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- [00:00]
Nicole Carroll
Are you tired of showing up to dinner parties with the same old uninspired bottle of wine? There has to be a better way to find unique wines that people will actually remember. That's why Psalmsation is a total game changer. Their expert team finds incredible wines from top independent producers, bottles you won't find at your local wine shop. These wines aren't mass produced. They're handcrafted with care, using pure ingredients and meticulous winemaking. And the best part? Sompsation's team of sommeliers curates every selection so you know you're getting wines that are truly special. Whether you want a single bottle, a full wine club membership, or even a guided tasting experience, Psalmsation makes it all easy and enjoyable. Explore now@somsation.com FashionPeople each spring, 23 Pulitzer Prizes are awarded for distinguished journalism, books, drama and music.
- [00:56]
Simeon Siegel
There was disbelief and pride and life changing.
- [01:01]
Nicole Carroll
My name is Nicole Carroll and I'm a member of the Pulitzer Board and host of Pulitzer on the Road, the official podcast of the Pulitzer Prizes. In each episode, winners reveal how much labor and risk, heart and imagination go into creating their prize winning work. We'll talk with novelists and reporters.
- [01:18]
Simeon Siegel
We found stuff that no one had heard before or found out it was.
- [01:21]
Nicole Carroll
Exciting critics and playwrights. I do not want to live in a world where we don't go on a stage and tell the truth about who we are, and columnists who've risked their lives to speak truth to power.
- [01:32]
Simeon Siegel
What moral right would I have to call on my fellow Russian citizens to stand up to the Putin dictatorship if I didn't do it myself?
- [01:39]
Nicole Carroll
The second season of Pulitzer on the Road premiered March 10. Follow and listen on Apple Podcasts, the Odyssey app, Spotify, or wherever you get your podcast. Hello and welcome to Fashion People. I'm Lauren Sherman, writer of Puck's Fashion and Beauty Memo Line Sheet, and today with me on the show is BMO Capital Markets Managing Director Simeon Siegel. We're going to discuss all things Nike. Happy Tuesday everyone. I am back in the States and back to work in earnest starting Wednesday. This week on Line Sheet, you'll find an epic mailbag issue where I answered all of your burning questions and plenty more From Sarah, from Rachel. We're all the gang's all here. This episode was unique in that it's not newsy. Usually the episode at the top of the week is a bunch of news. A news dump, you could say. But instead, because I was away, we did a Nike deep dive, a portion of which ran in line. Cheat Last week as part of Thursday's issue, which is available to inner circle members only. So some of you don't realize I actually have a five day a week email called Line Sheet, which you should subscribe to. It's part of Puck, which is a bigger publication. There's lots of me. There's a person who does finance, his name's Bill Cohen. There's a person who does entertainment, his name is Matt Bellamy. There's a person who writes about media, his name is Dylan Byers. And if you subscribe to Puck, you get all of us and on Thursdays to pay a little more money, but you get extra me. And an edited version of this conversation you're about to listen to is on there. And I think if you wanted to reference it or whatever, it's worth subscribing. But I hope you enjoy this. I feel like Simeon and I are constantly chatting about state of Nike and where it's going. And this was, you know, clarifying for me. And I hope it is for you, too. Simeon Siegel, welcome to Fashion People. Welcome back to Fashion People.
- [03:53]
Simeon Siegel
It is always fun to be here.
- [03:55]
Nicole Carroll
I. I'm always happy to have you. We're recording this very far ahead of time because I'm going to be on vacation for a week. And so this is.
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Simeon Siegel
Where are you going?
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Nicole Carroll
Tokyo.
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Simeon Siegel
Oh, that's fun.
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Nicole Carroll
Yeah, it'll be good. It'll be fam. Family spring break vacation.
- [04:15]
Simeon Siegel
Vacation in Tokyo without stopping into stores?
- [04:19]
Nicole Carroll
No, of course not. I mean, the whole thing is you go to stores. Unfortunately, I've already set up a meeting with Orally, this brand I really like, that has a store there. And. But that's the only work. I'm not gonna do any work. I'm mostly doing kids stuff. It's gonna be very kids.
- [04:40]
Simeon Siegel
If you hold to that. I will be impressed.
- [04:42]
Nicole Carroll
You know, here's the thing. I really need a vacation. So I'm pretty good. You know, I worked for a European company for 10 years, basically, so. And they really take vacation seriously over there. So I'll be okay. I'll be able to do it. But I. The. I'll. I'll definitely be taking a lot of notes. That's the thing. Your brain doesn't stop. And I don't like. I don't like vacations where you, like, go to the beach or whatever. It's not. I can't do that. I get very stressed out.
- [05:14]
Simeon Siegel
You and I are weird. We like what we do. I think that when I'm on vacation, I'm enjoying this stuff.
- [05:20]
Nicole Carroll
Yeah, totally. And then when I get back I'll have all these kind of nuggets to. Sarah Shapiro was just in Richmond, Virginia and she ended up for friends exciting as Tokyo, as exciting as Tokyo for her friends, kids bar Bat mitzvah, I think. And she was like, she's, she got five story ideas from it. I mean this is the, this is the life we live.
- [05:43]
Simeon Siegel
This is the beauty of retail and fashion. It's all here.
