The Shake-Ups

Tar­iffs took cen­ter stage, while ath­letic firms' cul­ture is­sues were in the spot­light

Footwear News - - CONTENTS - By Sheena But­ler-Young

From fe­male Nike staffers cir­cu­lat­ing an in­ter­nal sur­vey in hopes of boost­ing gen­der eq­uity to ma­jor brands pulling the Chap­ter 11 trig­ger, 2018 marked a year of tough but mean­ing­ful change across the shoe in­dus­try. ➵ As dig­i­tal in­te­gra­tion be­came the new nor­mal and earn­ings re­ports ev­i­denced that pre­vi­ously chal­lenged tra­di­tional re­tail­ers — Macy’s, DSW and Kohl’s among them — had found their om­nichan­nel stride, footwear’s key play­ers en­dured dis­rup­tion of a new va­ri­ety. ➵ The down­fall of mega big-screen pro­ducer Har­vey We­in­stein in late 2017 cre­ated a water­shed mo­ment for Hol­ly­wood that would, in ef­fect, give birth to #MeToo as well as the Time’s Up ini­tia­tive. As ex­pected, the domino ef­fect would hit a range of in­dus­tries in 2018. ➵ In March, the move­ment — which em­bold­ened women to speak out about in­stances of in­equity, ha­rass­ment and mis­treat­ment at work — took aim at footwear’s ath­letic sec­tor.

Nike, Un­der Ar­mour and Adi­das Grap­ple With Cul­tural Chal­lenges

Three months into 2018, news cir­cu­lated that two of Nike’s most pow­er­ful ex­ec­u­tives had abruptly de­parted the brand. As spec­u­la­tion built across the in­dus­try, an April ex­posé by The New York Times pur­ported in­ter­nal be­hav­ior chal­lenges at the com­pany, in­clud­ing a “boys club” cul­ture that left fe­male em­ploy­ees feel­ing dis­en­fran­chised. (The rev­e­la­tions re­port­edly fol­lowed the cir­cu­la­tion of a sur­vey among those women, who then routed the feed­back to CEO Mark Parker.)

All in all, the con­tro­versy would see about a dozen high-pro­file ex­ec­u­tive depar­tures at the Swoosh, which em­ploys around 70,000 staffers. For its part, Nike ad­mit­ted that it had fallen short in pro­mot­ing women and peo­ple of color, and in July, it an­nounced a plan to raise salaries for 10 per­cent of its work­force to help cor­rect pay in­equity. (Nike also won ac­claim when it casted po­lar­iz­ing ex-foot­ball player Colin Kaeper­nick — who took a knee dur­ing the na­tional an­them at games to protest racial in­jus­tice — in its “Just Do It” cam­paign in Septem­ber. See page 18 for more.) Still, at least two law­suits and one com­plaint al­leg­ing race and gen­der dis­crim­i­na­tion with Ore­gon’s Bu­reau of La­bor and In­dus­tries would re­sult from the ex­ec­u­tive depar­tures fall­out.

In Novem­ber, fol­low­ing a re­port in The Wall Street Jour­nal that made known a years­long prac­tice of ex­pens­ing vis­its to strip clubs on cor­po­rate cards, Un­der Ar­mour had its turn un­der the #MeToo mi­cro­scope.

In a let­ter ob­tained by FN, CEO Kevin Plank and pres­i­dent Pa­trik Frisk told em­ploy­ees that the WSJ re­port — which also al­leged that top male ex­ec­u­tives be­haved in­ap­pro­pri­ately with fe­male sub­or­di­nates and that women were in­vited to an

an­nual cor­po­rate event “based on their at­trac­tive­ness to ap­peal to male guests” — was “tough to read.” Plank fur­ther pledged that the com­pany “can and will do bet­ter.”

That same month, FN ob­tained a copy of a let­ter ad­dressed to Adi­das North Amer­ica pres­i­dent Zion Arm­strong.

The memo, pur­port­ing to rep­re­sent the views of mi­nori­ties at the com­pany, urged the new leader to “di­ver­sify rep­re­sen­ta­tion” in the firm’s up­per ranks, al­leg­ing racial and eth­nic ten­sions at the Ger­many-based brand. Speak­ing to FN, sev­eral mi­nor­ity em­ploy­ees at the firm cited what they see as cul­tural chal­lenges at the com­pany, which had pre­vi­ously faced crit­i­cism for main­tain­ing its part­ner­ship with Kanye West af­ter he made con­tro­ver­sial com­ments about slav­ery.

