When Nike CEO Elliott Hill started talking about Converse he made it obvious the plan is to turn the brand around now that it’s acquired by Nike.
According to reports, the latest 10-Q filing from the company makes you wonder how they really plan to do that.
Over the holiday break Nike dropped their latest 10-Q online. For anyone who doesn’t mess with this stuff these filings show how the company is doing money-wise every quarter and what risks are hanging over them. It’s the behind-the-scenes look you don’t get from the fancy investor calls.
Hill said on the earnings call in December that the brand is still taking hits everywhere. Sales are down in all categories and growth is crawling along. But the number that really made me stop was the marketing budget.
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Converse’s demand creation, which is just another way of saying marketing, dropped forty-four percent in the second quarter compared to last year. That’s a fall from forty-three million to twenty-four million. For Nike, a company that usually flexes hard in marketing, that is wild.
Marketing is how Nike makes people care, how they turn shoes into something people want to rock. They know how to make a product feel necessary and get noticed. Cutting almost half the marketing budget for a brand they say they want to save feels like a weird strategy.
This isn’t just about ads or campaigns. The cut affects skateboarding too.
Skaters who are part of the Converse team could see fewer resources, less support for events, and smaller budgets for promotions.
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In the skate industry, credibility and presence matter. If Converse isn’t investing in skaters, it could lose ground to other brands that are still backing the community, events, and grassroots support.
How does Converse come back if they are spending way less to make people notice them? Are they cooking up some other plan or is this just temporary? It’s hard to see how slashing promotion helps a brand that is already struggling.
Nike has been known to play big in marketing and get people hyped. Seeing them pull back on Converse doesn’t match the story they are telling investors. The numbers are speaking a different language and now it’s a wait-and-see game to see if the brand can bounce back while running on less fuel.
Right now Converse is in the red and the strategy looks shaky. The next few months will show if Nike can actually turn the brand around or if it’s just talk while the marketing budget keeps getting cut.