- [05:47]
Nicole Carroll
Okay, so as, as I said, we are recording this very far ahead of time. So one subject that we are going to try to, I don't want to say totally steer clear of, but not root in the present day is the tariff situation because we are recording this hours after Liberation Day. So it feels very fresh right now and everybody's chaotic. So we are going to preface this with if you wanna know why we're talking about Nike and we're not talking that much about tariffs or more broadly about tariffs, it's because a lot's gonna change in the next two weeks and we need to make sure we are, you know, we need to make sure the information we're giving you is clear eyed. Yeah, clear eyed. Accurate information. So I wanted to have you on this came out of a conversation we were having that a few months ago, Jacob Gallagher, maybe a year or so ago Jacob Gallagher and I did a podcast on Nike and it was pre, it must have been a year ago because it was pretty new CEO, pre changes and sort of we scratched the surface of what is really up with Nike and why it was so challenged and obviously so much has happened since. They have a new CEO, they've enacted this turnaround plan. And I wanted to bring you on because we're both passionate about the subject and kind of do a temp check on, on what's happening there. So why don't we start with where is the company? Like if you, if you were talking to the people that you, that you talk to every day or writing one of your notes, what is sort of the situation at Nike right now?
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Simeon Siegel
Okay. And we're going to, I'm going to take your permission and we're going to say we're going to assume that Nike will continue to exist despite whatever happens in the next several weeks vis a vis tariffs.
- [07:57]
Nicole Carroll
So we're going to, if Nike doesn't exist in the next two weeks that we're, this is all in trouble. Yeah, we got to do another podcast cuz we, if, if Nike doesn't exist, I don't know if we would exist.
- [08:10]
Simeon Siegel
Well, I Think the question is what from, from what happened last night to stay one line in there. Just the Vietnam has been the biggest selling point that I think when I talk to companies in the few hours after the announcement post Liberation Day, that's what everyone's focusing on. So we will take that aside. So we will. Tariffs notwithstanding. What I think is so fascinating about what's happening with Nike right now is you ask, where are we? I think we're 10 years into the past. And so you and I have talked about this. Sarah and I talked about it. We, my team wrote a report about probably also month or so ago where we called Just do it again. And the idea was history rhymes doesn't repeat. We know that, but it feels like it's rhyming. And so what do I mean by that? What do we know about Nike? We know that Nike sold a lot of things. We know that Nike kind of bastardized their brand. They diluted their brand by selling a lot of things. And now we know that they're trying to reverse course. That is what happens across all brands that get a little too overeager and too overexcited by selling their own stuff. But it definitely happened to Nike 10 years ago. And so we'll get into that because I think what's happening against, let's say on and Hoka and New Balance, etcetera, Is very similar to what happened when Adi came back. So when Adidas, Adidas, however we want to talk about it, wherever the listener is coming from, whichever side of the pond, 2015, 2017, Kanye first signs with them. You get Easys, you get Ultra boosts, you get originals come back. Adi had their moment in the sun in a big way, came at Nike's expense. It was very similar to what's happening now. And I would say the high level conversation of what happened then and what happened now is to combat when Nike finds themselves at odds against a new competitor, the way they combat it, they try to find a product that will be able to compete. Until that happens, they go back to their archives, right? They play the, the luxury angle, they play the Disney angle and they open their vault. The problem is, in my opinion, when they do that, they're selling their logo more than they're selling their brand. And that's ultimately, that's, that's a cheap dollar. Today you can sell a lot of stuff, but that's just moving units that ultimately hurts you. Tomorrow we are in the tomorrow.
- [10:20]
Nicole Carroll
Got it. So, so what do you think Nike needs to do to sort of combat this Issue of selling a logo versus selling a brand.
- [10:35]
Simeon Siegel
So I think it's not what makes them or it's not special to them other than the fact that they are the largest and have the largest budget and so they effectively dict these terms. But when a brand overstretches, a brand needs to pull back. They need to retrench, they need to then amplify with product and storytelling what makes them special. So that's the completely oversimplified version of this. The most interesting thing we learned while doing this research report, because it's fun, sometimes we write the conclusion before the hypothesis and that's a problem. This one was literally, it was a several week report that became kind of a several month report because we just kept learning things. What my team and I learned from this project was that back for the last five years, everyone has thought, oh, Nike's losing a ton of share. Anand Hoka are taking over. If you actually look at the dollars, I'm going to ignore the fact that Nike dwarfs them in total dollars. That's, that's not even a question. But incrementally, every single period, every quarter, they actually were selling more incremental. So a year on year, Nike was selling more dollars. Growth rate, right? I'm getting moderately technical, not too technical, but growth rate may have been in favor of the new upcomers, but in terms of actual dollars, people were choosing to buy more and more Nikes.
- [11:48]
Nicole Carroll
So a way to break that down for people who don't, who didn't take a finance course in college or even a math. A math course, because I didn't take math in college, I tested out. What that means is, so the percentage of growth for Anand Hoka is obviously going to be really high because they're very small. So like they can do 100% growth when you're small. Like. But the amount of money in the increase at Nike was more than at Honor Hoka. So Nike was selling the increase of the amount of shoes or whatever product was actually more than the increase of what on or Hoka were selling.