In re­sponse to the ac­cu­sa­tions about its treat­ment of mi­nor­ity em­ploy­ees, Adi­das told FN in a state­ment that it is “com­mit­ted to main­tain­ing a re­spect­ful and in­clu­sive en­vi­ron­ment for all Adi­das em­ploy­ees around the world. It’s cru­cial that we have and sup­port a di­verse work­force that rep­re­sents a va­ri­ety of ideas, strengths, in­ter­ests and cul­tural back­grounds.”

Tar­iff Tales

A global back and forth — ini­ti­ated by Pres­i­dent Don­ald Trump in March — has seen the U.S. slap tar­iffs on $250 bil­lion in Chi­nese im­ports this year, while Bei­jing re­tal­i­ated with levies on $110 bil­lion of Amer­i­can goods. Al­though a 90-day fi­nan­cial cease­fire was an­nounced this month — fol­low­ing a meet­ing be­tween Trump and Chi­nese Pres­i­dent Xi Jin­ping — it has not done much to quell the anx­i­eties of re­tail­ers, who have said they’re wait­ing for the next shoe to drop.

PVH chair­man and CEO Manny Chirico, for ex­am­ple, warned in Novem­ber that the global cloth­ing busi­ness — par­ent to Tommy Hil­figer and Calvin Klein — would have to raise prices to make up for the mount­ing tar­iffs. Mean­while, re­tail be­he­moth Wal­mart and depart­ment store chain J.C. Pen­ney ex­pressed their con­cerns in let­ters ad­dressed to U.S. Trade Rep­re­sen­ta­tive Robert Lighthizer in Septem­ber. “Ei­ther con­sumers will

“Ei­ther con­sumers will pay more, sup­pli­ers will re­ceive less ... or con­sumers will buy fewer prod­ucts or forgo pur­chases al­to­gether.”

pay more, sup­pli­ers will re­ceive less, re­tail mar­gins will be lower or con­sumers will buy fewer prod­ucts or forgo pur­chases al­to­gether,” Wal­mart’s memo read.

Gap, Co­lum­bia Sportswear, Vans and Steve Mad­den have also in­di­cated a need to drive up costs due to tar­iffs — with the lat­ter even look­ing to shift pro­duc­tion to Cam­bo­dia.

The stock mar­ket has also borne the pres­sures of mount­ing trade war fears: The Dow, Nas­daq and S&P 500 re­versed their 2018 gains in re­cent months as Trump fired off tweets re­fer­ring to him­self as “Tar­iff Man.”

Bank­rupt­cies Rage On

In pre­vi­ous years, footwear com­pa­nies — save Pay­less Shoe­source in 2017 — were largely spared from the wave of Chap­ter 11 fil­ings. But 2018 was the year the shoe in­dus­try joined the fray, with Char­lotte Olympia, The Walk­ing Co., Nine West Hold­ings Inc. and The Rock­port Group among the com­pa­nies to seek bank­ruptcy court pro­tec­tion.

In Fe­bru­ary, a decade af­ter Bri­tish de­signer Char­lotte Del­lal launched her whim­si­cal footwear la­bel Char­lotte Olympia, the com­pany’s U.S. hold­ing arm, Pink­toe Taran­tula Ltd., filed a Chap­ter 11 pe­ti­tion in Delaware. Still, a spokesper­son for the brand later told FN that de­spite shut­ter­ing its re­tail stores in the U.S., Char­lotte Olympia’s whole­sale busi­ness re­mains in­tact.

Fol­low­ing months of spec­u­la­tion over its fi­nan­cial strug­gles re­sult­ing from a debt-laden pri­vate eq­uity buy­out, Nine West Hold­ings Inc. in April filed for pro­tec­tion. Two months later, it sold off the Nine West and Ban­dolino brands to Authen­tic Brands Group for $340 mil­lion at a bank­ruptcy auc­tion.

In March, com­fort footwear maker The Walk­ing Co. took its fi­nan­cial woes to bank­ruptcy court for the sec­ond time in 10 years, cit­ing the com­pany’s strug­gle to de­velop its brand be­tween 2013 and 2017 amid the con­sumer shift to on­line spend­ing.

Rock­port, home to the Aravon, Dun­ham, Rock­port and Cobb Hill col­lec­tions, filed for bank­ruptcy in May, blam­ing — among other things — a timely and costly sep­a­ra­tion from pre­vi­ous owner Adi­das. When it filed, the firm noted that it en­tered into an as­set pur­chase agree­ment with CB Marathon Opco LLC, an af­fil­i­ate of Charles­bank Cap­i­tal Part­ners LLC, to ac­quire vir­tu­ally all of its as­sets.

On the re­tail side, Sears Hold­ings Corp. — owner of the Kmart and Sears chains — and BonTon Stores Inc. also sub­mit­ted bank­ruptcy court dec­la­ra­tions in 2018.

Nike CEO Mark Parker

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.