Nike and Louis Vuitton, Struggling with 'Poor Performance,' Aim for a Turnaround Here [Paris Olympics]

Nike and LVMH Struggle with Sales and Stock Decline
Promoting Key Shoes through Marathon Star Sponsorship
Attracting Attention with Luxury Torch Case and Medal Production

With the opening of the Paris Olympics just around the corner, the excitement is not limited to the athletes and spectators participating in the games. It is also an opportunity for fashion companies responsible for producing athletes' team uniforms, equipment, and medals to showcase their presence. At the center of this are Nike, the world's largest sports brand, and Louis Vuitton Mo?t Hennessy (LVMH), the world's largest luxury group. These companies are in urgent need of a turnaround amid ongoing sales growth slowdowns and stock price declines.

Nike's flagship product prominently featured in this Olympics is, as expected, shoes. In April, Nike announced its sponsorship of Kenya's marathon star Eliud Kipchoge and Britain's sprinter Dina Asher-Smith for the Paris Olympics. Kipchoge, in particular, is the defending champion who won gold medals in the marathon events at both the 2016 Rio de Janeiro Olympics and the 2020 Tokyo Olympics. Major foreign media outlets have predicted that Nike's ambitious 'Alphafly 3' marathon shoes will attract global attention through the Olympics.

Nike's 'Alphafly 3' marathon shoes released targeting the Paris Olympics [Photo by Nike]

For Nike, which has been experiencing a decline in running shoe sales, the success of this marathon shoe model is crucial. Nike's sales for the fourth quarter of fiscal year 2024 (March to May) were approximately $12.6 billion, down nearly 2% from the same period last year. This also fell short of market expectations (around $12.9 billion). Sales through websites, applications (apps), and offline stores decreased by 8%. Total sales for fiscal year 2024 increased by only 1% year-over-year to $51.4 billion. The Wall Street Journal (WSJ) described this as "the worst performance in 20 years, excluding the first year of the COVID-19 pandemic and the 2008-2009 financial crisis."

Particularly highlighted was the 4% drop in shoe sales, which account for 68% of the company's revenue. This decline is attributed not only to consumers tightening their wallets due to high inflation but also to fierce competition from brands like Hoka One One, Asics, On Running, and Lululemon. Hoka, a running shoe brand owned by Deckers, saw its sales grow by 34% in the fourth quarter of this year. Nike's stock price has plummeted 31% since the beginning of this year, contrasting sharply with the S&P 500's rise of over 16% during the same period.

John Donahoe, Nike's CEO, emphasized, "The Paris Olympics provide a pinnacle moment to showcase our sports vision to the world," adding, "We will create moments that customers won't want to miss through groundbreaking innovation and brand campaigns." However, skepticism remains. Hernan Haruvy, a marketing professor at McGill University, pointed out, "Using the Olympics to expand brand awareness is meaningful for smaller brands like Lululemon, which sponsors the Canadian team’s equipment, but it is unlikely to be effective for companies like Nike that already have universal brand recognition." Nike is sponsoring Team USA as well as South Korea's breaking dance team at the Paris Olympics.

LVMH is in a similar position, needing a turnaround as its recent sales growth has stalled. LVMH's sales in the second quarter reached €20.98 billion (approximately 31 trillion KRW), growing only 1% year-over-year. This contrasts sharply with a 21% sales growth rate just one year ago. The biggest impact came from Chinese consumers, major players in the luxury market, who have tightened their spending due to a real estate market downturn. Additionally, the increase in Chinese tourists traveling to Japan to take advantage of the 'yen discount' on luxury goods has led to deferred luxury consumption, negatively affecting results. In the second quarter, LVMH's sales in Asia, excluding Japan, fell 14% year-over-year.

[Image source=AP Yonhap News]

In response, LVMH is investing €150 million (approximately 220 billion KRW) in the Paris Olympics, putting everything on the line. Bernard Arnault, Chairman of LVMH, stated, "The Olympics are held in Paris, and LVMH represents the image of France," emphasizing, "We cannot miss the opportunity to be part of the Olympics." LVMH’s Berluti was responsible for producing the French team’s opening ceremony uniforms, and Mo?t Hennessy provided wine and liquor services for VIP events. Additionally, Chaumet designed the medals, while Louis Vuitton created the cases and leather trays to hold the medals.

Antoine Arnault, Bernard Arnault’s eldest son and LVMH’s Head of Environment and Image, explained the Paris Olympics promotional strategy, saying, "We tried to find ways beyond simply signing checks and putting up billboards on the street." Luca Solca, a luxury goods analyst at investment bank Bernstein, described LVMH’s Olympic sponsorship strategy as "an unprecedented level for a luxury brand."

This content was produced with the assistance of AI translation services.