Nike’s Potential Golf Exit Could ‘Do Long-Term Damage to the Brand,’ Analyst Says
A recent report that Nike could let go of some of its golf business is compounding an already uncertain situation for the Swoosh ahead of its second quarter earnings results next week.
The “No Laying Up” golf podcast last week reported that this weekend’s PNC Championship, a major golf tournament, could mark the last time that Tiger Woods is represented as a Nike athlete. Nike is a longtime sponsor of the golf icon, though details of their contract have not previously been publicized.
The podcast also hinted at a similar situation among other Nike golf athletes — which include stars such as Rory McIlroy, Scottie Scheffler and Brooks Koepka — and said that there could be a potential apparel brand launch in the works from a golf equipment manufacturer.
In a Monday note to investors, Williams Trading analyst Sam Poser called out reports that Nike “may be planning to license out its entire golf business” and part ways with Woods, Mcilroy, Scheffler and Koepka.
“The changes will likely remove Nike’s presence in golf, and will do long term damage to the brand,” Poser wrote.
Nike golf shoes have been a standout in the sector since the early aughts, in large part due to Woods and his signature line that put the Swoosh’s golf line on the map. This ultimately helped bring on recreational players and modern-day pros like Mcllroy.
In April 2022, Woods ignited controversy when he was spotted wearing a pair of all-black FootJoy shoes instead of his expected Nike branding. At the time, Nike said it was “delighted to see Tiger back on the course” a year after he was hospitalized following a serious car accident.
“His story continues to transcend sport and inspire us all,” Nike said in a statement that was emailed to FN. “As he continues his return, we will work with him to meet his new needs.”
Woods noted at the time that he needed different footwear to cater to his recent injuries.
“Nike’s been fantastic over the years of providing me with equipment and we have worked, we’ve been working on trying to find something to allow me to do this and swing again,” he said to reporters. “We’re still going to continue doing it and hopefully we’ll have something soon.”
In addition to its potential golf pullback, Nike also appears to have undergone layoffs in the weeks leading up to its Q2 earnings report. In November, some Nike employees took to LinkedIn to share that they have recently been laid off from the company as the Swoosh unveils major C-suite changes across design and marketing. According to the posts, the cuts occurred across talent and product management teams as well as in contracted roles like copywriting. Nike did not return FN’s requests for comment.
“The expense cuts mentioned above may be a saving grace for earnings, but not necessarily for the long term value of the brand or the stock,” Poser wrote.
In February, Nike’s global chief digital information officer Ratnakar Lavu — then the company’s top technology official — left the company. Shortly after, several Nike employees shared similar messages on LinkedIn regarding a wave of cuts across Nike’s talent teams.
In the most recent quarter, Nike reported Q1 revenues of $12.9 billion, up 2 percent compared to the prior year. Nike reports second quarter earnings on Dec. 21 after the markets close.