Nike has changed its CEO and stock prices have soared.

Does it really matter?

And what does it mean for the future?

We're going to discuss it this time on fire footwear.

Welcome back to Fire Footwear, everybody.

As always, this is your host, Matt Fraitzen.

I hope that this finds you well, and I want to thank you for coming back to this podcast.

Over the last couple of weeks, we've seen a little bit of a surge in new listeners and new consumers of the content.

So I'm always flattered by that, always humbled by that.

So thank you very, very much.

And also at the top, I should mention I was able to record with some new friends, this time from Canada, the in kicks we trust podcast.

They were good guys.

Trevor and Kevin were really gracious to have me on their platform.

I had a great time.

So hopefully that will be coming out soon.

But always support the people who support me.

Go to them on whatever podcast app that you use and type in in kicks.

K I x we trust and hit follow, because honestly, we all need to support each other in the sneaker community.

So Nike has changed their CEO.

It was announced last week that John Donohoe was stepping down as Nike CEO and he was going to be replaced.

And I think a lot of people felt a certain way in the sneaker world.

But I wanted to talk about it a little bit because I think what has happened recently, and I think this happens because I believe that sneaker people, people like us, I think we kind of assume that companies like Nike, Adidas, Puma, all of those sneaker companies that are giving us the heat that we're constantly picking up, I think we assume that they exist to placate sneaker culture.

You saw this whenever air came out in 2023, a lot of people, a lot of sneakerheads were saying that there wasn't enough sneaker history, there wasn't enough for them, when really, the movie is not for you, the really, the movie is for the general public.

And so Nike is one of those companies that I think falls into this category.

And I honestly think they fall into this category more so than others.

The reason being is because sneaker culture is so big now, but Nike does so much more than just make sneakers for sneaker culture.

They didn't start out that way, and they certainly don't just do that.

They do a lot of things.

They provide athletic apparel, athletic gear for so many professional teams, the US Olympic team.

They are an international brand that does so, so much.

And so when the CEO gets changed over, I think it's obvious that a lot of people are missing the point that it's not just about what does it mean for sneaker culture.

It means for a lot of different things.

But I also think that there is sort of this unfair narrative going around sneaker culture about John Donohoe's leadership and about his time there.

Because once again, there is this disconnect between what people think and what is actually the truth.

And there are highs and lows to his leadership.

And I think that it's only fair that we kind of go over some of those because many people are taking a Victory laugh thinking that this means that the company is going to be cool again.

Let's be clear.

John Donohoe is not in that position to keep Nike cool necessarily.

He's there to make sure that a certain amount of people make a lot of money.

That's himself included.

And so the CEO is incentivized to go in there and basically make sure that the bottom line continues to creep up and up.

And sometimes that comes at the disservice of your consumer.

But if we're looking at the highs of his tenure now, we should also start by saying his tenure went from 2020 to 2024.

And I feel like when you say the year 2020, it's very triggering for a lot of people.

And that's because that was the pandemic.

It was a really difficult time for a lot of people, but it also served as a really high profile time for sneakers in general because the pandemic, one of the things that it did outside of obviously spreading the coronavirus.

But the other thing that it did was it made it feel as if resources were scarce.

First of all, time with our loved ones was scarce because we weren't leaving the house, at least most of the time.

Toilet paper was scarce because people were just going to the stores and almost stealing it at some point.

And sneakers became something that people gravitated toward because of the last dance documentary.

And because of that, obviously, prices went up.

But there were a lot of high profile sneaker releases in that four year period.

And you also have to remember, right before that period happened, Kobe Bryant passed away.

So obviously there's a lot there.

Off white.

Off White was something that was huge prior to the pandemic.

And then, of course, Virgil Abloh suddenly passes away in 2021.

And so you see all of these things happening that make it a little bit difficult for sneaker culture because a lot of their quote unquote cash cows have now left this earth.

And so they have to figure out a path forward.

And we saw even off white have a little bit of an imprint with the 50 dunk collection.

And we saw the dunk low panda have its moment in the sun.

Now, it's something that you can easily get, but at the height of the pandemic, at the height of resale, it was something people were going to the replica market for.

It was that popular.

Of course, you saw a lot of classics come back over the years.

The Air Max 90 bacon.

You saw a ton of Kobe's comeback.

The partnership between Kobe and Nike was reinvigorated.

