Nike: Out of the golf equipment business

[Spitfisher]

2 hours ago, nevets88 said:

Nike and Adidas are getting out of the golf business at exactly the wrong time

http://www.businessinsider.com/nike-adidas-getting-out-of-the-golf-business-at-wrong-time-2016-8

The above link is a bit misleading, Rounds are up comparatively speaking to the previous years(s) so that could very well mean (& likely does) the same golfers are playing another round or two per month, that would account for the percentage points. The other element is the weather, this year in northern New england we had very little to no snow, unseasonable warm spring temps. This year I played golf in January Feb, March and April, the previous year my home course didn't open till the first week in May in 2015. I am willing to believe conditions were much better from Maine, NH, VT& upstate NY- as well as all the way down the mid-atlantic states.

For sale and sold are too vastly different things

Companies such as Adidas and Nike are looking at 10-15 year window (sales, market share and profitability projections)  in the future, adidas especially when they decided to put the largest market share Taylormade up for sale. Reasons are simple projections of sales and market growth for the next 10-15 years looks bleak, Older golfers will literally be dropping out for health, death and cost reasons- many sub 50 year olds are only now starting to see their retirement funds return to what they were 10 year earlier. Yet on the entry side, kids participation levels are at an all time low and a noticeable drop in 20 somethings playing. If that isn't enough your average golfers age in the past 10 years has risen 5 years. Oh sure  some have said well what about the first tee program etc......its had a minimal effect, it got young children sometimes pushed into it by their parents, but interest was short lived by many. 

TM has reduced inventory and product counts in preparation of the sale, running leaner, cleaner and more profitable with a 24% increase, largely due to the M-line of metal woods and irons.

 

Nike conversely was/is down double digits (YE 5/31), Last year 2014 and 2015 was almost as worse- their product was selling and worse they were operating a manner of swapping product out or very aggressive buy downs.

 

[newtogolf]

12 minutes ago, Spitfisher said:

The above link is a bit misleading, Rounds are up comparatively speaking to the previous years(s) so that could very well mean (& likely does) the same golfers are playing another round or two per month, that would account for the percentage points. The other element is the weather, this year in northern New england we had very little to no snow, unseasonable warm spring temps. This year I played golf in January Feb, March and April, the previous year my home course didn't open till the first week in May in 2015. I am willing to believe conditions were much better from Maine, NH, VT& upstate NY- as well as all the way down the mid-atlantic states.

For sale and sold are too vastly different things

Companies such as Adidas and Nike are looking at 10-15 year window (sales, market share and profitability projections)  in the future, adidas especially when they decided to put the largest market share Taylormade up for sale. Reasons are simple projections of sales and market growth for the next 10-15 years looks bleak, Older golfers will literally be dropping out for health, death and cost reasons- many sub 50 year olds are only now starting to see their retirement funds return to what they were 10 year earlier. Yet on the entry side, kids participation levels are at an all time low and a noticeable drop in 20 somethings playing. If that isn't enough your average golfers age in the past 10 years has risen 5 years. Oh sure  some have said well what about the first tee program etc......its had a minimal effect, it got young children sometimes pushed into it by their parents, but interest was short lived by many. 

TM has reduced inventory and product counts in preparation of the sale, running leaner, cleaner and more profitable with a 24% increase, largely due to the M-line of metal woods and irons.

 

Nike conversely was/is down double digits (YE 5/31), Last year 2014 and 2015 was almost as worse- their product was selling and worse they were operating a manner of swapping product out or very aggressive buy downs.

 

I don't know of any business that makes buy / sell / hold decisions based on 10 - 15 year projections.  No one has a crystal ball and can project much beyond 5 years. and even trends analysis for something like golf is so economy and free income dependent that they wouldn't be accurate.  

Nike is a public corporation that lives quarter to quarter, year to year by hitting their projections to satisfy the market and shareholders.  Divisions get cut when they don't perform to expectations and there's no reasonable belief that performance will change significantly over time (1-3 years).  Divisions also get cut when other divisions that are more core to the corporate business show weakness that needs to be compensated for by eliminating overhead and additional expenses.  

