The Converse acquisition is the right thing Nike has ever done in this decade

Nike bought Converse 13 years ago, and the sub-brand has grown almost tenfold. This is why buying Converse is such a great move for the world’s biggest sportswear brand and why Nike has been and continues to be more and more successful.

In the early summer of 2016, Nike released a new Converse shoe called the Converse Auckland Modern, a Converse shoe but with the same soles as many Nike running shoes, and of course, for the sneaker segment. jogging exercise. This is a big change from the Converse brand’s classic Chuck Taylors and shows how Nike is continuing on its path to reinvent and grow the Converse brand. Here’s an objective look at how Nike’s investment in Converse has massively paid off, and its potential for the future.

Nike’s decision to invest in Converse

In 2003, the 95th anniversary of the Converse shoe brand, Nike acquired the company for $ 305 million. At the time, Converse had an annual revenue of just over $ 200 million. But fast-forward 12 years to Nike’s 2015 fiscal year – Converse sales have skyrocketed to almost $ 2 billion, or about 19% growth per year. And continuously in recent years, its revenue has been maintained at about 2 billion USD. Securing a portion of parent brand sales is Nike.

The Converse brand’s $ 2 billion in revenue could be minuscule compared to Nike’s 32.4 billion in flagship products. But it still accounts for about a tenth of the company’s total footwear sales. It also represents one of the fastest growing segments for Nike in its most recent quarter with 18% annual sales growth.

And while Converse’s sales may look good, earnings are even better. Thanks to high margins on Converse shoes, this segment accounted for less than 7% of the company’s revenue but delivered 12% of total EBITDA at $ 128 million in the fourth quarter.

These may not be the best years yet

Actual sales in 2016 fell 1% year-on-year but rose sharply and surpassed $ 2 billion in fiscal 2017 (a 2% increase excluding currency fluctuations). It is expected that in the coming time, we will also see the remarkable development of Converse under the management of Nike.

The main reason for this ups and downs has many reasons. The year 2016 was considered the transition year. Converse is in the process of transitioning to a new model under the direction of Nike. They are moved to a “more direct operating model”. Part of that includes a tool to automate processes in different areas.

That transition was a hit, in 2017. 2017 was a remarkable year when Converse’s sales hit $ 2 billion. However, due to the onslaught of rival shoe companies, the market share in 2018 showed a bit of slowing down. However, with the continuous retro version, the colab is extreme. We can fully believe Converse will continue to grow and reach new heights a year from now.

Converse’s future?

The 21st century has a strong “replace” trend, all consumer trends are no longer as easy to grasp and control as in the late 20th century. Pop culture and the strong wave of skater. Emerging, Chuck shoes were once again chosen as a cultural icon.

Nike and its smart marketing team have used all of these factors to their advantage. After many advertising campaigns, Converse has gradually been brought back to the original position of this brand. In a 2012 financial report, it was only thanks to Chuck Taylor shoes that Nike earned $ 450 million. That means that every 43 seconds, a pair of Chuck Taylor is sold.

Besides, the wave of simple and gentle fashion has become more and more popular. It will not be strange if Nike will later turn Converse into a fashion brand, not only shoes, but also clothes and backpacks, towards popular tastes. In addition, big campaigns, colabs are sure to be a potentially fertile ground waiting for Converse, or more precisely Nike, to take over.

No matter what Nike’s vision for Converse is, it’s no wonder Converse has been one of Nike’s most important investments. With staggering growth since Nike acquired the brand in 2003 and is likely to continue growth in the coming years as new direct operating models are deployed, and Converse’s potentials are explored. The Converse acquisition is certainly one reason Nike continues to lead the way all the time, and in the future as well.

Reference content and images from many sources.

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