- [12:31]
Simeon Siegel
Exactly. And so tapping into my right brain instead of my left brain or whichever one is I'm supposed to is the creative one. Nike was losing mindshare, but they weren't actually losing market share. People as they were saying Nike was worse as they were saying Hokenon and were special. They were still spending more dollars. They were still choosing to grow Nike more than the other brands. And again, there's a function, there's a lot of reasons for that. But what was interesting and that's no longer the case. So now, hoken on now, Nike is declining. So now obviously people are choosing to go the other way. But what was so interesting about it was, okay, what was Nike doing to drive all that volume? That incremental volume was all coming from Air Force Ones, Jordans and dunks. Nike was selling their brand. That was them. That was Disney saying, okay, I'm going to open up the vault for Snow White, right? That was LV saying, I'm going to cheat and go to my archives because I have nothing special. When you allow, when you open something up that's not typically there, yeah, you're going to sell a lot of volume. And so that's a band aid. But if you do it too long and you do it too far, it's very damaging. And so that's the exact same thing that happened 10 years ago. So when ADI so in 2013, ADI introduced the boost technology, right? Big foam sole, very comfortable, didn't exist before. It looked weird. That didn't kick off at first. When they turned it into the Ultra Boost in 2015, that was that big foam soldier. Then Kanye signed, they created Yeezys. That's when they really started kicking into high gear and the same idea. All of a sudden it looked like brand new product dominating, but it was a mindshare dominant. It wasn't a market share. Nike was still out selling. That stopped a few years later because at some point you run out of room the same way it did right now. What happened back then? Well, back then Nike spent about two years creating a product called the Epic React. If you Google it, it looks like the Ultra Boost. It has the word react in the word. It's a reaction to adi. And they were back. They put out a product. They then they were able to put out the storytelling. Nike has the largest R and D budget dollars, the largest demand creation marketing budget dollars than anyone in the group. They're very hard to compete against. Plus they have something to do. That's where I think we are now. I think they need the Epic React. They need that new product that's really copying or giving them an edge against what exists now. Once they do that, then we get really compelling storytelling.
- [14:48]
Nicole Carroll
So how hard is that in this market and the talent pool? The culture of Nike changing over the last 10 years, all of that stuff. Obviously they brought in someone to run the business that understood the good things about the Nike culture. But like we were saying again and again and again, you can't go back how hard Is it going to be to make the epic react or something else? And also, where would you put the Nike skims play into all of this?
- [15:26]
Simeon Siegel
Yeah, that one's fascinating. Okay, so the first. So two. Two big questions, I think, and this will be a polarizing comment that will probably get nice amount of backlash for. But if you're not getting any backlash, you're not saying anything interesting. So that's okay. If we can operate under the presupposition that Nike perhaps is okay with being less creative all the time than we might otherwise think. Right. Said another way, not every product and not every success story is supposed to be innovative. Nike acknowledges they want to have innovation. They want to come out with the flyknits of the world. But what they need to do is make sure they're selling a lot of products, make sure they're selling a lot of goods. Well, if what that involves sometimes is finding a product that's really working and making your own version of it, creating an epic reaction to combat the ultra boost, the talent, the creative talent demanded in there is less important than the budget. And I don't want to overstate that comment because creative talent matters through everything. But if the goal sometimes is ensuring you have an IT product and that IT product is not mirroring but building off of something already in the market, you just don't have to be that clever. You don't have to be that creative. And so I think there's an element here where, yes, there has been a brain drain that people are worried about. One, when Nike is firing, they will get the people back. They're firing on all cylinders. Not when they're firing people. When they're firing on all cylinders, they will get the people back. But two, I do think it's important to acknowledge if we, if this assumption is true, that they need a product that rhymes with Hoka or on to be able to compete with people that are looking for a similar giant foam sole midsole shoe that actually doesn't need the most creative of people. You want creative people to come up with a new innovative product that no one has, but you also want people that are willing to look. I think that's very different from marketing, by the way. I think the marketing creative needs to be genius and needs to be innovative. It needs to be unique. But I think for the product, this is an interesting dynamic. And to your question of when do we see it, how does that work? They may be already in the works. So there's a product Zoom Fly 6, which has a giant look it up has a giant foam cell. It looks just. It rhymes with, let's say, some of the Hoka products. There's a new Pegasus Premium which is selling out. There's a Vomero 18 which all of a sudden looks a lot thicker. And so you wonder, are they starting to get there and starting to have these products aligned? And if that is the case, the next thing that follows is marketing.
- [17:46]
Nicole Carroll
Okay, so let's go through these things. First of all, it's very interesting to hear you say they should spend more on development. I understand your point about like, the talent versus the spend and length of time and money they're willing to put in it. It's very interesting because there's a lot of development. And if you compare this to a luxury brand, there's tons of development at luxury brands. There is not as much development at bigger. And when we say development, I mean you make a bunch of things that never get made. You're just like experimenting and they get thrown away at the sort of mass level. And you know, this or even the mid market, there's less development because the budgets are tighter around. You can't be that waste. What, what some people would call wasteful, it's like creative waste, essentially. It's, it's useful waste. So it's interesting to think about the fact that I, I see this a lot with young designers where they want to do more development and they don't have the money and they get frustrated and. But it's, it feels like it's just an, it's an interesting thing that at that level it is good to kind of dump a lot of money into that. So say, say they do develop a product that makes sense for this market when you're marketing it. Like, how do you, what do you think about their marketing plan right now and how does it need to change? Or do you think they're right on the right path? Or how, how do you see the marketing that they're doing right now interplaying with the product itself?
- [19:30]
Simeon Siegel
So I think that's really interesting. I think your first point is important because I think that when I think about samples, when I think about all the things that were, okay, you know, we made one version, it didn't hit, and let's move on in luxury. A lot of that and push back on me. A lot of that is more tied to fabric, feel or look rather than some big technological change.
