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  1. Home
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Duke's Zion Williamson Injury Wasn't Nike's First Quality Control Issue

Nike has shown resilience to product mishaps in the past.
By KEVIN CURRAN Feb 21, 2019 | 10:18 AM EST
Stocks quotes in this article: NKE, ADDYY

Nike, Inc. (NKE) shareholders are feeling some pain alongside Duke star Zion Williamson on Thursday as questions arise over the company's product quality.

Shares dipped slightly on Thursday's open, reflecting the high-profile nature of the Zion Williamson sneaker mishap.

Zion's shoe: destroyed �� pic.twitter.com/LqQ2te0Jay

— SportsCenter (@SportsCenter) February 21, 2019

Yet, the company has encountered problems with its products in major sporting events in the past, including at the professional level.

The Oregon-based athletic apparel leader signed an eight year deal to supplant Adidas (ADDYY) as the provider of team uniforms across the National Basketball Association in a deal worth $1 billion to the company.

The deal added to existing endorsements with such prominent names like LeBron James, Kevin Durant, Kobe Bryant, Kyrie Irving, Paul George, and Russell Westbrook.

The problem was that the jerseys consistently ripped apart during the 2017 season.

Mark Parker tells @CNBC that Nike has made improvements with NBA jerseys since the Lebron jersey rip. "We've isolated the issue." pic.twitter.com/L320152U6y

— Jess Golden (@JGolden5) October 25, 2017

The issue ended up leaving star players like Draymond Green, Kevin Love, and Ben Simmons feeling a bit exposed and led many to believe Nike was providing a cheap, inferior product.

Damn. pic.twitter.com/49D6jIct8W

— Adam Lefkoe (@AdamLefkoe) November 3, 2017

What's encouraging for Nike investors in the wake of the Williamson incident was how little this trend meant for the share price or the NBA deal.

During the NBA season that spanned October 13, 2017 to June 8, 2018, the stock climbed over 45%. The NBA also never brought up the idea of dropping Nike despite the wardrobe malfunctions. Athletes have likewise stood by the brand, especially amidst the criticism it has received more recently for endorsing Colin Kaepernick.

"We are very concerned to see any game-day tear and are working to implement a solution that involves standardizing the embellishment process and enhancing the seam strength of game-day jerseys," Nike said in the statement on the issue in November 2017. "The quality and performance of our products are of utmost importance, and we are working with the NBA and teams to avoid this happening in the future."

The statement is awfully similar to the statement offered by the company in response to the Zion Williamson incident.

Considering the NBA jersey rips halted shortly after the company released the statement, there might be reason to believe in the quality control at the world's leading sneaker maker and its stock trajectory after this mishap.

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TAGS: Earnings | Investing | Stocks | Consumer | Retail | Sports business | Sports | Stock of the Day

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