Nike Pulls Shoe Release Amid Report Colin Kaepernick Objected to US Flag Design

Nike shares traded modestly lower after the world's biggest sportswear group said it was pulling a planned sneaker release following a reported intervention from one of its key brand ambassadors.
By Martin Baccardax ,

Nike Inc. (NKE) - Get Report shares traded modestly lower Tuesday after the world's biggest sportswear group said it was pulling a planned sneaker release following a reported intervention from one of its key brand ambassadors.

Nike said it would not release a special Fourth of July version of the Air Max 1 Quick Strike, which featured an older, 13-star version of the American flag on its heel, known colloquially as the 'Betsy Ross' design. The decision followed a report from the Wall Street Journal that former NFL quarterback Colin Kaepernick, who fronted the company's 30th Anniversary ad campaign last year, found the design -- and its connection to an era of slavery in the United States -- offensive when images were posted on social media.

"We regularly make business decisions to withdraw initiatives, products and services," Nike said in a statement. "Nike made the decision to halt distribution of the 'Air Max 1 Quick Strike Fourth of July' based on concerns that it could unintentionally offend and detract from the nation's patriotic holiday."

Nike shares closed 0.54% lower at $84.96 Tuesday, a move that still leaves the stock up more than 16% for the year.

Arizona Governor Doug Ducey said Nike had " bowed to the current onslaught of political correctness and historical revisionism" by pulling the shoes, calling the decision a "shameful retreat" that would cause it it lose taxpayer funding for a planned investment in the Phoenix suburb of Goodyear.

Kaepernick inspired a series of nation-wide protests against police brutality and social injustice but courted controversy by kneeling during the playing of the national anthem before some NFL games in 2016.

The former San Francisco 49ers quarterback reached an out-of-court settlement with the NFL after suing its ownership group for collusion after he failed to find a spot on any team roster despite leading his team to the Super Bowl in 2013.

Last week, Nike posted its first quarterly earnings miss in seven years when it said profits for the three months ending in May came it at 62 cents per share, as marketing costs linked to the 30th Anniversary ads added 10% to the group's expenses tally, which hit $12.7 billion, and ate into its final quarter bottom line.

"Our SG&A growth in fiscal year '19 was a function of accelerating the investments required to drive transformation while gaining leverage in our core legacy expenditures," CFO Andy Champion told investors on a conference call. "We are editing and shifting to gain leverage most notably within our geographies, where we're creating differentiated consumer experiences leveraging digital while optimizing on differentiated retail."

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