- [19:52]
Nicole Carroll
Right.
- [19:52]
Simeon Siegel
And so I think that if something is not going to sell, you need to take risks and then you need to Move on. If you're putting a lot of R D, if there's technical aspects where you're creating a new technology, you're focusing on comfort or something that allow you to jump higher, run faster, etc, even if the initial run doesn't work, it doesn't look right. It's not going to be cons to a consumer, it's not going to work. That doesn't mean you don't repurpose the technology. And so I would say we probably do see, there probably is a similar degree of trial error. Let's move on. Throw it away. But you're not throwing it away, you're not going back to the drawing board, you're changing the silhouette. And so when the silhouette is everything, then you have to throw it away, you have to move on. When the silhouette is just the facade, it's the outer layer of a product that actually is special because of some technology, then you don't have to get rid of the technology, you just figure out how to make it look nice. And so I think that might be a little bit of a delta when thinking about development here versus straight luxury.
- [20:45]
Nicole Carroll
Yeah.
- [20:46]
Simeon Siegel
And tell me if you disagree.
- [20:48]
Nicole Carroll
No, I. You make a good point.
- [20:51]
Simeon Siegel
I'm allowed one a show, I think so I'm glad I got one.
- [20:55]
Nicole Carroll
Yes. Just one.
- [20:58]
Simeon Siegel
Just one. So I want. The marketing I think is really important. It's really interesting and I think obviously what Nike is known for is being edgy. What Nike is known for is being someone anti establishment. What Nike is, is known for is saying things that people don't always agree with. And I think Phil Knight's thing is he doesn't mind being loud. He just wants to be on the right side of history as they see it, something to that effect. This was kind of an interview a long time ago. There's. There was a really interesting line that he had given in a long go interview where he said his endorsers don't have to be. I'm going to butcher it. But he said his endorsers don't have to be and shouldn't just be the best scorer. They need to be the, the loudest personality. And if you look at who he picks, that's very bright.
- [21:42]
Nicole Carroll
Right.
- [21:42]
Simeon Siegel
That's very true. And so this notion of standing for something, even if not everyone's going to agree with it and then having product that everyone will agree with, the product is an interesting mirror and it's an interesting dynamic. And I don't know that we've seen obviously the super bowl commercial was, was A little bit more powerful. But yeah, there hadn't been really loud campaigns before that in, in a bit. And so sometimes they happen, right? Sometimes. Whether whether you liked it or not. The Kaepernick taking a knee was a conversation that people that Nike decided they wanted to make their bet. So sometimes you find things and you rally around them. But again I think if you're not rallying around, I don't want every piece of their marketing to be tied to a product. But if you're not rallying around good product, ultimately you're going to fall flat. And so that's why I think what they needed, they need something that says we're back. We have product that people are going to want to buy even though they were buying the more basic goods before or the things that were just logos before. Once you have brand driven product, I think then you can start telling more compelling brand driven stories. I've been counted out, dismissed, passed over, told I'd never be a golfer with just one arm. But the only thing that feels better than proving people wrong is out driving them. I'm 14 year old golfer Tommy Morrissey and I want to be remembered for my ability as a champion partner of the Masters. Bank of America supports everyone determined to.
- [23:04]
Nicole Carroll
Find out what's possible in golf and in life. What would you like the power to do? Bank of America bank of America NA.
- [23:10]
Simeon Siegel
Member FDIC Copyright 2025 bank of America Corporation. All rights reserved. In 2009, three days before Halloween, a grisly crime stunned the seaport town of Anacortes, Washington. I can only describe it as evil. From 48 hours. This is Train to Kill. The dog trainer, the heiress and the bodyguard. He couldn't control his obsession. Who was the hunter and who was the hunted? Follow and listen to Train to Kill on the Free Odyssey app or wherever you get your podcasts.
- [23:47]
Nicole Carroll
Okay, so bringing the product and the marketing together, let's talk Nike skims, which still hasn't launched. I think I am one of the reasons it was announced as early as it was.
- [24:02]
Simeon Siegel
Yes, you had that the day before, right?
- [24:05]
Nicole Carroll
Well, I think it was not supposed to be the day before. I think that they it was supposed to be further along in the process.
- [24:12]
Simeon Siegel
But I the hour of a Lauren.
- [24:14]
Nicole Carroll
Scoop I learned about it and that is because people like to tell me things, tell me everything, everybody. So to me this kind of hits because the thing I once I knew and started talking to people I did talk to some people at Nike who were like the product it wasn't, I don't Think it was ready when I learned of it. So it wasn't like they could share a lot of visuals. But then I did talk to people on both sides that were like the product is awesome. You're just gonna be blown away by it. And I do think skims really understands Emma Greed, who kind of does all the merchandising there is an incredible merchant. And I went to the skims store on Tuesday and it was so fabulous. Like I was just. I'm blown away by the way they merchandise it. Have you been to the one in New York Briefly.
- [25:14]
Simeon Siegel
I've been, I've been in and out.
