Nike’s Nightmare, YNAP Deal Murmurs & Heiress Fashion Escapades

Hi, welcome back to Line Sheet. I’m living the perfect Los Angeles life: On Tuesday, I ran into my long-lost buddy Rachel Antonoff at Stir Crazy, and my personal style icon Nicole Cari at Osteria Mozza. (Who doesn’t love a Nancy Silverton restaurant!) Then last night, I went to see Bruce Hornsby at the Troubadour. (The 65-and-over crowd was going for it.) I am only in town for a few more weeks before I leave for months of fashion shows and book events, so let’s get together before I’m off and running. Today, I’ve got updates on the YNAP sitch, the Tom Ford sitch, and the Fforme sitch. (Yes, I do believe one of the F’s is silent.) I also make a virtual pilgrimage up to Portland to dig into something we haven’t discussed before: the Nike sitch. (I’m actually going to Portland for real in a few weeks, so… let’s hang.) 🚨🚨 Programming note: Tomorrow on Fashion People, my guest is Hollywood’s favorite jewelry designer, Irene Neuwirth. We talk about what it was like growing up between the Venice canals and the hills of Brentwood, how to get celebrities to wear your jewelry on the red carpet without paying them, why Christy Rilling and Ruth Rogers are important, K9 Jets, and why horses are cool. I’m dazzled by Irene’s work and genuinely love being around her, and you will, too. Listen here. P.S., tomorrow is also my birthday, and all I want in this life is for you to subscribe to Puck. If you’ve already done that, preorder my book. Or, why not both?! You won’t regret it. Mentioned in this issue: Nike, Massimo Giunco, Richemont, Yoox Net-a-Porter, Alison Loehnis, Tom Ford, Haider Ackermann, Fforme, Paul Helbers, Frances Howie, Joey Laurenti, John Donahoe, Phil Knight, Bernard Arnault, Lululemon, Hokas, Michael Kors, Vuori, Wieden+Kennedy, LVMH, Blumarine, and many more…

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Will Alison Loehnis get her happy ending?: I’m hearing from multiple sources that Richemont is in the final steps of firming up a deal to sell Yoox Net-a-Porter, which will be announced in September. (Potential acquirers included private equity firms like Bain Capital, but there was also talk of some sort of strategic setup with Mytheresa.) A new legal team has already been built for the group, separate from Richemont. Whether Yoox itself—the near-useless resale site—will simply die, I do not know. Anyway, Richemont employees are wondering when their discounts are going to be revoked. Get shopping, people!
Let the Tom Ford speculation commence: Last week, I was told by people close to the situation that a replacement for creative director Peter Hawkings has been chosen and that person is in the process of being signed, if they have not been signed already. Haider Ackermann, the former Berluti creative director, is the very sexy name being batted around at present. Ackermann, who has reintegrated himself into the fashion industry scene over the past year or so (going out and such), was named the first creative director of Canada Goose a number of months ago. He designs sultry, elegant garments for both men and women, and would bring a new shimmer to Tom Ford without losing the essence. More soon, for sure.
What happened at Fforme?: I’ve gotten many requests to cover the exit of esteemed designer Paul Helbers from Fforme. Here’s my view: Helbers is incredibly skilled, with years of experience at prestigious houses including Louis Vuitton and The Row on his C.V. He’s been around and knows everyone. But while the clothes were beautifully constructed, they lacked context. I was impressed by the progression over the first few seasons, but not yet convinced that Fforme needed to exist. That may or may not be Helbers’ fault, but it doesn’t matter: Founder Nina Khosla, the Silicon Valley heiress, calls the shots, and she’s chosen C.E.O. Joey Laurenti to run the show. (Khosla’s original partner, Laura Vasquez, left soon after co-founding the brand.)After growing up in showrooms (Opening Ceremony and then his own), Laurenti’s expertise, whether intentional or not, has become managing small businesses supported by very wealthy women (first, Nancy Marks’ Sies Marjan, then Carly Mark’s Puppets and Puppets, and now Khosla’s Fforme). My sense is that the collection is selling fairly well at retail, and that there was some disconnect between Helbers, who is based in Europe, and Laurenti, who is in New York. (Khosla, the daughter of the famous venture capitalist Vinod Khosla, is in Northern California.) Perhaps this new designer, Frances Howie, previously the design director of Stella McCartney, will do the trick for Fforme. (She’ll be working from New York, for one thing.) I can’t recall a time when a brand backed by an independently wealthy person really stuck—usually they get bored, or distracted, and eventually sick of burning so much money. But I also believe that more wealthy people should invest in fashion (why not?) and hope this works out. I also wish Helbers the best of luck with whatever is next for him.

