.SWOOSH by Nike this week launched its first digital sneaker. The platforms first launch of a Polygon-based OF1 (Our Force 1) can be described as discombobulated at best with Nike clearly working through technical kinks combined with what appears to be less robust demand than anticipated for the OF1.
I’m not an expert on the digital product space, but I don’t need to be to understand the challenges that come with building out a first-time platform from scratch. While .SWOOSH can lean on RTFKT (which you can read more about below) for guidance, it was still having to construct an online forum for selling and storing products built on a blockchain. And though sell-through hasn’t been the best, the point of .SWOOSH is as much selling digital products as it is engaging with Gen Alpha customers (all children born in or after 2010).
As for details on the launch, . SWOOSH is still in Beta with a membership of around 350,000. Last week, the platform air-dropped select Beta members 106,453 OF1 (Our Force 1) digital posters, which are required to purchase an OF1 NFT ($19.82) during early access. Users can buy one of two UF1 boxes, which will open at a date tba.
After delaying the early access launch, the site crashed multiple times on day one, which the team claims was caused by a huge influx of traffic. And yet, in a Twitter Spaces room on day three (May 17, 2023) of the early access launch, the .SWOOSH team said it had sold just 16.5K OF1 posters out of a total of 106,453.
Numbers reflect a 15% sell-through rate, which is great for real sneakers but is light for an NFT, especially a first time project for a massive global brand, which could be why the deadline for early access was extended three times. The .SWOOSH team said it needed to work out kinks and provide all poster holders a fair chance, but several members griped on social media that the platform was trying to sell through as many OF1s during early access as possible, so the general access launch would sell out quickly.
.SWOOSH on Instagram: “The Our Force 1 General Access sale begins Wednesday (5/24) at 9 AM PDT 📆”
May 22, 2023
As of today, the general access sale of 83K OF1s will now begin on May 24th. Underscoring lackluster demand, the .SWOOSH team has announced that beta members can buy up to four OF1s during the general access sale, even for those who acquired one during early access, an increase from initial guidelines setting limits at two for those with early access and one for general access.
For some more background, . SWOOSH doesn’t describe its virtual products as NFTs no doubt in part because they’re currently “sole bound,” in other words . SWOOSH’s virtual products are linked to the individual account and can’t be bought or sold. As well, the OF1 can only be purchased with a credit card. The company has promised it will soon launch a marketplace, “where users can acquire more virtual creations and grow their collections.”
In you missed the launch of .SWOOSH, it was announced in mid-November 2022, as a new Web3 platform located at swoosh.nike. The project is part of Nike Virtual Studios, led by vice president Ron Faris, the former head of Nike’s SNKRS app. .SWOOSH will be the home of Nike’s virtual creations. Digital platform RTFKT (for which Nike is said to have paid over $1B), informs Nike Virtual Studios, but the Dot Swoosh project is Nike-only.
Opening and closing party for Bally and Rhuigi Villaseñor, who lasted just 17 months at the label (a design stint so short it set a record according to Hypebeast). Not sure what went wrong, but Villaseñor posted a few cryptic tweets following the announcement that seem to imply he didn’t have enough control: “Be causal, have full control of ur actions and ur destiny.”
Villaseñor then followed up today and let it be known it was his decision not to extend his contract: “With my decision not to extend I’ve been seeing a lot of fashion business expert, i guess everyone is an expert nowadays lol.”
In the midst of her Rennaissance World Tour, Beyoncé took to Instagram to announce she’s launching a haircare line. Based on the image (above), it looks like it will include product and haircare appliances. While we’re all fatigued by celebrity beauty lines, Beyoncé does boast 308 million followers and there is no doubt a percentage who would be thrilled to reach for a Beyhive-branded bottle when caring for their tresses. And because Beyoncé is known for her long and luxurious hair, this could be a better fit for her than, say, athletic clothing.
The one thing that has created challenges for Beyoncé as a marketer is that when she’s not performing, she’s very much a homebody! Her appreciation for privacy is very different from Rihanna, who is more willing to stay mixing it up with the public. It’s a strategy that keeps her name bubbling along with the brands she associated with.
