• by Sarah Mahoney , 5 hours ago

Nike’s recent earnings report brought more bad news for Converse: sales fell 28% to $263 million, the 13^th straight quarter of declines. And while Nike management says fixing Converse’s problems is a key priority, the news seems to have kicked off yet another round of “Why doesn’t Nike just go ahead and sell Converse?” speculation.

The latest conjecture comes from reports in Fortune this week, as well as older reporting in Retail Dive, citing BNP Paribas analyst Laurent Vasilescu, who noted that Nike’s decision to cut marketing spending for Converse might indicate a potential sale.

Several months ago Bloomberg reported that Authentic Brands Group had expressed serious -- and longstanding -- interest in buying Converse.

Maybe, but not for now: “Converse remains an important part of the NIKE, Inc. portfolio,” the company told Marketing Daily via email. “As Dave Denton, EVP & CFO, said on our most recent earnings call, a key priority is getting our Sportswear, Jordan, and Converse brands back to financial health. That means ensuring we are appropriately resourcing our priorities, taking the right actions with discipline and urgency, and maintaining accountability across the organization.”

Converse’s annual sales have plummeted from $2.4 billion to roughly $1.2 billion.

And while Converse makes up less than 3% of Nike’s sales, it accounted for 20% of the company’s sales decline last quarter. It’s the latest in a rough year for the brand. For one thing, there was a PR disaster last month, when the company had to apologize for a social media ad that many say used imagery suggestive of a Ku Klux Klan costume and lynching. For another, there were bewildering directional shifts: In June, Converse said Shai Gilgeous-Alexander (SGA), the two-time NBA MVP and star of the Oklahoma City Thunder, and a cornerstone Converse athlete, was leaving for Nike.

But some observers wish Nike leadership would go ahead and sell the company: “They should absolutely sell Converse,” one former Nike exec tells Marketing Daily. “It’s the only hope that brand has if it’s going to survive.”

He points to Nike’s track record with other brands, including Hurley, Cole Haan, Bauer and Umbro. “The company has failed to become a house of brands. It will always be a branded house,” he said, adding its botched management of Converse “should be a Harvard Business School Case Study in stubbornness and arrogance.”

Sale or no sale, says Neil Saunders, managing director, retail, of GlobalData, "what is certain is that Converse has been achronic under-performer. It is no exaggeration to say that demand for its products has collapsed and, unfortunately, Nike doesn’t seem to have a clear strategy to get it back on track."

Eventually,  "Nike probably could fix Converse, over time. But it has so many other things it needs to fix and it does not seem to have the bandwidth to stem the losses,"  he tells Marketing Daily via email.