WE/CEE SummaryFree market response [25th April 2011]

•Free WE/CEE futures/territories/distribution/opportunity•Marketplace response by brand•Appendix

WE/CEE Free FuturesThe last 12 months has seen a huge increase in Free for the European marketplace.

FY 12 is also tracking towards further growth with 285k/$20m booked in the first 4 months of the year……

     Values    FY 2010   Long Description   units   $   NIKE FREE 3.0 V2 54,945 3,638,130  NIKE FREE RUN+ 52,384 3,414,217  NIKE FREE 5.0 V4 40,636 2,657,726  NIKE FREE 7.0 V2 9,854 645,682  NIKE FREE EVERYDAY+ 2 7,660 504,662 Mens total  165,479 10,860,418  WMNS NIKE FREE RUN+ 31,135 2,021,693  WMNS NIKE FREE 5.0 V4 26,858 1,830,798  WMNS NIKE FREE 3.0 V2 15,456 1,029,798  WMNS NIKE FREE 7.0 V2 6,882 454,784  WMNS NIKE FREE EVERYDAY+ 2 696 47,334 Womens total  81,027 5,384,407    246,506 16,244,825

 FY 2011   Long Description   units   $   NIKE FREE 3.0 V2 128,903 8,715,251  NIKE FREE RUN+ 110,979 7,285,699  NIKE FREE RUN+ 2 65,332 4,615,695  NIKE FREE 7.0 V2 7,856 512,300  NIKE FREE RUN+ LAF 1,454 104,305  NIKE FREE RUN+ 2 LAF 791 58,397 Mens total  315,315 21,291,647  WMNS NIKE FREE 3.0 V2 65,532 4,555,214  WMNS NIKE FREE RUN+ 67,601 4,455,179  WMNS NIKE FREE RUN+ 2 35,232 2,480,085  WMNS NIKE FREE RUN+ LAF 1,005 72,709  WMNS NIKE FREE RUN+ 2 LAF 1,041 68,663  WMNS NIKE FREE 7.0 V2 661 43,107 Wmns total   171,072 11,674,957    486,387 32,966,603

97% 103%

WE/CEE Free Futures

The European marketplace is very polarised regarding adoption and bookings of Free:

AGS/Northern Europe and Retail are the biggest regions……….and account for 77.8% of all Free business.

France/Iberia and Italy account for only 1.39% of Free business, yet they are $162m Nike running business in FY 11 so there is vast opportunity remaining to connect here….

Proportion of business fy2011   AGS 236,077 48.54% CEE 89,033 18.30% France 1,167 0.24% Iberia 3,035 0.62% Italy 2,600 0.53% Retail 65,346 13.43% NE 77,108 15.85% UK 12,021 2.47% Ftlkr 0 0.00% 486,387 100.00%

WE/CEE Free FuturesFY 12 outlook is very strong with almost 60% of the business from last year booked already in the first 4 months of the year.

The growth in the European marketplace is fastest in France, Iberia and Italy but the base remains very low.

The more “mature” markets for Free still show appetite for growth…….  fy2010     fy2011     fy2012 [4 months]    fy 11 GROWTH % men women men women men women AGS 84,104 42,765 126,869 155,387 80,690 236,077 96,820 48,206 145,026 86.08% CEE 38,262 14,060 52,322 62,155 26,878 89,033 23,246 10,924 34,170 70.16% France 173 0 173 729 438 1,167 1,330 340 1,670 574.57% Iberia 685 121 806 2,184 851 3,035 2,779 1,145 3,924 276.55% Italy 555 191 746 1,620 980 2,600 949 217 1,166 248.53% Retail 20,144 9,835 29,979 42,152 23,194 65,346 26,206 10,162 36,368 117.97% NE 18,883 12,495 31,378 43,463 33,645 77,108 29,863 20,064 49,927 145.74% UK 2,673 1,560 4,233 7,625 4,396 12,021 9,864 3,405 13,269 183.98% Ftlkr 0 0 0 0 0 0 0 0 0 0.00% 165,479 81,027 246,506 315,315 171,072 486,387 191,057 94,463 285,520 97.31% 67% 33% 65% 35% 67% 33%

WE/CEE Current Free Distribution: Sporting Goods Sports Lifestyle General Goods

Best/RSG

Better

Good N/A

N/A

N/A N/A

To date, distribution has been only to the Sporting Goods channel at the better/best level of distribution by Nike in the Geo. In the UK it has been segmented further to RSG accounts only.