A good example is her upcoming line with Puma, which recently announced offerings will be themed on unisex and kids offerings. A$AP Rocky will also be very involved. Not surprisingly, Rihanna has been spotted with her son, RZA, in many of her outings as of late. You can call it a coincidence but it’s not, because she very expertly hid him from all cameras for the first nine months of his life. But her ability to push product without making it feel like she’s selling is the secret sauce of Rihanna that’s not easily duplicated.
Adidas reported relatively good Q1 earnings in early May, but the call stood out to me mainly because new Bjørn Gulden is such a refreshing change from his predecessor Kasper Rørsted. As the former CEO of Puma and a professional soccer player, he clearly knows the space at a molecular level and comes across as not just relaxed but also realistic about the myriad of challenges facing the brand.
I was struck the most by how willing he was to discuss Adidas and Nike’s central approach to marketing and his wish to take a more local approach:
“I do think that we need to have a different business model than Nike. You have to remember again that Nike has a centralistic business model coming out of the US where they generate, what I call, the American street culture and they export it. It’s an efficient model as long as that works and then we will see down the road if it still works. I think we, sitting in Germany, doesn’t have a German street culture to export, so we need to do it in a different way. And that’s why the strategy for us in the future is to have creation centers that works on lifestyle products out of Herzo, out of L.A., out of Tokyo and out of Shanghai, and the sum of that is our offer. That is less efficient on the cost side, but might be more efficient on the consumer side.”
The entire call was filled with little gems, which were refreshing to listen to especially given how wooden most earnings calls are. Still, it’s one thing to articulate challenges, but it’s another thing to direct effective change, especially with a global company whose bad habits have developed over a period of 73 years.
VF Corp.’s revenue and EPS beat expectations and inventories were up 62% versus last year. The North Face was a bright spot with revenues up 16% (constant currency), while Vans and Timberland’s constant currency revenues were down 12% and 6% respectively. The company also noted a non-cash impairment charge of $313 million related to Supreme, a company it paid $2.1B for in 2020.
VF stated its revenue for FY24 will be flat to up slightly in constant dollars, including Q1FY24 revenue which will be down high-single digits”reflecting “a challenging U.S. wholesale environment.”
The stock is up low-single digits on the news though remains not far off from five-year lows.
Sitting at the top of a topsy turvy market, Dick’s Sporting Goods reported a healthy Q1 with revenue and EPS beating expectations. Comps of 3.4% came in a touch light but unlike a lot of retailers and brands as of late, it reaffirmed guidance for the remainder of the year. The stock ended the day up a smidge on the news.
“We think footwear is the engine that drives the chain,” said CEO Lauren R. Hobart. Responding to a question on Nike allocation and and inventory levels, she enthusiasatically added, “Our Nike relationship is at an all-time high. We are having significant discussions sharing consumer insights, sharing insights on products, sharing co-branded marketing. We are working on all aspects of the business together. And as we continue to build premium full-service footwear decks, that does enhance our allocation and our ability to provide premium products across Nike and all the brands actually. So, we do not feel we have an over inventory situation with that product at all.”In the Nike membership, we have over 1 million members.”
Foot Locker reported perfectly dismal Q1 results with the company missing on revenue, comps and EPS while also taking down guidance, sending the stock down 27% on the day.
Drilling down on comps, Foot Locker reported sames-store sales were down 9.1% falling short of expectations of down 7.7%. The company probably would have met plan if it weren’t for Champs whose comps were down a dismal 24.6%.
The company called out a 10% reduction in tax returns this year, but also underscored it had lower allocations of the Nike shoes that did sell well.
Items that sold poorly: boots in general plus skate and canvas shoes. Lifestyle items that sold well: New Balance (cited as the chain’s best-performing brand), Jordan Retro, Nike Air Force 1 and Dunk, Adidas Samba and Gazelle; peformance run: On, Hoka, Brooks and Asics; performance basketball: Nike Ja1 and LBJ20 and Puma Lamelo Ball.
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