China And ‘The Last Dance’ Propel Nike’s Jordan Brand To Record $3.6 Billion In Revenue

Nike

NKE
reported fourth quarter and full-year results on Thursday that highlighted the negative impact of the coronavirus on the sportswear giant. Revenue plummeted 38% for the quarter, due to closures of physical stores around the globe. It triggered a full-year revenue decline for six of the company’s seven main categories; soccer (-17%), running (-15%) and training (-13%) had the biggest drops versus last year.

The one exception: the Jordan Brand, where revenue soared 15% for the year to $3.6 billion (Nike does not break down Jordan revenue by quarter). New CEO John Donahoe highlighted the brand in the company’s earnings call, saying it “resonated deeply” in the quarter with the airing of the 10-part documentary, The Last Dance, on ESPN when the rest of the sports world was shuttered. Jordan revenue grew more than 50% in China for the fiscal year to almost $1 billion.

“Women’s has played a key role in Jordan’s growth, and we see significant opportunity for Jordan to achieve even greater scale, as we create more products for women, expand lifestyle offerings, and grow the business internationally,” said Donahoe.

The Jordan Brand and its namesake, Michael Jordan, pledged $100 million this month over 10 years to organizations dedicated to racial equality, social justice and education access. Both parties are contributing $50 million. It is one of the largest donations made in response to George Floyd’s death.

“Black lives matter. This isn’t a controversial statement. Until the ingrained racism that allows our country’s institutions to fail is completely eradicated, we will remain committed to protecting and improving the lives of black people,” per the statement announcing the pledge.

Michael Jordan has been part of the Nike family since the brand signed him in 1984 when he was drafted by the Chicago Bulls. Jordan’s charisma and brilliance on the court, including six NBA titles, combined with Nike’s marketing prowess, turned MJ into a global phenomenon and the world’s richest athlete with a net worth of $2.1 billion.

Nike has paid Jordan an estimated $1.3 billion since 1984, including $130 million last year by Forbes’ count. His original five-year deal paid $500,000 annually, plus royalties.

The Swoosh has a monopoly in the basketball sneaker business. Its share of the performance basketball market, including the Jordan Brand, was 86% last year, according to market research firm NPD. Nike was even more dominant in the lifestyle basketball category, with a 96% share.

More than 75% of NBA players wore Nike or Jordan sneakers during the 2019-20 season, according to shoe database site Baller Shoes DB. The top nine models were all made by Nike. Jordan’s current roster of endorsement stars includes Russell Westbrook, Zion Williamson and Chris Paul.

The Jordan Brand has expanded from its basketball roots into other sports with its sponsorships, including a handful of NCAA football teams like the University of Michigan and University of Florida, as well as French soccer club Paris Saint-Germain.

The Last Dance was originally set for a late June release, but ESPN moved up the release with no live sports on TV. It produced record ratings for a documentary with an average of 5.6 million people watching each episode.

Nike’s digital revenue rose 75% in the fourth quarter, but it could not offset the store closures. Donahoe said almost all of its stores in Greater China were open by mid-May, and currently 85% of stores in North America were as well. Roughly 90% of stores were open in the company’s Europe, Middle East and Asia segment.

Nike’s stock is up 21% for the year, but was down 3% ahead of Friday’s open.