Swift Profits

Nike shoes are front runners

Like the ski parka and the ten-speed bike, multi-hued running shoes have become part of the trappings of the modern American, even if his or her idea of exercise consists only of getting up to turn on the television set to watch the Wide World of Sports. Bearing price tags that range up to $69, the new breed of cushioned rubber athletic shoe has trampled that familiar and often smelly old relic, the sneaker.

The most successful U.S. manufacturer of the fancy new footwear is Blue Ribbon Sports of Beaverton, Ore., a privately held company founded by Running Enthusiasts Phil Knight, 42, and Bill Bowerman, 69. In just eight years, Blue Ribbon Sports and their Nike (rhymes with psyche) shoes have gone from a standing start to sales of $260 million, and this year they could climb to $360 million or more. Nike is now aiming to overtake Adidas, the West German sports giant. Nike already has 136 models, for every sport from running and tennis to volleyball and wrestling. This year it plans to add another 50 varieties to cover everything from hiking to leisure wear--running shoes in effect for the non-runner.

Knight and Bowerman, the former University of Oregon track coach, met in 1958, when Knight was a business student at Oregon and a miler of some accomplishment (best time: 4:13). For years the crusty coach had been trying to design a better running shoe in his kitchen. "American shoes were just awful," says Bowerman, because they were heavy and lacked cushioning.

In 1964 Knight and his old track mentor each put up $500 and went into business importing Japanese running shoes. In 1972 they first produced their own make of shoe, naming it after the Greek goddess of victory. Just before the 1972 Olympic trials in Eugene, Ore., Knight and Bowerman persuaded several marathon runners to try them. Runners wearing Adidas finished first, second and third, but the next four runners wore Nikes.

Nike's breakthrough came as a result of some Sunday-morning fiddling by Bowerman in 1975. He began tinkering with the waffle iron that had just been used to make breakfast. With some urethane rubber, he fashioned a new type of sole whose tiny rubber studs made it springy. Bowerman ruined the iron, but he created a new running shoe that was soon grabbed by the army of week end jocks suffering from bruised feet.

Along with its successes, however, Blue Ribbon has garnered a few problems. The much ballyhooed "air sole" shoe, which had a tiny gas-filled bag in the sole, flopped at first because of too little gas pressure. Blue Ribbon, moreover, may be beginning an expensive squabble with Runner's World magazine, the Baedeker of the sport. Nike charges that the magazine's annual ranking of shoes has given higher ratings to its competitor, Brooks Shoe Manufacturing Co., because of business links between that company and the magazine. Runner's World has countered with a $6 million suit against Nike.

Yet the champion shoe company's biggest challenge now may be to raise larger amounts of capital so that it can introduce new products and keep ahead of the pack. So far, Blue Ribbon has grown on the strength of reinvested profits with some limited outside backing, but in the near future it could be forced to go public or merge with a larger firm. Levi Strauss is rumored to be one possible partner; such a merger would complete Levi's mastery over the youthful wardrod of blue jeans and running shoes.

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