From: Wall Street Journal
Nike Inc. will launch new golf clubs this month without the promotional muscle of golfing great Tiger Woods.
That will be a challenge for the sporting-goods giant, which was largely a nonentity in golf before it built a sizable business around the superstar’s image.
Nike says that its Victory Red STR8-FIT Tour fairway woods, which will go on sale Jan. 28 for $299, were designed with input from all 13 U.S. golf stars who promote Nike’s golf products. But the promotional materials make no mention of Mr. Woods, whose tradition of wearing red shirts on the final day of golf tournaments inspired the Victory Red name.
Instead, the materials trumpet that the clubs were tested in tournament play by a respected but lesser-known golf pro, Lucas Glover, who claimed his first major victory last year when he won the U.S. Open Championship.
Nike’s inability to bank on Mr. Woods — who remains a Nike-sponsored athlete but is postponing his career as he deals with the fallout from his alleged extramarital affairs — comes at a problematic time. The Beaverton, Ore., company has faced deteriorating golf sales because of the recession. Annual revenue at the Nike Golf division fell 11% last year to $648 million after peaking at $725 million the year before.
Still, some of Nike’s retail partners said they expect the company’s clubs to sell well in 2010, with or without Mr. Woods to champion them.
“They have certainly established themselves as a very successful golf manufacturer over the past 10-plus years, and we believe we will have a very solid year with them,” said Matt Corey, senior vice president of marketing at Golfsmith International Holdings Inc., the nation’s largest specialty golf retailer.
Nike declined to discuss the effect of Mr. Woods’s problems on its business, where overall revenue grew 3% to $19.2 billion in fiscal 2009. But in a conference call with investors last month, Chief Executive Mark Parker played down the ramifications, even as he acknowledged that larger economic factors were hurting golf sales.
“We feel very good about how we are managing our golf business through this period and our position in the broader golf market,” Mr. Parker said, adding, “We’ll continue to support Tiger and his family as we, of course, look forward to his return.”
Nike’s golf slump mirrors a wider plunge in the market for golf apparel and gear, as consumers put off discretionary purchases. Sales of clubs and other hard equipment fell 11.9% in the first 11 months of 2009 at golf-course shops and specialty stores, according to Golf Datatech LLC, a market research firm. Retail experts estimate that such locations make up roughly three-fourths of total golf sales.
While Mr. Woods’s alleged peccadilloes have forced him out of the limelight for at least part of this year, some golf-industry experts say Nike has a larger set of options because of the recent emergence of other stars.
Like Mr. Glover, Stewart Cink, also a Nike-sponsored athlete, captured his first major title last year when he won the British Open. .
“Nike golfers won two major tournaments last year, and neither guy was named Tiger Woods,” said Tom Stine, co-founder of Golf Datatech. “What Tiger gave Nike is credibility. When you have the top guy out there winning with your stuff, it tells the public that you have top-line equipment. But they have plenty of other golfers doing that now.”
Michelle Wie, also under contract with Nike, won her first professional women’s tournament last year, one of the first signs that the 20-year-old phenom could yet fulfill her potential to become the female version of Mr. Woods.
Nike first dabbled in golf in 1985 with a shoe called the Air Linkster, and pro Curtis Strange donned its gear while winning U.S. Open championships in 1988 and 1989. But it was not until Nike signed a huge endorsement deal with a 20-year-old Mr. Woods in 1996 that the swoosh became an upstart in the business side of the sport.
The golfer draped himself in Nike apparel as he won a dizzying succession of major titles, and the company blanketed the airwaves with emotional ads playing up his historic ascent, notably a landmark spot called “I am Tiger Woods” that showed children of numerous races playing the game.
Mr. Woods started using Nike golf balls rather than the Titleist balls favored by other stars, and later picked up Nike clubs, moves that experts say greatly helped the company win over skeptical golfers raised on such brands as Callaway Golf Co. and TaylorMade Golf Co, a subsidiary of Adidas. Titleist is part of Acushnet Co., a subsidiary of Fortune Brands Inc. that also includes Cobra golf clubs and FootJoy golf shoes and generates annual revenue of more than $1 billion.
Mr. Woods has also helped Nike craft new clubs, boosting the company’s reputation for cutting-edge sports-gear design. “This is my iron. This is what I created. This is what I’ve been playing,” Mr. Woods said in a promotional video for a Victory Red line of golf irons two years ago. “Now that consumers get to feel and play what I’ve been playing, they’ll understand why I love it so much.”
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