Vanessa Bryant bringing it back.

And so for a lot of people, there was a lot of good shoes to be had.

And over the years, though, up until very recently, resale prices went from the highest they've ever been to almost back down to what they were pre pandemic.

For some shoes, it's not the truth.

Obviously, Kobe's are going to continue to sell because of his legacy.

He's no longer here.

So a lot of people want a piece of that legacy.

But there has been a lot to be had in that time period.

And I think people kind of forget that because the oversaturation makes us forget that.

There has been a lot of heat, a lot of retros, a lot of really quality releases.

Resurgence of new people like Amma moneyer on the scene.

And I think that a lot of that has caused sneaker culture to be in a really good place today.

But if you also look at some of the business decisions, we're talking direct to consumer strategy now, this one, in some ways, I think that it's good because I think you want to have a direct line to your customer.

Obviously, if you're creating a business, you want to be able to be seen giving the product to your customer.

And when you have middlemen, when you have businesses that are in the middle, it can make it so that costs are a little bit bloated because you're obviously giving it to another company who then you have to figure out percentages and things of that nature.

But also a lot of those brands, we're talking foot locker.

A lot of those brands had a nostalgic pull to a lot of people in the culture.

I remember being a young kid and going into foot locker all the time because it was the sneaker store that was in the mall that I went to.

That's where I saw my first Reebok pump.

That's where I saw a lot of shoes that I really wanted that my mom just wouldn't get me.

So I have memories there.

And a lot of people, that was their accessibility.

It was an access point to be able to get shoes, because going online now, there are so many people going after these shoes on release day that it's very difficult.

I did an episode about sneakers and how there's so many people going after every single hype release that people don't realize that it's all about numbers.

It's just too many people going out for shoe that they just did not make enough supply of.

And really they can't make enough of a supply of it.

So while going direct to consumer obviously was meant to build direct relationships with its consumer, I think it did put a strain on traditional retail partnerships that really, again, in the sneaker market specifically, had a very high level of nostalgia and people wanted to go there.

So while they were trying to, again, make it more direct, I think what they did was take away some access points for people.

Also in this timeframe, Nike was focused on sustainability initiatives and we're talking about reducing their carbon footprint.

And that's when they started to get into a lot of the things like the Nike space hippie line, and they started using recycled materials.

You started seeing the refurbished line, using the recycled boxes, things like that.

I mean, there's something to be said about that long term for the company, but a lot of people didn't see how it translated to sneakers.

And I think a lot of people felt like refurbished shoes or sustainable materials made it feel like sneakers were less than what we normally would get.

And honestly, as a culture, we're already pretty critical about what kind of materials are used, the kind of quality we get, the QC, stitching, glue, stains, all that stuff.

So while the idea of sustainability as a company is a good thing, I think it fail to translate to a quality product, at least in the perception of sneaker culture.

And then, of course, Nike has been known for technological innovations throughout its entirety.

And while maybe they are a little bit behind when it comes to certain innovations in design, I think when it comes to technological advances, they are still kind of in that space of being near the top.

And one of the things that stands out to me is the Nike go fly ease.

Now, the fly ease hasn't really caught on as this mainstream shoe that people are wearing, but I think that the idea behind it of making it a lot easier, a hands free shoe designed for accessibility, I think that is a great, great thing.

And I do believe that we need to be thinking about people in the culture and just people who are wearing shoes in general, who maybe don't have the, the privilege of having two arms or the privilege of being able to tie their shoes.

And so I think that was something that happened in that time period that was a really great thing.

Of course they were trying to hit on the NFT market which had this moment but has kind of come down to earth.

And so they started making sneaker nFts and things like that.

All of that was really a fad.

But I think that kind of summarizes the highs.

And obviously I didn't hit all of them.

But Nike wasn't exactly dormant during this time period.

Unfortunately though, you are judged a lot of times by what did you do for me lately?

And that's where the lows come in.

So let's talk about some of these supply chain disruptions.

Covid-19 I talked about resources being scarce and that really was a reality for so many people and honestly so many things.

And we're talking about factory related shutdowns in Southeast Asia due to the Covid-19 pandemic.

And we saw a shortage of so many materials, so many things that really caused supply chain issues to where this direct to consumer idea was even halted further because they couldn't get shoes out.

