Shares of Nike (NKE) dipped in morning trading after a sneaker made by the company and worn by Duke University star Zion Williamson split in half in a game against North Carolina.
SHOE SPLIT: Zion Williamson, a Duke University freshman center who plays for the Duke Blue Devils, suffered a mild sprain to his right knee after his sneaker split in half 36 seconds into a highly anticipated game between Duke and North Carolina, Blue Devils coach Mike Mike Krzyzewski said. Williamson did not return to play in the match-up, which ended with Duke losing 72-88 to the North Carolina Tar Heels. Williamson was wearing the Nike PG 2.5 basketball shoe when he was injured, according to ESPN. The line of sneakers are a product of a collaboration between Nike and six-time NBA All-Star Paul George, who plays for the Oklahoma City Thunder. After the game, Krzyzewski told ESPN that Williamson's knee was stable and that a timetable for his return would be determined Thursday.
Nike is Duke’s exclusive supplier of uniforms, shoes and apparel under a 12-year contract that was extended in 2015 and has had an exclusive deal with the private university since 1992, ESPN noted.
NIKE SAYS 'ISOLATED OCCURRENCE': In a statement, Nike said "We are obviously concerned and want to wish Zion a speedy recovery." It added that "The quality and performance of our products are of utmost importance. While this is an isolated occurrence, we are working to identify the issue."
WHAT'S NOTABLE: Nike has previously dealt with quality control issues on its sportswear. In 2017, the company faced criticism after at least five NBA players' jerseys ripped during the 2071-2018 season. Nike said in November 2017 that it was working to implement a solution that involved "standardizing the embellishment process and enhancing the seam strength of game-day jerseys." It added that "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."
ANALYST COMMENTARY: Oppenheimer analyst Brian Nagel said that at this point, he is optimistic that while negative headlines might weigh upon Nike shares for a bit, "any lasting damage to the company and its shares will prove minimal." He added that Nike is "renowned for producing some of the best athletic footwear and apparel in the industry and outfitting successfully many of the world's pre-eminent athletes." Nagel also said that he cannot recall any major prior instances of Nike products malfunctioning and that the company's senior management has a history of acting "masterfully" at always protecting and enhancing the company's brand image with core customers.
PRICE ACTION: In morning trading, Nike shares have declined 1.5% to $83.53.
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