- [25:15]
Nicole Carroll
I, I just, I mean compared to Victoria's Secret, it's just. I'm sure the Hillary super and all that crew are just like in Victoria's Secret. I mean in skims. Every day looking at how they do it, it's so well done. It's. It feels like every single product that skims has ever made it is in the store but it's not overcrowded. They have. It's mostly solid colors and then they'll just have like one or two novelty items mixed in. Really well done. Anyway, I do think they understand that the product is the marketing in this era. But for me the Nike skims thing is analogous to Jordan Nike modern version of that. It could be. It may not be, but it could be because Nike doesn't obviously sells billions of dollars worth of stuff to women. But it's not top of mind for active women who of, of. Of a certain. It's. It's sort of like the base layer. It's not the, the go to for.
- [26:29]
Simeon Siegel
People go back to this mindshare versus market share dynamic. Again, it's not real but it's just thinking about like when do we think versus the Nike does a lot of. But to your point, it's not top of mind.
- [26:39]
Nicole Carroll
Totally. So there's that part of it. So they are going to get this, they're going to hook in this group of people who by the way, like I'm not a huge consumer of skims. It's not. I don't feel like a connection to the brand but I am a consumer of Nike and all my friends and I talk about is like we just wish we could just wear Nike workout clothes. Like it's not. There is a mark, there is a customer who wants it. So the two together just. It sort of feels like if the product is good and if they position it properly and that they've done their research and development, I know they were working on it for a year that they needed to do to get it right. This could be a huge unlock for them. And it could be because the thing about Kim Kardashian is of course she's not an athlete, but she is a. Well, I mean, maybe she. Everyone's an athlete or whatever they say.
- [27:39]
Simeon Siegel
Exactly.
- [27:40]
Nicole Carroll
But she is, she's not going away. Like she's proven that she's. She's around. So it's an interesting bet for them and I guess you start out small and you see how it goes. But I'm just curious, like, do you think that they're betting big on this and they think that it could be like a sub brand of, of Nike in the way Jordan is.
- [28:09]
Simeon Siegel
So one, if you're the reason why they pulled forward the announcement and didn't have product ready, that actually explains a lot because to your point, that press release, the initial launch was so short of detail and more of this teaser and it was just here we are. This is more than a collaboration, it's a brand. But you're going to have to wait for the rest. And to your point, normally you would think that would be littered with at least something right beyond the ID card that showed Kim as employee number one. So great marketing teaser. But if that's why there wasn't product, then that is really interesting. I, I think you're definitely right, sort of by definition that this is Jordan. This is intended to be a Jordan esque rather than a collaboration because there's no X in the middle.
- [28:59]
Nicole Carroll
Right.
- [28:59]
Simeon Siegel
It's not a collaboration, it is a brand. I think where it could go even further, like what's interesting is what, whether they intend for this or not, whether it will become this or not, we will see. But at least they're starting with the potential for it to be more than Jordan. And I don't mean in dollars because that's going to be very hard to do. But. But Jordan doesn't have a swoosh. It's not called Nike Jordan. Like this is unprecedented. Nike has never given their logo to another brand before. Isn't that interesting? Like if you think about, Nike's had other brands. They own Converse, they own Jordan, they had Cole Hahn. It was never swoosh and another one. And so here you're taking a brand that you have built over decades of blood, sweat, tears and a lot of cash and you're putting it online. Yes, you're the left. So theoretically you're higher, higher billing, whatever, but you are sharing that line with a company that to their credit, has earned that space in a very short amount of time. That's a much smaller business. And so I think that that is very important. Like this is not them saying, we're making one season, we'll try a capsule and we'll move on. They are saying right now this is a bet we are going to make because we believe that this should be part of the Nike family.
- [30:11]
Nicole Carroll
It's interesting. I mean, the Jordan Nike thing, I think initially it was probably more Nike than Jordan. Right. Or at least. And now it's its own thing. So what do you. Do you think that it, knowing what you know about both brands, do you think it has the opportunity to succeed?
- [30:33]
Simeon Siegel
So the opportunity to succeed is very different than the opportunity to become Jordan. $7 billion. And so I think that we know it, it has to succeed. Right. You have the dominant budget from the largest player on one side of the sphere. So you've got the power of Oregon about to make this. Whatever needs to be spent will be spent. And then on the other hand, you've got Kim. But to your point, you don't just have Kim, you have the greeds. And so Jens and Emma have shown a phenomenal ability to drive this as well. And so you've got this nice powerhouse now. What does it mean to succeed is going to be his question. Does this become. Does this siphon. Do you, as the Nike shopper that's looking for some more relevance or something that speaks to mind share, not just market share. Is this the answer? I don't know. I don't know if it's going to speak to everyone. I think it's coming at an interesting point in time when Lululemon appears to be showing us its saturation or its cap. And so there's definitely. It's not just Victoria. So. Right. The, the Nike skims. We might start moving past speaking about Victoria's Secret to start speaking about Lululemon. I think that would be the goal, but I think that this is going to be on them to make sure that they can continue this power that they have.
