Nike unveils new products in environmental push

NEW YORK Tue Oct 28, 2008 10:13pm GMT

Nike Chief Executive Mark Parker poses with the Nike Pegasus 25 running shoe after the Nike Considered Design news conference in New York October 28, 2008. REUTERS/Shannon Stapleton

Nike Chief Executive Mark Parker poses with the Nike Pegasus 25 running shoe after the Nike Considered Design news conference in New York October 28, 2008.

Credit: Reuters/Shannon Stapleton

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NEW YORK (Reuters) - Nike Inc unveiled a line of more eco-friendly products on Tuesday which aim to use more sustainable, recyclable materials that should also translate into better profit margins for the future.

That strategy will help the world's largest maker of athletic shoes and apparel keep its stride as consumers worldwide cut back on spending on worries about a deepening financial crisis, its top executive told Reuters.

The new "Nike Considered" products are made with more efficient design patterns that use less material and are easier to recycle, adhesives made from water instead of toxic chemicals, and sustainable items like cork and organic cotton.

"We're trying to reduce costs and improve margins," said Chief Executive Mark Parker in an interview. "To make the company more profitable while reducing the footprint we have on the planet."

Parker said streamlining the supply chain will offset increased costs from the environmentally-preferred materials, which tend to be more expensive.

As a result, sustainably-designed shoes and clothes will carry the same price tags and profit margins as others, he said, noting that over time, margins will improve.

Parker was in New York for an event showcasing several dozen shoes, and some articles of clothing, made under the "Considered" principles to reduce waste and use of water, energy and toxic chemicals. The sustainable offerings represented 15 percent of Nike's total Spring 2009 offering.

Parker said that no company was immune to a retrenchment in consumer spending in the next few months.

But Nike's strong brand helps when people are more cautious about spending. The owner of Cole Haan, Converse and Umbro brands has yet to see any tangible impact from a spending slowdown that has battered many peers, Parker said.

"It's going to be a difficult next six months or so, I think, for everybody," he said. "We tend to be a little more resistant. Not immune, but more resistant."

Nike shares closed nearly 13 percent higher on Tuesday at $52.42 on the New York Stock Exchange. The stock is down 18.4 percent this year but is ahead of the Dow Jones U.S. Footwear Index, which lost 26.7 percent during the same time.

GREEN GOALS

As the push for sustainable, earth-friendly consumer goods gains momentum, major companies from eBay Inc to Clorox Co have begun to offer more green products, recognizing their growing importance for shoppers.

According to market research firm NPD Group, the number of people interested in environmentally sound apparel has risen 300 percent since 2003.

Nike, whose U.S. track and field uniforms during the recent Beijing Olympics were made from recycled Coca-Cola bottles, set a target to have all its shoes meet "Considered" standards by 2011, all clothing by 2015, and all equipment like balls, gloves and backpacks by 2020.

Once all Nike products meet these benchmarks, it will translate to Nike reducing waste in its supply chain by 17 percent and increasing the use of environmentally preferred materials by 20 percent.

The first shoe to embrace the "Nike Considered" principles was the Air Jordan XX3 shoe, unveiled in January. The clean and modern-looking shoe is made from recycled plastic and scrap materials with no toxic adhesives. Instead, its stitching provides support and helps hold the shoe together.

(Additional reporting by Alexandria Sage in San Francisco, editing by Gerald E. McCormick and Bernard Orr)

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