N/A

N/A

N/A

Nike Free Running

Nike NSW Free starting FA 11

Competitor DistributionSporting Goods SportsLifestyle General Goods

Racers/Tempo: Adidas Zero/Brooks Green Silence/Saucony Kinvara

Best/RSG

Better

Good

Natural Motion: Free/Vibram/Brooks/Innov8/NB Miniumus/Asics 33

Decathlon own brand

Zara

Nike Free/possibly Asics 33

Nike Free Su 12 Distribution thoughts:Sporting Goods Sports Lifestyle General Goods

Best/RSG

Better

Good

Innovation: disruptive lightweight product e.g Mayfly/Nike knit etc

Nike Free family :

1.0/3.0/4.0/5.0/trail……

Nike Free family : 4.0/5.0

Nike Flex :

Opportunity to engage premium consumers in this channel around Free innovation…..3.0?

No intended product distribution N/A

N/A

N/A N/A

The Future…..Opportunities in Europe;

•Preserve Nike Free integrity and credibility with runners

•Ensure premium positioning is maintained

•Opportunity to ignite Free in southern Europe markets, current approach to date has not resonated….. what can we do differently [profile/materials]?

•Opportunity to engage the Sportslifestyle consumer/channel. Showcase and amplify Free to position Nike running innovation. Su 12…….potential to explore Free 3.0…… offers the profile and premium materials to connect here …..

•Harvest with “good” partners through Flex product offer [monitor quantities]

Market response to Free

•Adidas•Reebok/Salomon•Asics•Brooks•Vibram

Adidas: •Adidas Climacool is available in Europe in 2 models right now. •The Ride 110E / £72)•The Chill 100E/ £62) •The Oscillate will introduce in FA 11 [similar price point expected . •The Run Box also FA 11 expected at 90E•The customised version of The Ride is available at 130E on Mi Adidas.

•Accounts targeted are in the Sporting Goods channel in the UK, both are distributed to SDI and are price discounted to £52 & £44.99. •The model is also in JDs in a limited amount/online and is not in Ftlkr.

• In AGS Adidas launched the Chill last Fall as a quickstrike pack sold to the retailers not on the "normal" future timeline. Key focus was the Clima cool effect and not the natural motion aspect. Consumer likes the product as it's lightweight, breathable, colorful and on a good/critical 100€ pricepoint. Sell thru on a RSG level is not great however. It is sold in the lifestyle doors of Runnerspoint called Sidestep. Sell thru is 5:1 Free Vs Chill.

•Multiple colour blow out is the strategy with up to 8 colours per model in major accounts.

•RSGs do not stock this product.

•Adidas will launch a TV advert continuing to use David Beckham to promote ClimaCool http://www.youtube.com/user/adidasrunningtv?v=vACznSF9Nq8&feature=pyv&ad=7851017702&kw=adidas#p/a/u/0/vACznSF9Nq8

http://www.youtube.com/watch?v=BLrvz59tb2c

120€

110€

105€

100€

90€

CLIMA COOL RIDE

CLIMA COOL CHILL CLIMA COOL OSCILLATE

CLIMA COOL RUNBOX and trail…….

Customisable CLIMA COOL RIDE via MI ADIDAS“ @ 130€

$75/ released in USA..in europe FA 11

FA11:

Adidas Running:

Adidas Training :

•€80 Fluid Trainer

http://www.youtube.com/watch?v=OOu8gJ-WWys

Customisable FLUID TRAINER VIA MI ADIDAS“ @ 105€

• €75 Fluid Trainer Lite 2 • €90 Fluid Tech Trainer

•€85 Fluid Trainer TT [suede]

Adidas Express: not directly using the same shoes in a sportswear execution, but use

elements of the Climacool technology….

