and RJR's Fate After the Smoke Clears
Nike (NKE)Jim: Up first today is the world's biggest sneaker company, led by one Philip Knight, the billionaire who never takes off his sunglasses and who started Nike by selling shoes out of his car in 1964.Mike: You're aware of the great controversy surrounding Nike right now, aren't you, Jim?Jim: Whether it pays its Asian production workers peanuts?Mike: More recent than that. I'm referring to Wall Street's concern about what's going to happen to the "swoosh."Jim: Nike's famous logo.Mike: Right. Apparently there were some press reports that Nike might eliminate or downplay the swoosh. But at a recent analysts' meeting, Knight took great pains to say that Nike Air Max Womens it's going to be as important to Nike as ever.Jim: I'll sleep better tonight.Mike: So that sends us back to the question of whether Knight and his company have made a fortune off the backs of 11 year old piece workers in Thailand and other Asian places.Jim: Knight and the rest of Nike's stockholders.Mike: True, although its investors aren't faring nearly as well as they were accustomed.Jim: We'll get to that in a second. First, I want to go on record that Nike's fiscal 1998 annual report is one of the most annoying documents I've ever seen. Now, I'm no fan of annual reports in the first place. As an analyst once told me, their value is generally limited Nike Air Max 2016 Clearance to seeing whether the CEO bought a new suit. But Nike's report tries to be so hip, with so many fonts and graphics, that it's a mess.Mike: Sort of reminds me of an issue of Wired magazine, where you try to find a page that your eyes actually can tolerate.Jim: Truth is, Nike's report is a huge mea culpa, because this company which created one of the world's most renowned brands ran into big trouble last year, and hasn't really recovered since.Mike: Right. Owing to its snazzy styles of athletic shoes and its savvy marketing, including its ability to lock up superstar endorsements, Nike was king of the hill. And it allowed Nike to live the manufacturer's dream: Charging a huge markup not seen outside of the costume jewelry business.Jim: Then the wheels came off last year. Asia's economic woes brutalized this company. In the States, Nike came up against tougher competition just as the overall sneaker market got saturated. Simultaneously, athletic shoes suddenly weren't as hip among the high school crowd, which started wearing more brown and black shoes.Mike: Once again pointing up how, in the fashion business, these things can turn on a dime and, more often than not, leave you behind.Jim: Adding insult to injury, Nike came in for bad publicity about the meager pay and other working conditions at its overseas factories .Mike: To make shoes that cost $130 or more.Jim: Exactly. So suddenly, you had a lot of people especially teenagers who saw nothing cool about supporting this company that chalks up nearly $10 billion a year in sales, charges $100 plus per pair of shoes, has a logo that is so ubiquitous now that it lost its cachet, and is paying pennies an hour to its assembly line workers.Mike: Now, Nike has talked a lot about the great things it's doing to turn matters around, like cutting costs, because the growth in its basic shoe lines is flattening out at a horrifying pace.Jim: In fact, Nike recently shaved some $100 million from its huge budget for paying endorsements to sports stars.Mike: That pains me, because there's still that Nike Air Max 2016 lockout in the NBA, and the league has players out there who really need the money.Jim: Talk about getting double teamed.Mike: Nike also is looking to create new lines, especially women's athletic shoes and some athletic apparel. It's boosted its minimum wages in Asia by 25% so some of those workers are actually earning a little bit more than a dollar a day.