And so while there was a perceived lack of resources across the world, in many places there was a lack of resources and there was disruptions in getting the products to their consumer because even if you go direct to consumer you still have to have an avenue to get it to your consumer.

You still have to have an avenue to get the material source, the materials.

And I think that was something that happened during the pandemic that Nike really had a hard time with.

They weren't the only ones, but obviously it made people feel as if they weren't as high priority for Nike in terms of sneaker culture.

And then of course you get this direct to consumer strategy, which is something that I said was both a pro and a con.

And they certainly were aggressive in pushing this out.

And I honestly believe that one of the things that happened is obviously they took away access points, they obviously took away nostalgia.

But I think that Nike's aggressiveness and trying to push this so hard and pushing out so many retailers that had been so critical in making Nike the brand that they are today.

I honestly believe that it created so much tension in the wholesale market, it contributed to some product availability and consistencies.

And I think people kind of felt like Nike was doing this and they weren't doing it with us in mind.

They really weren't doing it with the consumer in mind, because on its surface, when you cancel out the foot lockers and the foot actions and the east bays and so forth, what you've done now is you've basically made it known that these companies don't matter, these stores don't matter.

And so for a lot of people, that perception gets put on them and they think, well, I don't matter because that's where I would go or that's where I would shop for shoes.

And so I think it made Nike feel or seem a little bit ruthless, a little bit lethal in their approach because they're trying to push them out as hard as possible.

And I think all of these came down to you also had some labor practices and criticisms about how they would go about that.

And despite efforts to kind of improve some of them, they continued to face criticism for working conditions in overseas factories.

And we're talking about factories that were affected by the pandemic.

Vietnam, Indonesia, I talked about supply chain issues.

And obviously all of that comes together for Nike to have a hard time of it, even though resale prices were going up, I think behind the lines, behind the scenes at Nike, they were having a tough time.

And all of this comes down to the lowest of the lows.

This is the low that almost every single person I've talked to has actually pointed to directly as to why John Donahoe's time was a failure and it was Nike stock performance.

I should note that during the height of the pandemic, when the stock market here in the United States crashed all the way down almost to rock bottom, I became a stockholder of Nike because the stock dropped so much, I was able to get in at a really good entry point.

And over the course of the pandemic, while I was sitting here internally complaining about resale prices and about the lack of availability for shoes, my Nike stock was going up like crazy.

And it had peaked at a price that was almost double what I paid for it.

And now you're looking at it where it's barely over what I paid for it.

And unfortunately for us sneakerheads and the sneaker community, as much as we want to think that Nike, Adidas, Puma, Asics, new balance, that they're all out for us, out for the culture, they're out for the bottom line.

And when you're a publicly traded company, your stock performance is the metric that everybody sees.

And so when you see that stock price continue to go down, continue to go down when they are trying to have shoes more available, but they're not selling out the stock price continues to go down.

This is unfortunately a direct reflection on your CEO.

And for John Donohoe, that was the last straw to see it go down to pandemic levels.

Think about that, folks.

When the stock market in the United States crashed so hard that so many stocks were so available and so down, for Nike to go back to those levels, that was a different time in this country.

That was such an unstable time.

And normally the stock market crashes that hard because of really catastrophic events, events that really can't be foreseen.

Think about 2008, when the stock market crashed and now you have a CEO who is lording over a company that has a stock price that not only hasn't recovered, but has doubled and gone right back down.

And you just can't have that.

The CEO gets paid a lot of money and they get paid a lot of money to make other people a lot of money.

And so when your stock price falls by almost 50%, the board of directors is just not going to sit for that.

Because those people, that's their livelihood on the line.

And yes, they make a ton of money regardless of what the stock price is for nike.

So I'm not sitting here saying that you should feel bad for them or that I personally have sympathy for them.

What I am saying though is when it comes down to it, your company has to perform.

And if it's not performing, you, the CEO, are the one that is going to get fired.

And so they have now moved on to Elliot Hill.

Now Elliot Hill has had an extensive tenure at Nike.

He has been at the company since 1988, but he's held various leadership roles at the company.

He played a crucial role in expanding Nike's presence in North America and in Europe.

And that's really big because Nike obviously being the global brand that they are, they needed touch points to be able to do that.

From 2018 to 2020, he was the president of consumer and marketplace and he was responsible for overseeing their global marketing strategies, their retail operations, their overall consumer engagement.

