Nike’s $5 billion wipeout disaster
NIKE had $5 billion wiped from its bottom line in a day of disasters for the sporting apparel giant.
US President Donald Trump again turned up the heat on the world's most prominent sporting brand as America ripped further apart following the launch of Nike's controversial campaign surrounding the 30th anniversary of its iconic "Just do it" slogan.
Nike's new ad campaign featuring Colin Kaepernick - the American football player turned activist against police violence - takes a strong stance on a divisive issue. The promotion could score points with millennials but risks alienating conservative customers.
That division prompted an extraordinary reaction from the market with shares of the blue-chip company finishing down 3.2% at $79.60 at the close on Wednesday morning (AEST).
That share price free-fall reportedly constitutes a loss of more than $5 billion ($US3.75 billion), according to Yahoo.com.
The ads featuring Kaepernick prompted immediate calls for fans to boycott the brand.
The former quarterback for the San Francisco 49ers, Kaepernick has been effectively black-listed by the NFL after kneeling during the US national anthem in 2016 in solidarity with the "Black Lives Matter" movement.
"While it is noble to take a stand on something, it is also commercially imprudent to dash headlong into a very sensitive issue which polarises opinion," said Neil Saunders, managing director of GlobalData Retail.
"Although the company's stand may go down well on its native West Coast, it will be far less welcome in many other locations."
Picking Kaepernick may turn off some customers, but it likely will strengthen the company's standing with others, including non-whites and millennials, said Kelly O'Keefe, professor of brand management at Virginia Commonwealth University.
"It's a dangerous move in that I'm certain there is already a boycott under way, but in the case of Nike I think those most likely to boycott are not likely to be their core audience," O'Keefe said in a telephone interview.
"I think their core audience is likely to be not only supportive of this, but even more enamoured of the brand for their willingness to take this stand."
The boycott is more than under way - it is well and truly in fifth gear.
Nike customers are burning their sneakers and cutting their socks in protest of Nike's new ad, the New York Post reports.
More than 30,000 people have tweeted using the hashtag #NikeBoycott, making it a trending topic in the US.
Shortly after the out-of-work quarterback tweeted a teaser for the ad celebrating the 30th anniversary of the brand's "Just Do It" slogan on Monday evening, people began posting pictures of their defaced Nike apparel or declaring that they would be switching to other athletic brands.
"Our soundman just cut the Nike swoosh off his socks. Former marine. Get ready Nike multiply that by the millions," tweeted country singer John Rich.
One video, posted by Sean Clancy, showed raging flames coming out of a pair of white Nike sneakers.
"First the NFL forces me to choose between my favorite sport and my country. I chose country," he wrote.
"Then @Nike forces me to choose between my favorite shoes and my country. Since when did the American Flag and the National Anthem become offensive?"
People also posted puns of the tagline on Instagram, writing "Just don't" or "Nike, Just Blew It!"
While Kaepernick is not an active player for the league, he has nearly two million Twitter followers and his jersey was still the 39th best-seller in last year's season.
He tweeted the new Nike advert, featuring a close up of his face, with the words: "Believe in something. Even if it means sacrificing everything," above Nike's trademark "swoosh" and "Just do it."
The ad was unveiled just days before the kick-off of the 2018 NFL season on Thursday.
The US president has repeatedly and harshly criticised Kaepernick and other NFL players who have protested during the national anthem as unpatriotic, calling for them to be fired.
Trump told the Daily Caller, a conservative website, on Wednesday morning that Nike had sent a "terrible message" with the Kaepernick ad. But Trump also said companies in the US had "certain freedoms to do things that other people think you shouldn't do," according to an interview published late Tuesday afternoon.
It was a restrained response for the President, who has taken to Twitter many times to blast companies he views as crossing him.
He slammed iconic American motorcycle brand Harley-Davidson after it announced plans to move some manufacturing capacity overseas because of tariffs enacted in response to Trump's tough trade policies.
But Texas Republican Senator Ted Cruz said Nike was "on the wrong side of the American people."
ESPN reported previously that Nike had kept Kaepernick, who signed a sponsorship deal with the company in 2011, on its payroll throughout the controversy of the past two years.
"We believe Colin is one of the most inspirational athletes of this generation, who has leveraged the power of sport to help move the world forward," said Gino Fisanotti, Nike's vice-president of brand for North America.
- with AFP