- [31:40]
Nicole Carroll
I want to talk briefly about category specific strategies. So this has come up for me in the last couple of weeks quite a bit. There's a lot of like golf brands launching and tennis brands and category specific things that will never really eat into like you're saying, not into Nike's market share per se, but maybe into the mindshare. And the thing that Nike, I was always amazed by, especially in the early 2000s, what they managed to do. And I Know that this was a course correction where they had been challenged a bit in certain categories, but they went into different sports categories and embedded with those athletes in those categories, embedded with the communities that were around them. I always think of skate and golf specifically as they managed to really like get in with those people and somehow legitimize the Nike brand in those. In those categories. Which just seems so crazy to me that they were able to do it. Like first, obviously they were. It started as a running track brand. Then they got into basketball somewhere where it didn't feel like you could get in because Converse dominated. Then they got into golf and all these other things and skate in particular. Like that's such a very specific culture. And they were able to make product that that group of people respected. And then something shifted. It felt like they became really obsessed with the idea of lifestyle because all these other players, Lululemon, all that were more focused outdoor voices, really focused on lifestyle versus sport in particular. But as trying to figure out the lifestyle element, they sort of. And also there was a restructuring at the business under the previous CEO where that sort of category specific work was deprioritized. How important do you think it is for them to have legitimacy in individual sports categories in order to also win at the lifestyle element? Because I think one of the reasons Lululemon has done so well is because it has legitimacy in yoga and now running and other and just like general activity. But there, there was great legitimacy in that category. How important do you think that is now for them to get like really granular and say, okay, everybody's obsessed with tennis right now. We have to make sure our tennis kits are the best and reflective of like how people actually dress on the court, all of that stuff.
- [34:40]
Simeon Siegel
Okay, so I do think we need to start again. I think this notion of revenue, sales, revenue dollars versus growth rates, really important. Lululemon's done a beautiful job, like fantastic job in totality. Their business this year will be around 12 billion. Less than that, give or take. Nike, if they lose 20% of their business, will have 40 billion. There's no real category that we can realistically say Nike is not winning in. It's just how. What is winning? How do we measure it? And so I think that is important to flag that. Even as they're lagging on a revenue dollar based on a unit basis, Nike still is capturing this. This mind your market share. By the way, I do think it's funny, I hadn thought about or verbalized this way until you and I are talking about it. But you're pulling it out. And I think that this mind share versus market share is very important when thinking about this dynamic of just dollars versus how we think about them. I think the second really important thing which you're alluding to now is segmentation. And so there's no one who does segmentation better than Nike. And so historically, we think about segmentation of, okay, do you sell in Kohl's and do you sell at Nordstrom and you sell online and can you sell luxury? Like that's. Normally we think about it as channel, but segmentation is also the profile of what you're selling. And so I think you're exactly right. You and I have talked about this in the past where my team's done a lot of work on brands ubiquitized, right. I've stopped saying peak because they do go higher, they come back down. Brands are less cool in North America, generally at 3 to 4 billion dollars. That's your. That's your healthy level. Brands that go higher generally come back down. That's just the math of it. Nike hasn't. Others have. Watch Lulu. We'll see if they do. One of the reasons behind that, it's not math. It's not. There's this magic number. It's every second grader knows when you have too much of something, it becomes less cool. And so the question is, how many. What does it mean of something? And so Jordan is one way Nike can say, well, I could be a much bigger business if I create a separate brand. But by the same token, if they create separate identity, if that skate person doesn't associate with the basketball, doesn't associate with the runner, then theoretically it takes a lot longer to dilute your brand. And so if the three main things that I'm hearing myself that are emerging from our conversation, it's mind share over market share, it's segmentation. It's thinking about, okay, how do I create these different personalities? How do I. How do I file this through? I'm like, these are the things that I think Nike does that is so powerful. And so, yeah, I think they absolutely need to keep that going. They need to figure out how they. Which, how do they appeal? How do they become really big without giving up who they are? And that ultimately is the question.
- [37:18]
Nicole Carroll
Well, how do they.
- [37:21]
Simeon Siegel
So that's what they. Well, they are. They've already done it, Right? And so I think this idea, that third thing I was going to say is this idea of selling your brand over, selling your logo. Those would be my three big Themes that I'm hearing myself say over and over again. I think it's really important when you say sportswear, well, that lifestyle is what they call sportswear. That is the biggest risk of just selling logo that by if you're, if you're a hoodie. Under Armour's biggest problem was that they decided to take the place of Gap being the hoodie at Disney World. I mean, everyone, like they sell so many units and people still do. They just don't stand for much anymore. And that's what they're going to try and fix right now. And so what you need to do is you need to make sure you are speaking to different people. Where that run club person is very different than the DSW back to school shopper, which is very different than the person who's lacing up to go play some hoops. Like, I think this is the constant. That's what they did so well and part of this storytelling. And that's why I would fuse the product and the marketing and this segmentation is going to be everything when you're just saying, let me just sell a swoosh. Yeah, then you become a lot. You can, by the way, sell a lot of swoosh for those few years, but then you stop representing, you stop standing for anything special. And then all of a sudden you get, you get subjected to my, my brand peak chart. And that's where you start coming back down to earth.
- [38:34]
Nicole Carroll
If fashion is your thing, ebay is it. Ebay's where I find all my favorites.
- [38:39]
Simeon Siegel
From handbags to iconic streetwear, all authenticated for real this time. A little supreme, some Gucci. I even have that vintage Prada on my watch list. That's why eBay's my go to for all my go tos.
- [38:53]
Nicole Carroll
Yeah, eBay, the place for new pre.
- [38:55]
Simeon Siegel
Loved vintage and rare fashion. EBay, things people love. 24 chefs, 24 culinary showdowns for 24 hours straight.
- [39:15]
Nicole Carroll
Which chef will out cook, outpace, outlast the competition?
- [39:22]
Simeon Siegel
No chef escapes the clock season premiere 24 and 24 Last Chef Standing Sunday, April 27th at 8. See it first on Food Network Stream next day on Max.
