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Daily News Record

July 20, 1998

SECTION: No. 85, Vol. 28; Pg. 14; ISSN: 1041-1119

IAC-ACC-NO: 20942255

LENGTH: 996 words

HEADLINE: NIKE TO ADJUST ITS GROWTH GEARS; COMPANY REORGANIZES JORDAN, ACG, GOLF AND HOCKEY INTO SEPARATE BUSINESS UNITS.

BYLINE: McKinney, Melonee

BODY:
Nike may be getting too big for its own fancy running shoes.

Since the company was started in 1972, it has continued to grow at an enormous rate. From 1992 to 1997, for example, it grew from a $ 2 billion company to a $ 9 billion one. But due to unethical labor practice charges and declining sales in recent months, Nike executives agree it is time for the now $ 10 billion company to sharpen its focus and address the fact that Nike may be outgrowing itself.

But growth shouldn't be a hindrance. So Nike has reorganized several brands into independent business units to help each one perform better individually. Nike executives say the transition for these new divisions will be gradual and that all the details are still being finalized. Details such as the number of new jobs to be created will be determined over the next nine months as each brand develops its own business plan.

The new categories, ACG (All Conditions Gear), Jordan brand, Nike hockey and golf, will also help Nike to better address the growing sport-specific trend that is sweeping the industry.

Gordon McFadden, president of ACG, said several of the businesses within Nike have grown individually, but have been limited in some aspects by being part of one big company. "With each business building its own budgets, strategic plans and organizations, there is more growth potential globally for each brand," he said. "We will be able to operate individually while still under the overall Nike umbrella."

Lee Weinstein, director of U.S. Corporate Communications for Nike, said with stand-alone business units, these brands will have more potential to grow in their own directions.

"Our goal is to grow these separate categories and allow them freedom from the Nike brand," he said. "These brands have tremendous potential and if they are set free, there is more latitude to explore the businesses on their own."

He said part of Nike's problem is that it started as a running company and has expanded into so many areas that it has made it hard to know what to emphasize. "The challenge for us is, how do we stay true to our roots? It is hard to be close to the athletic consumer and still be a large company."

Gordon Thompson, vice-president of design, said he agrees that Nike needs to take a more personal approach. "We design 15,000 products a year, so I think we need to get a more personal fit into the products. We don't want Nike to seem like this huge company. We want people to put on a piece of apparel and feel like it was designed specifically for them."

So now Nike and each of its new categories will be able to have an individual approach to each respective market. Weinstein said Jordan will be the only brand represented by its own logo (the flying man) without a Nike swoosh. The other brands will have combination logos.

Larry Miller, former vice-president, apparel, who was recently named president of the Jordan Brand, said at a conference in June that since Michael Jordan has been able to successfully apply his name to so many different things, then why not his own line of apparel? "If Ralph Lauren can do $ 1,500 suits and sports apparel, I don't see why we can't use Michael Jordan to help us have two separate lines."

Miller said this week that he didn't see any reason why the Jordan brand couldn't be a billion-dollar business. "Nike is looking to for a way to focus on certain parts of the business," he said. "We want to get the company broken down into manageable pieces. And this is a great opportunity for the Jordan brand."

Miller said that although specifics will be decided over the next few months, the brand plans to be running on its own by the next fiscal year, which begins June 1. "We are still mapping out how we want to approach this. If we have to adjust it as we go, we will."

Weinstein said this brand also helps Nike reiterate its interest in footwear and apparel inspired by an authentic athlete. "With Jordan, we can have more freedom to explore lifestyle apparel and footwear. Where it goes from there we will see over the next couple of years. But it will definitely be able to do things it couldn't do as Nike."

ACG, headed by McFadden, former president of Helly Hansen NA, is a $ 280 million business for Nike that will become operational as its own brand within the next year.

McFadden said the mission for ACG is to be committed to making authentic equipment, footwear and apparel for the outdoor enthusiast. In the past, he said, Nike had several commitments, ACG being only one of many that could've gotten lost in the shuffle.

"In the past, because we weren't singularly focused, the translation was lost," McFadden said. "Over the next nine months we will put the plan together and will have a team of people solely focused on building the ACG brand worldwide."

McFadden said ACG will focus on two areas of growth: sports-specific and leisure lifestyle. Although the main focus will be sports-specific, he said the increase of casual lifestyle trends will have more of an impact on that aspect of the business.

He said another aspect that ACG will continue to develop is the Alpha project, which will be one or two products in each category that cater to the expert as opposed to the enthusiast. These will be top-end items developed to withstand the rigorous elements they go through in extreme conditions. These products will initially be available only in specialty stores.

In addition to Jordan and ACG, similar developments are in the works for both the hockey and golf divisions. The hockey division will be based in Montreal at the headquarters of Bauer Inc., a manufacturer of hockey skates and equipment that was acquired by Nike several years ago. The hockey division of Nike will be made up of two brands, Nike Hockey and Bauer, and will be run by Bauer president Pierre Boivan.

The golf division is still in development and the search for a president is currently under way.

LANGUAGE: ENGLISH

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