And that's where I think the sneaker community feels like maybe Nike is lacking these days in that consumer engagement.

Because a lot of people want to feel like Nike is listening to their complaints and listening to what they want and in some ways they are.

In some ways they are not.

But what you saw during his tenure in those positions is Nike's revenue and market share grow, pushing the company past $39 billion in annual revenue by 2020.

So the company was doing really well by the time that John Donahoe became the CEO.

So it's not as if Nike was hurting and all of a sudden John Donohoe made it worse.

It's just these things ebb and flow.

He has been key to the leadership and global expansion, like I mentioned, instrumental in driving Nike's global expansion endeavors, especially in emerging markets.

And they built localized strategies that deepen consumer loyalty across regions.

And while I think that this is true across the board, I think that there are some people who feel that Nike has not been loyal to them.

And so you're not seeing that.

But now he's going to take on the CEO role and he's going to basically come back in October of 2024.

It's his first time in the top leadership role and he's going to be tasked with navigating the next phase.

And that's why I ask you, what does it mean for the future?

Well, the first thing that you see is that Nike has decided to take back and delay the Jordan one reimagined black toe.

I think that's a sign of things to come because I think what they saw was, hey, wait a minute, we have the black cement threes coming out and now we're going to put this piece of history.

I think they're going to spread things out of.

I was reading the other day on sole Savvy's website that they're now going to be stopping production or pushing back production of a lot of shoes.

They're going to be producing less.

They're going to make it seem as if there is less to be had.

They're trying to drive up hype.

And as much as we all hate that, it's what is going to keep sneakers alive.

Resell, at some point in hype is going to have to buoy this market.

And I think that people are disappointed with that because right now is the best time for sneakers because almost everything is available.

But that means that there's no hype.

That means that there's nothing to sustain it into the future.

And I think that Elliot Hill is going to look at this and he is going to try to get Nike back on the map.

They are perceived as being not cool right now and they just cannot have that.

Nike needs to get back.

They need to grow their stock, they need to make more money, and they're going to do that off the backs of athletes and they're going to do that off the backs of sneaker culture.

Before we get to the end of the episode, though, as always, I have a release of the week for you.

Release of the week where I like to give you a shoe that catches my eye.

It's not always hype.

Sometimes it is.

It's just something that I want you to know about.

This is a shoe that I have seen a lot of people talking about on social media, specifically Instagram, but it is on September 30, 2024, the Nike Air Max 95 erosion.

The Air Max 95, as I said, is one of those if you know, you know, kind of silhouettes.

If you grew up with it, if you grew up wearing it, you know how fire it is.

Maybe if you haven't seen it before, maybe if you're not familiar with it.

It doesn't seem like it's something that fits in today's aesthetic, today's society.

But this rosen shoe with two different shoes, with the colors that it has, that muted, earthy palette, I think it's actually beautiful.

It's really awesome.

I won't be going out for it because I've copped enough this year.

I see a lot of hype for it.

I see a lot of people talking about it.

The thing is, though, this is not going to be like a hyped release in the same way that you'd see a Travis Scott.

This is just a very beautiful shoe, at least from the pictures.

It's part of the city pack and I think it's just a great, great addition to the Air Max 95 lineup.

We've seen some awesome ones with that Toronto release a couple of weeks ago.

So we got two fire air Max 95s right in a row.

And I believe that that is your time to cop one.

If you do not have one, and it is a beautiful one, it's perfect for fall.

It's perfect for.

Honestly, it's perfect for any time.

So if you need an Air Max 95 in your collection, that is the time.

Do you, as sneaker culture care about CEO's and do you think that this changeover is going to make things better for the culture or do you think it just doesn't matter?

I would love to know.

Call the fire footwear hotline.

Give me a sneaker story.

Give me your opinion.

I'd love to play it on a future episode.

And that is for your us callers.

Area code 202-643-9170 if you're international, just make sure you get that plus one country code in there.

I love to hear from all the people who are part of sneaker culture.

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It would mean the world to me because I'm trying to do some different things out there.

Hope this finds everybody well, fam, I hope this finds everybody safe.

And as always, I will talk to you next time.

This is fire footwear.

The opinions and viewpoints expressed on fire footwear are those of Matt freights and his guest, and not necessarily those of the Matti Ice media network.

Fire footwear is exclusively owned by Matt Freights and is brought to you by the Matti Ice Media Network.