- [39:36]
Nicole Carroll
So what do you think happens next? And, and also what should Elliot Hill's goal be? Like, does Nike need to be a double size? It already is. No. So it's the, the goal is to be more profitable, correct. Not be bigger.
- [39:54]
Simeon Siegel
I'm sure Elliot wants to be bigger too. I think what his I, I speaking for myself here, I don't know this to be the fact. My gut is Elliot's mandate is to go back to the future. My gut is Nike, to your point, used to do this so, so magically with their segmentation. They used to focus maniacally on what they were selling rather than where they were selling. And then D2C became this be all, end all. And they stopped saying, okay, I'm going to have many different portfolios, I'm going to have many different customer profiles. I'm going to have many different identities that I'm creating within this wheelhouse so that no one feels like they're next to the person. Like they don't get this Lulu problem right now. If you walk into the store and what do you represent? And so I know exactly what I'm going to represent to each person I'm trying to do that for. I think that's what his goal is. I think his goal is let me repair wholesale relationships, which he's doing. Let me repair employee morale, which he did. We will see what happens given where the stock is, and then let me start repairing the customer relationship. That's the hard one. I think that's what he's doing. I think if he does that, yeah, I think he wants to see growth. But yes, this margin, this profitability, the flow through should be a lot better. And a lot of that will come through selling full price product.
- [41:07]
Nicole Carroll
And do you think they need to think about how a brand like this plays in the culture versus how it did 20 years ago? Because I think the other big thing, I don't know exactly how old you are exactly, but I assume we're supposed.
- [41:24]
Simeon Siegel
To divulge that on this. Is that, is that.
- [41:26]
Nicole Carroll
No. But, but are you, are you even 40?
- [41:30]
Simeon Siegel
I am, I am.
- [41:32]
Nicole Carroll
What year?
- [41:33]
Simeon Siegel
84.
- [41:34]
Nicole Carroll
Okay. I'm two years older than you, sibling.
- [41:37]
Simeon Siegel
I skipped, I'll be 41 next year. I skipped for.
- [41:39]
Nicole Carroll
Okay, I'm, I am going to be 43 this year. So I don't think brands have as much. Well, and this, maybe we can end with this because it's a, it's a big deal for Nike. So Nike is one of these things. I would say there are very few of them, but there's Levi's, there's Nike, there's Kleenex, that are so sort of formidable in the eyes of the millennial generation and above that they are just a given. I don't know if consumers who are Gen Z and definitely Gen Alpha, I'm not saying they don't have brand loyalty. I think all that stuff about them not caring at all is not true. But I just don't know if like, people are as emotional about this stuff as we were because, like, Nike is Nike. Like, Nike is the best. It just is the best for our generation. Like, there isn't really a lot of pushback. Like, no one's like, oh, I hate Nike. But there, and I'd say with all their competitors, there is like that tension. Nike's not like that. It's like there's a, there's something about it that just feels right. And, and so when they fail and they don't get the product right, it's frustrating for a certain set of consumers because it is the default. Do you think that that kind of brand can emerge in this, in this current era? And also does Nike need to be that still or can they sort of let go of that, that dominance the mind? Can they let go of the idea that they will own all the mind?
- [43:22]
Simeon Siegel
Share I still going back to the fact that you thought I wouldn't know what a Kleenex was.
- [43:29]
Nicole Carroll
I thought you would know what a Kleenex was.
- [43:31]
Simeon Siegel
How great would it have been if I told you I was 25? Wouldn't that.
- [43:34]
Nicole Carroll
Well, no, I, I mean, I thought I was looking at you and I was like, oh, Simeon looks really young. He might actually be younger than me.
- [43:44]
Simeon Siegel
I just got my hair blown. My kids are telling me that I'm.
- [43:49]
Nicole Carroll
Also, you have many children. So I think I, well, I mean, we are basically the same age. Yes, but I, I, I always equate you of being my age and maybe a year younger and it turns out.
- [44:02]
Simeon Siegel
Too, you know, and we just think we're younger. So that's, so we'll go with that. But so here, here's what I would tell you. One, how do we know they're relevant because of that market share comment. So to your point, no one, there's difference between no one hates Nike versus everyone loves Nike, but everyone buys Nike. And I think like that is an important one. Distinction number two, the really interesting one, normally people ask that with Jordan. Normally the question is how is Jordan such a large business when no one who wears his product has seen him play? Right. The amount of kids or whatever gen, whatever letter we want to include that have never known Michael Jordan the player. And yet Michael Jordan the brand or Jordan the brand has exploded. Like, I think, like when you think about Jordan, when you say Jordan to most people, they're more envisioning the Jumpman logo than they are the actual person. And so I think like this notion of what they've been Able to create, even though it's not what was originally intended, I think is spectacular. I think that's really important to them. But I do think you're absolutely right. No one says Kleenex anymore, they say tissues. No one knows what a Xerox machine is because it's not a thing. And so a lot of like, just because you owned that level of brand association doesn't mean you get to keep it. And I think what they have done very well is maintain that staying power. Because even though they are selling $50 billion and even though they are going through this slump, let's call it, they've overstretched. I don't think people have. I think there are still people that love Nike. I don't think people are just saying, okay, this is my automatic purchase. And I think that's something that they've historically done really well. And I think there's certain products that people do absolutely love. I think there's certain signature shoes that people do absolutely really love. And the fact that they can launch this Pegasus premium in two different colorways a month or so apart and both of them sell out immediately is one obviously tied to the fact that it's limited supply. But two shows that there still is interest when they do it right. So I think what you're describing is absolutely the most important warning that they need to make sure they never become a need based purchase. The magic of Nike is they fuse need and want. If you just become a replenishment staple for back to school then then you lose all, then then you're a regular shoe. So that is their warning. They need to listen to you on. I think so far I think they still have the license to be something special. I think we're seeing it in the dollars. I think we need to see it in the story.
