The athleticwear giant said Wednesday that it will stop producing golf clubs, balls and bags. Instead it will take a page out of the likely more profitable model used by rival Under Armour (UA - Get Report) -- simply hawk golf apparel and footwear.
Nike's announcement shouldn't come as a shocker to anyone holding a business degree. But the real question is what the heck took Nike so long to swallow its pride and change direction on a failing business?
Nike's sales at its golf business plunged 8% to $706 million for the fiscal year ended May 31. Excluding the impact of the strong U.S. dollar, sales dropped 6% from the prior year. It was the worst-performing business for Nike in terms of sales last fiscal year.
Weak sales for Nike golf -- which represents about 3% of total sales for the apparel and footwear giant -- had become a recurring theme in recent years. The injury-prone Woods has been spotted less in riveting final rounds of PGA Tour events (he has not played a PGA tournament this year, and won't). And other Nike product endorser Rory Mcllroy lacks the star-power of Woods.
Sales for the Nike golf division fell 2% to $771 million for the fiscal year ended May 31, 2015. Excluding the impact of the strong U.S. dollar, sales were unchanged from the prior year. Nike golf didn't light up it up on the sales line the year before, either. Nike's golf division saw sales relatively unchanged at $792 million for the fiscal year ended May 31, 2014. Excluding the impact of the strong U.S. dollar, sales rose a meager 1%.
A real slap in the face to Nike is that it's exiting golf businesses just as people are back out playing more rounds of golf, which is spurring sales of new drivers, shoes and irons. Earlier this year the National Golf Foundation reported that, for the first time since 2012, the number of golf rounds played in the United States increased in 2015.
Helped by a warmer-than-average winter, golf rounds played increased 5.5% in the first three months of 2016, according to Golf Datatech. In March alone, rounds played boomed by 13.2%.