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Nike's Sole Strategy
How Nike really makes money?
Nike’s first-quarter 2025 revenue totaled $11.6 billion, and marked a 10% decline year-over-year, while digital sales dropped 20%. Despite a 28% decrease in net income, Nike’s gross margin improved to 45.4%, showcasing strong cost control.
Footwear is the backbone of Nike’s business, generating about 80% of revenue, or $7.5 billion, in this quarter alone. Apparel followed with $3.0 billion, Equipment added $0.6 billion, and Converse contributed $0.5 billion. Footwear’s dominance in revenue shows that Nike primarily profits from its innovative, high-margin shoe designs that hold global appeal. Overall, Nike achieved a gross profit of nearly 45%, yielding a net profit of $1.1 billion, or a 9% net profit margin, highlighting its efficient cost structure and ability to maintain profitability despite revenue challenges
Sam’s Club tests a checkout-less future as retailers tweak their scanning strategies
Walmart’s Sam’s Club hopes its latest test will chip into Costco’s market dominance. This month the membership-only warehouse club is opening its first checkout-free location. Customers at a Dallas-area Sam’s Club will have to make purchases by scanning products in an app, which the company says could become the norm at its 600 US locations. For Walmart, it’s meant to win over Costco customers (two years ago, it undercut the retailer’s famous $1.50-hot-dog deal by 12 cents).
Bulk tech: Sam’s Club recently rolled out a techy exit archway that automatically audits shoppers’ carts, eliminating employee checks. One in three of its members uses scan-and-go tech.
Warehouse rivalry: Sam’s Club has about the same # of US stores as Costco, but pulls in half its annual revenue ($86B vs $177B). This year it revamped its Kirkland-esque private label (aka Member’s Mark) and said it planned to open more locations.
Checking in and out… Retailers can’t stop futzing with checkout. As self-checkouts’ outsized role in theft became clear, retailers have reversed course on DIY lane investments. Dollar General eliminated the tech at 12K stores this year, joining retailers including Five Below, Target, and Walmart. Amazon ditched “Just Walk Out” tech in its grocery stores this year, and the company closed more of its checkout-free Go convenience stores. Amazon once planned to open thousands of Just Walk Out stores but now has only 17 in the US.
Some Fun Facts From Sam Walton’s Early Days of Building Walmart
First Store on a Shoestring Budget: Sam Walton opened his first store, Walton's Five and Dime, in Bentonville, Arkansas, in 1950. He used every penny he had saved and even borrowed $20,000 from his father-in-law to get started!
A Humble Discounting Pioneer: Walton was one of the first to see the potential of discounting in rural areas. He bought goods in bulk and passed the savings on to his customers, focusing on volume over high margins – an idea that was unconventional at the time.
The $1,000 Mistake: When setting up his first Ben Franklin franchise store, he failed to negotiate a long-term lease with his landlord, who took over the store once Walton’s business became successful. Walton learned from this mistake and became more cautious with leases and contracts in the future.
Flying High (Literally!): Walton was known for flying his small plane over rural areas to scout potential store locations. This was a cost-effective way to analyze local markets and made it easier for Walmart to reach rural communities overlooked by larger retailers.
Homegrown Inventory Management: In the early days, Walton didn’t rely on advanced technology for inventory management. He simply walked through his stores with a notebook, personally keeping track of products and demand – the start of Walmart’s emphasis on operational efficiency.
Walmart's $25,000 Loan Origins: When Walton opened the first Walmart in 1962 in Rogers, Arkansas, he did it on a $25,000 loan. The store was located in a small, rural town, but his competitive pricing and community-focused approach drew in customers, proving his business model.
World's first wooden satellite launched into space
Japanese researchers launched the world's first wooden satellite into space yesterday. The satellite is made of honoki, a kind of magnolia tree traditionally used to make sword sheaths. The researchers believe that the material can be used to build structures in space. They plan to collect data on the satellite for six months, and if the experiment is successful, pitch the idea of wooden satellites to SpaceX.