- [46:09]
Nicole Carroll
So one, one final note on apparel versus shoes. I feel like a lot of the narrative is around apparel and the fashion element of Nike. So one thing I've talked about, I think Jacob and I probably discussed is their collaboration strategy and why that's been challenged, that type of thing. Also the Skims, Nike, we the obviously leading with apparel because Skims is an apparel brand. So the, the idea is like are they going to become a competitor in the boutique fitness gym sets thing, whatever. So a lot of the talk is around apparel. I had a really interesting conversation with someone who works at Under Armour a couple of weeks ago which you and I need to discuss it. Under Armour at some point. I'm initiating my coverage Simeon. But the one Thing they brought up to me that was really a point is like the business is sneakers. Like, yes, the apparel matters, they sell billions of dollars worth, blah, blah, blah, blah, blah. But this is a sneakers business. That is what drives it. And even for something like Under Armour, that's the way they're thinking. And they famously like, it took them, you know, a minute to get into sneakers. And, and I, I don't know if they even have legitimacy in sneakers at this point. Like, it, it doesn't. But that's, I mean, that's for another day. But the point being, when you're talking about the R and D, when you're talking about the product, when you're talking about all this stuff, how much of their focus needs to be on? Because for me, like I'm almost, and I, and I, you know, I'm an audience of one. But I do think these anecdotal things do help inform how to think about this stuff. But I haven't worn Nike running sneakers. And, and this is what you're talking about with the Zoom Pegasus or whatever. Like they need to win that customer back who now is just kind of like, I don't need to, I don't need to engage with it. But how much of their focus on all this stuff needs to be about sneakers versus the whole kit.
- [48:29]
Simeon Siegel
So listen, I think that what is important there, I think everything you said just had tremendous amount of validity. But in North America last year, Nike sold $15 billion. Just under $15 billion at wholesale of or combined is a little bit. But let's just the number they reported, which is a higher number when you think about the actual reality, just under $15 billion of apparel. Of footwear, sorry. And just under 6 of apparel. Like this is. You're, you're exactly right. Nike is a footwear business. Under Armour is the inverse. Under Armour's got a billion dollars and it's just where did you start and where do you go? And if you can create a very compelling footwear model, not only do people replenish, not only do people fall in love, not only people collect, it's also arguably less competitive. It's harder to do. You and I tomorrow could start an apparel company. We couldn't start a footwear company. It's much harder. And so I think there's an element here where to your point, and this is again, not to, not to broken record myself, but this is mind share versus market share insofar as Nike sold a crazy amount of running shoes last year, but people weren't in Love with them. Right. You didn't go, you didn't say, oh, I'm really excited to, to go get the latest line which now may or may not be changing. Seems like early initial reads are good. But yeah, I think that there's this notion that what you and I are going to talk about the all the audiences of one are going to talk about the latest launches. And the latest launches have been going to the Hoka Cliftons and Bondies and New Balance and whatever it's going to be. But the volume has still been behind the Nike running. And so what Nike has to do that special is convince you and I convince the media, convince investors, convince the, the prime, the specialty runners that they've got this amazing halo. They have to win marathons. But by the way, any shoe that helps you win a marathon is not a shoe that Nike's selling in crazy amount of volume on. And so to become a really big business, what they've always done really well and Ralph used to do it, but others maybe, maybe LV does it well. But generally speaking, it's very hard to segment. It's very hard to create the Runway line that is not diluted by the mass that actually makes you a big business. I think that's what Nike, that the historical magic of Nike is they've been able to sell these drops that sell out for several hundred dollars and yet sell $50 running shoes to kids that are going to school in September.
- [50:39]
Nicole Carroll
Can they keep the magic for another 20 years? Simeon?
- [50:44]
Simeon Siegel
They've got the budget. This is a check size conversation, right? I mean they will find the next LeBron and no one will be able to outspend them. There's a beautiful thing and this is the nerd in me coming out. There's a beautiful thing when you're in a variable expense world, when everyone needs to spend 10% on marketing, when you need to spend 10 cents of every dollar on marketing. The larger your sales, the bigger your marketing. It's as simple as that. And so when Nike decides they want someone, when Nike decides they're going to deploy an R and D budget, that development budget, you just can't compete against them. They might not get a hit every time, but they will get the dollars.
- [51:17]
Nicole Carroll
Final thought, maybe Kim is the next LeBron.
- [51:20]
Simeon Siegel
Maybe Kim is the net from your lips.
- [51:23]
Nicole Carroll
Simeon, thank you so much. It was great to have you.
- [51:26]
Simeon Siegel
Always great to be here.
- [51:28]
Nicole Carroll
Fashion People is a presentation of Odyssey in partnership with Puck. This show was produced and edited by Molly Nugent. Special thanks to our executive producers. Puck co founder John Kelly, executive editor Ben Landy and director of editorial operations Gabby Gross Grossman. An additional thanks to the team at Odyssey, JD Crowley, Jenna Weiss Berman and Bob Tabador.