Men's 9174 – Clima cool upper Named after the postal code of adidas HQ in Germany.

Hyper fuse type materials?

ClimaCool outsole?

Reebok: •Real Flex, will launch in Europe in Sp 12 and expected to follow on from Zig Tech.

•Zig tech £90/€100-130 was launched in Sportslifestyle doors such as JDs/FTlkr and is also in selected Sporting Goods doors like JJB [uk]Stadium [swe]Sportscheck [ger]Go Sport [france].

•It is not present in most RSGs.

65€RX MOC

RX TRAVEL

75€

RX S LAB

Salomon:

Salomon concept does not target to strengthen your muscles or natural motion but instead has a focus on the recovery aspect. The shoes above are visible in the NE & AGS market with the dealer network expanding.

Pricepoints are 75E which is quite significantly below Free. [E110]

Distribution is in SG/Outdoor channel and is following their success with Trail Running shoes.

Asics: GEL 33 RUSH

“LOW MILEAGE RUNNING SHOE”

INSPIRED BY THE 33 JOINTS IN THE FOOT

LTWT MINIMALIST/NATURAL MOTION POSITIONING

Not visible in the European market yet

UK research suggests it is expected to enter the market in Sp 12 or Su 12, however in AGS the lead account Runerspoint is placing it is 30 doors from Nov 2011.

Asics see US leading the barefoot running market and will launch there first.

Distribution not entirely known, but expected to start in RSG and leading Sporting Goods accounts like RunnersPoint..

Current performance line from Asics goes to all levels/channels from good accounts like SDI to Ftlkr to RSG so it may not take long to cascade…….

Brooks:

Comprehensive product offering to target Lightweight & Natural Motion Silo

Tends to be an RSG excl brand in Europe and is gaining ground within this distribution in many territories

“Pure project” is being offered to UK RSGs exclusively, it is on the radar in Northern Europe and is being offered in Germany via Runnerpoint from Nov 2011.

It is positioned as lightweight and natural motion product suitable for road and trail.

The midsoles varies from model to model, but all have a 4mm drop heel-to-toe)

Pricing is £90-100 and €130-140

Vibram: -Very narrow distribution in Europe with product to be found mainly in Specialist Outdoor Stores and a few RSGs like Run2 in Germany and Run2day in Holland.

-Credible and premium positioning, but still quite niche.

-In the UK online partner is Barefootjunkie.co.uk (offical Retail Partner for Vibram).

-Product range is large from £85/90E - £165 over 13 different styles with some key styles offering 5 or more color options.

120€

110€

105€

100€

90€

CLASSIC WOOL JAYA

CLASSIC

130€

SPRINT

http://www.vibramfivefingers.com/index.htm

BIKILA LS

SPEED

KOMOD SPORT

Appendix Others:

Others: Innov8 UK off road/trail/fell running brand - expansion into Europe beginningPrimarily Outdoor and some RSG distribution 3 barefoot inspired products…….INOV-8 Road-X 233 (£90), INOV-8 Road-X 255 (£90) launch FA 11, INOV-8 Baregrip 200 (£90) launched Su 11

Others: Saucony -Offer lightweight tempo product

-Pro Grid Mirage (SRP £85) & Pro Grid Kinvara (SRP £85) with Distribution solely on RSG and Online Channels.

Others: New Balance -Minimus

-3 options for Running…..Trail and Everyday use.

http://www.inov-8.com/News-Detail.asp?NID=342&L=26

Other: Ecco Biom A

RRP 199.95€Running natural motion idea. High priced and not successfull in sell-thru

Big launch at ISPO last year. PR coverage within the key running magazines and Triathlon magazines. Only at some RSG‘s but in the south of Germany already losing ground – retailers start focusing on the better selling brands.

Other: On

Newton Running shoes are designedto mimic the advantages of barefoot running. Comes from Triathlon background

Others: Newton

Other: Merrell Merrell Trail glove

Other: Terra Plano Evo II

Other: SkechersApparently a Sketchers natural motion solution is on the way…………..

Other “Own” Brands: Zara -ZXM Running Shoe – Iberia E40

- priced very competitively.

Other “Own” Brands: Decathlon E40