The golf industry is stagnant or slightly declining and there was likely nothing within Nike's R&D and marketing that was going to lead to increased revenue and profits so they took the division off of life support and let it die.  

[rauhlyfe]

ohhhh Nike, dear... dear Nike. I don't understand why they would cease to produce ALL forms of golf equipment. I really enjoy the looks of their bags, and on occasion I use their golf balls as well.

I do agree though that their club technology isn't exactly up to standard with the rest of the manufacturers. Especially the Drivers... oh man, I had little sense of direction when using the drivers especially all the members of the VAPOR series. There wasn't ever really a good indicator on the crown of the club of where your club head was aiming towards, so I would usually end up relying on my stance and muscle memory. Another thing I couldn't get over was the huge cavity on them... It just didn't feel right to me, but that's not to say that they weren't functional, I'm just biased. I mean Rory won several times with Nike in the bag.

Hopefully after this, Tiger and Rory will go back to Titleist. I myself use Titleist 714 MB's, although I plan to get some TMB's for my 4 and 3 iron. I can hit my current ones well, but not as consistently as I would like to, not to mention the pain in my hands after a REALLY bad mishit.

It's pretty funny to me how fast the Vapor Fly's are selling now just because of the price drop. I work at a dicks sporting goods and When I have asked some customers as to why they were purchasing the clubs, they said it was because of the price drop. I mean, I'm all for saving money, but they didn't even bother testing it in the fitting bay, so how do they really know they are going to perform well with them?

[Intruder2000]

What will tiger use when he plays again?Will he play without an equipment sponsor to see what he's got first or will his agent approach what he prefers to play, mizunos?

[nevets88]

Hip Hop and Golf? How Callaway Is Swinging for Millennials [Ad Age]

Quote

The initiatives are aimed at "creating an avenue for a new audience to think about Callaway," Mr. Arnett said. The preconceived notions people have about the game of golf "were definitely preconceived notions that people had about Callaway," he added, meaning that it is for rich men.

"There is an affluency to the game that definitely is attractive and has been a foundation to our business," he added. But "we are extending ourselves to a newer, broader audience," he added, like people who are "looking for that next passion point activity. And we think golf can be that."

http://adage.com/article/cmo-strategy/hip-hop-golf-callaway-swinging-millennials/305447/

[mvmac]

 

[iacas]

1 hour ago, mvmac said:

 

Wouldn't surprise me. He played Miura even when they were stamped Mizuno, Titleist, and early Nike clubs.

[mvmac]

7 hours ago, iacas said:

Wouldn't surprise me. He played Miura even when they were stamped Mizuno, Titleist, and early Nike clubs.

Yep. 

I wonder if he'll go sponsor-less with his equipment, just use what he likes best. He can obviously get an equipment deal but there might not be a "big" deal out there for him right now so it might not be worth it to commit to one equipment. 

[nevets88]

McIlroy back to Titleist putter.

Quote

"I haven't been home, but apparently my parents' house has been inundated with golf equipment from different manufacturers," McIlroy remarked. "I haven't asked for it, but it's there."

http://www.golfdigest.com/story/rory-mcilroy-confirms-hes-ditching-nike-putter-for-scotty-cameron-but-likely-wont-sign-new-equipment-deal-for-at-least-a-year-or-two

[nevets88]

Surprise, NYT a little slow on the draw.

http://www.nytimes.com/2016/09/23/sports/golf/nike-golf-equipment-apparel.html

[newtogolf]

11 minutes ago, nevets88 said:

Surprise, NYT a little slow on the draw.

http://www.nytimes.com/2016/09/23/sports/golf/nike-golf-equipment-apparel.html

Thanks for posting but nothing really new here except to confirm how poorly their equipment business was doing.  The reasons Nike failed I believe are the same reasons UA is being very cautious entering the golf equipment market.  Unless UA buys a company that is well established they will have a difficult time gaining market share.  

[colin007]

Rory moving to the M2. Scary scary numbers....

 

[newtogolf]

That club head speed is amazing given his size.