Even with U.S. sales lagging and recent management issues, Nike Inc. is more valuable than any other apparel brand, according to an annual study.
Independent business strategy consultant Brand Finance said Nike topped the list of the world’s most valuable apparel brands, despite a “significant drop” of 12 percent in its brand value to $28 billion over the last year, stemming from challenges in its North American market and now, “challenges connected to inappropriate behavior among executives and managers.”
Nike’s chief executive officer Mark Parker on Thursday briefly addressed last week’s abrupt departure of brand president Trevor Edwards while discussing better-than-expected quarterly results — still showing a continued sales decline in North America offset by major growth elsewhere — admitting the company had become aware of “some behavioral issues inconsistent with Nike’s values of inclusivity, respect and empowerment.” Specifics have not been disclosed and Edwards is set to remain in a consulting position until August.
Brand Finance said in its report that a “failure to effectively address these issues may result in a further decrease of the brand’s strength and value next year,” while noting that rival Adidas, which came in fourth on the list, behind H&M at $19 billion and Zara at 17.5 billion, saw its brand value jump 41 percent to $14.3 billion as it grew rapidly in athletic and casualwear categories.
“The top four brands in apparel are here to stay,” Richard Haigh, managing director of Brand Finance, said. “However, steep competition to maximize on the sporting apparel trend, coupled with increased choice and information for the consumer could threaten Nike’s future position in the rankings. This year, Adidas’ brand value is further encroaching on the incumbent champion, which has suffered significant loss to brand value.”
He also noted that the increase of “empowerment” among consumers, mainly through social media, “is having a widespread impact on the industry.” H&M’s brand value fell 1 percent, with Brand Finance citing the online uproar over an online listing of a children’s hoodie with an allegedly “racist” photo and then the company’s decision to preemptively sue a graffiti artist whose work showed up in an advert.
Hermès saw its value jump 36 percent to $11.3 billion, leapfrogging over Vuitton, which stayed in sixth place despite its value increasing 17 percent to $10.5 billion. Cartier did the same, growing 45 percent (the most of any of the 50 brands on the list) to $9.8 billion to jump to seventh place over Gucci, where brand value grew 25 percent to $8.6 billion, putting it in eighth place.
Meanwhile, Under Armour, which is also struggling with sales in North America after a significant period of growth and going through an internal restructuring to address it, fell the most of any brand. It’s now in nineteenth place with a 36 percent drop in value to $3.8 billion from twelfth place last year.
“The brand’s strengths had traditionally revolved around clever product placement and celebrity endorsements, especially with American basketball superstar Stephen Curry,” Brand Finance said in its report. “Unfortunately for Under Armour, it appears that its highly regarded expertise in athletic clothing has not been recognized across the rest of its product range.”
Brand Finance puts a brand’s value as equal to a “net economic benefit” the owner of the brand would realize should they license it, based on what proportion of a company’s revenue is driven by the brand.
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