Sneakerheadaches

Nike’s distribution snafu covers over a far more significant mistake—a couple of them, really.

LAUREN SHERMAN

Earlier this week, former Nike marketing executive Massimo Giunco, who describes himself as a “CMO/Brand Strategist/Human Being” on LinkedIn, posted a 3,000-word diatribe that attempted to outline the problems facing his erstwhile employer of nearly 22 years. Nike, one of the most recognizable brands in the world, has lost 31 percent of its market value over the past year. Earlier this summer, the company announced that it had missed analyst expectations for the recently closed quarter, and projected a 10 percent revenue dip for the next quarter—a situation Giunco described as an “epic saga of value destruction.”Wall Street analysts have been pessimistic about the company for more than six months, but it wasn’t until Giunco posted his LinkedIn screed that Nike’s woes went mainstream. In Beaverton, Oregon, the home of Nike’s world headquarters, “everybody’s freaking out” over the Giunco post, I hear from those on the ground. But they’re also asking how John Donahoe, who replaced longtime C.E.O. Mark Parker in 2020, is still in his job.

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The trouble began after Donahoe, the former of C.E.O. of Bain and eBay, then ServiceNow, the cloud computing company, decided to end Nike’s relationships with several wholesale partners—including Zappos, DSW, and Dillards—to focus on its direct-to-consumer business. Theoretically, this made sense. On some level, Nike is a luxury brand, like Apple or Dior, and it should be sold direct for all the obvious reasons—relentless focus on the product and narrative, scarcity, vertical integration, harvesting data, etcetera.But unlike the luxury market, where multibrand retail continues to contract, outlets like Dick’s Sporting Goods or Zappos offer an essential and convenient service. If you stop selling via Zappos, for example, it’s not like all those sales are suddenly going to funnel to Nike.com. (Beauty works similarly—look at the dominance of Sephora and Ulta.) By pulling back from normie wholesalers, Nike made room for Hoka and On, among others, to snag market share. Deckers, which owns Hoka, has seen its stock rise 73 percent over the past year. On’s shares are up 18 percent. In retrospect, Nike implemented the strategy too fast—in two big tranches, instead of slowly over a decade. “They clearly didn’t think through which retailers they were going to drop,” Matt Powell, a longtime retail analyst and the ultimate sneaker market authority, told me earlier this week when I called him to talk about Giunco’s post. Donahoe has since walked back that approach, and is re-entering certain wholesale partnerships, such as the one with DSW.

The Bigger Problem

Nike’s distribution snafu covers over a far more significant mistake—a couple of them, really. The company was founded, of course, by Phil Knight, the original sneakerhead, whose aptitude for popular culture and marketing made him one of the 50 richest men on earth, and whose image still looms large over the company. (Ben Affleck plays him in the 2023 film he also directed, Air.) When Knight eventually stepped down as C.E.O., in 2004, he was replaced by Bill Perez, an MBA type who had successfully run S.C. Johnson & Son, the manufacturer of Glade and Ziplock. It wasn’t a good fit, and Perez was out within two years—off to run the Wrigley chewing gum company. He was replaced by Mark Parker, a former collegiate runner (like Knight) who had joined the company as a sneaker designer in the late ’70s. Parker steered Nike for the next 14 years almost as a Knight surrogate—a guy with an umbilical connection to the founder and his vision.When Donahoe joined, he implemented a subtle but critical reorganization of that vision. In an effort to compete more directly with brands like Lululemon and Vuori, he broke the company free of its sport-based silos, and instead divided the business by gender. There was a strategic wisdom behind the maneuver—the women’s category represents a massive opportunity for the company—but it overlooked the reality that Nike is a performance brand. Knight grew the company by creating domain expertise in individual fields: after running it was basketball, cross-training, tennis, outdoors sports, then baseball, then golf, football, hockey, skate, and so on. Splitting the business by gender emphasized lifestyle rather than sport—its bread and butter. This manifested in ways large and small. For years, Nike and its legendary advertising agency, Wieden+Kennedy, were marketing to teenagers, many of whom considered themselves serious athletes, in the hopes that they would hook them for life. Now, they are marketing to the people those 16-year-olds have become after their dreams have crested. The new Olympics campaign, heralded by some as a return to form and lambasted by others, states, “Winning Isn’t for Everyone.” Uh. But isn’t Nike about being a winner?

