two biggest accounts there, and feel like we have some plans to get that to a better place.

There has been a lot of speculation on the higher price point products. We're not seeing those indications as much as we're hearing speculation from the analyst groups out there. We feel that there is a healthy appetite both on the sport performance and the sport culture side of the business, so we're actually working those levers and making sure that as I said before, the changes that are taking place in terms of sport culture product that has made that more appetizing to consumers, some of that can influence the performance product as well. We are making those changes and we're seeing some great acceptance from consumers and retailers out there.

We feel like we're in a good position to manage through some of these challenges in the marketplace, and feel like the rest of this fiscal year will be improving our position and bringing some real energy and leadership to the marketplace.

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2007 Dec 20 01:11 AM