On Thursday, Nike announced it would donate $50 million toward a "Let's Move Schools" program, which seeks to increase physical activity among America's youth. I sat down with Nike CEO Mark Parker to talk about this partnership and other issues surrounding the world's largest shoe-and-apparel brand.
Darren Rovell: Nike is donating $50 million toward this program. What does $50 million mean?
Parker: It's not just about money, it's what you do and how you use it. We're focusing on getting kids active in schools, providing access to sports and sports programs at the community level and expanding our list of partners so we can have a huge impact here. One of our sayings at Nike is "Edit To Amplify." In the end, having an impact means talking and doing things in a way kids can relate and it's not about the stuff that parents and administrators care about. We're a sports company and we're hoping to bring athlete inspiration and innovation to the cause. As a parent, the statistics are incredibly sobering. The kids today are part of the most inactive generation in our history by a long shot.
Rovell: A couple of years ago, PepsiCo CEO Indra Nooyi told me she didn't like the fact that people were drinking Gatorade on non-active occasions. How much do you care that kids are buying athletic shoes but wearing them with their jeans?
Parker: We do care. It's obviously up to the consumer to do what they want once they buy them. But we want people to be active and we have a vested interest in the world being active, not just from a business standpoint, but from a social standpoint. We love to see people buy our product and actually use it for what we made it for instead of having it sit in a box on a shelf or to wear to and from school.
Rovell: Oscar Pistorius is the most recent Nike athlete to be in the news in a negative fashion. Several people in the media have suggested that, after Tiger and Lance and a host of others, that Nike should perhaps get out of the business of athlete endorsements or do a better job at evaluating them beyond the playing field. Where do you stand on this?
Parker: We believe in the power of sports. It is who we are. Athletes remain at the core of what we do. We say that we listen to the voice of the athlete and use that insight to drive innovation that really creates relevance from the brand and product standpoint. So the relationship with the athlete is critical to who we are. Athletes are human beings and they make mistakes. We do try to be careful and we don't just look at a resume from a competition standpoint when considering an athlete.
Rovell: I don't believe you have broken out sales on the FuelBand? Any update?
Parker: We had a fantastic holiday season and we set all sort of records. We've had to work hard just to meet demand so I'm very bullish on the future.
Rovell: You've moved many of the hot shoe releases to an online system due to crowds and issues associated with lines. I've seen a lot of complaints, some people aren't happy with where it is now. How would you evaluate the system?
Parker: It's something we are going to have to keep working on. Am I completely happy? No. Are we in a better position that where we have been? Yes. So we haven't figured it all out yet, but its infinitely better.
Rovell: Fast Company recently named Nike the world's most innovative company. The big part of their story was about FlyKnit, your new way of making shoes that comes in one piece for the upper and literally has no waste from a production standpoint. Are you more excited about FlyKnit from a sales standpoint or from a cost savings standpoint at the factory level?
Parker: Obviously there's an aesthetic uniqueness to it and we're excited about what has been in the marketplace as well as what's coming. The look and the performance of it is just going to amaze people. Then you have the fact that it gives us an opportunity to streamline production though a breakthrough design. It's just a huge idea. Typically, we've made shoes by cutting pieces of material and stitching it together. With FlyKnit, we've eliminated the waste and we'll be able to eliminate additional labor. What's coming in Generation 3, 4, and 5 of the FlyKnit life cycle is pretty phenomenal.
Rovell: The cost of raw materials went up a couple of years ago and you passed the cost on to the consumer. There was very little price resistance then. Then the raw material cost went down and Nike, for the most part, kept the prices where they were. Has there been any push-back on any of the prices for your products?
Parker: We've seen no real resistance and that means we're pricing products right. But it's not just about the materials. There are different parts of the pricing equation including labor, material, transportation, supply chain. We take all of this into account.