This all snakes back to a concerning shift in company culture, which I am convinced is the root cause of Nike’s problems, and why Donahoe may not be the right person to lead Nike into the future. By the time Nike’s influence peaked in the late 2010s, its corporate culture was legitimately toxic. (I’m not talking Business Insider toxic; I’m talking New York Times-investigation toxic.) It’s not only about sexism—in some ways, the culture was also intoxicating. Over the years, I’ve observed many Nike executives struggling to succeed outside of that ecosystem, partly because their jobs at Nike were so specialized that they actually did not know how to operate in another organization.Employees were often managed in a unique way. One former executive called it the “love ’em up” method, or the belief that constant positive reinforcement creates fertile ground for success. Those who performed better when they received praise thrived. If praise makes you lazy, you wouldn’t last. That’s why I was so intrigued when Giunco mentioned in his LinkedIn rant that much of the Donahoe-era restructuring was advised by McKinsey, which is paid millions to decidedly not love up employee bases. Now, though, Donahoe has little choice but to build everyone back up—and fast. He’s asked for a do-over on direct-to-consumer and gendered strategies. He’s also lured back some longtime executives, like current C.M.O. Nicole Hubbard Graham, who worked at the company for 18 years prior to founding a creative agency in 2021. And he’s tackling the innovation problem, moving up the launch of the new Pegasus sneaker by one year as a message to the market that Nike is still with it. But check the Nike tag on Highsnobiety or Hypebeast, and you’ll find news of dozens of sneaker drops offering minor tweaks on old styles—a new upper there, a novel colorway there. Boring. Then there’s the stagnant collaboration strategy, which does nothing for the bottom line at a company like Nike. There’s also extreme discounting and promotion that Donahoe resorted to in order to keep sales fairly steady. Pull back on that, and sales will dip even further. There’s plenty of quantitative data proving Nike’s slip, but all you have to do is look at the ground. It hit me at the airport earlier this year, when I was heading to Hawaii from Los Angeles, an athleisure-heavy route. I was surprised to see that most of the people in the boarding line were not wearing Nikes, but a mix of Hokas and Ons, Adidas, Brooks, Saucony, and New Balance. Now, it’s anyone’s game.

What I’m Reading… And Listening To…

Three words to live by, according to Michael Kors: wheels, water, and wings. I loved his conversation with Paul Cavaco and Cayli Cavaco Reck, which gives you a real sense of why he’s been so successful and really, what it takes for anyone to succeed in this business. [Under the Cover]Talking about the rocket ship man makes me tired and want to cry. [Fashion Network] Here’s a ditty from back when Nike was really, very clever about marketing. [Twitter] Alison and Emilia give some great advice regarding button-ups on this pod, which I found to be a very soothing listen. [Solicited Advice] Dear Missoni: Hire Liana to consult. [Neverworns] Edit! [Whit Stillman’s Twitter] LVMH is gonna be as big a name as McDonald’s once this is all over! [Marketing Interactive] I wish David Koma, the new creative director of Blumarine, all the success in the world. [Vogue] Bernard Arnault wanted to buy a hotel in Venice, but was outbid. [Bloomberg]

And finally… has the man bag gone mainstream?Until next week, Lauren

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