NEW YORK — Nike on Wednesday signed a deal to buy Converse, thereby strengthening its position among athletic brands, such as Fila and Adidas, which have been building label portfolios.
This story first appeared in the July 10, 2003 issue of WWD. Subscribe Today.
The $10.7 billion Beaverton, Ore.-based company is paying about $305 million for Converse, not including an undisclosed amount of debt. Nike and Converse executives could not be reached for comment. Fila owns Enyce and Ciesse Piumini and Adidas-Salomon owns TaylorMade, Arc’teryx, Cliché, Bonfire and Maxfli.
Former professional basketball star Chuck Taylor helped put Converse on the map in the Twenties by wearing their high-top canvas sneakers. However, the North Reading, Mass.-based company fell on tough times in recent years. In January of 2001, Converse filed for bankruptcy, but a group of private investors later bought the company and tried to revive it.
Converse sells its products in over 12,000 athletic specialty, sporting goods, department and national chain stores in the U.S. and Canada, and through 42 licensees in over 100 countries. Last year, Converse’s sales totaled $205 million. Worldwide wholesale volume for all products bearing the Converse brand, excluding Japan, were approximately $390 million.
“Converse is one of the strongest footwear brands in the world with great heritage and a long history of success,” Tom Clarke, Nike’s president of new business ventures, said in a statement. “Converse’s management has done an excellent job of reestablishing this beloved brand with consumers and we look forward to supporting them as they continue to implement their growth strategy.”
Like its competitors, Nike has been on the move to broaden its array of brands. Earlier this year, Nike made a bid for Fila, which was rejected. Aware that today’s fickle consumers — especially Generation Y — are maxxed out on big brands, Nike has found a few alternatives.
To ease into the action sports business last year, Nike bought Hurley International, a $70 million operation based in Costa Mesa, Calif. Industry sources pegged the purchase price just north of $100 million. Earlier this year, Nike provided the financial backing for Savier, a start-up skate company also based in Portland.
As part of the deal, Nike gives Savier access to footwear, material, and production technologies. Sources said Nike tried to keep its tie to Savier undercover to avoid putting off marketing savvy shoppers, but word spread quickly in the skate community.
Nike also owns Cole-Haan footwear and Bauer Nike hockey.
John Varvatos helped rejuvenate Converse by designing a pair of leather high-tops for the brand. Converse now stands to benefit from the popularity of old-school labels.
In 2000, Converse had a brief run in women’s apparel through a licensing deal with Fashion Options.
Converse had not produced women’s activewear since its license with Active Apparel Group expired in 1998. At its peak, that line reached about $5 million in sales. But then, the brand lost weight with consumers, possibly because Converse was too restrictive with the use of its logos on apparel.
Also, coordinating footwear was lacking since women’s footwear consisted basically of men’s styles sized down for women, one executive said.