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DAMAGE CONTROL

A nepotism scandal has Nike scrambling to rebuild trust with sneakerheads

A photo shows a man's shadowy silhouette as he walks past a Nike store
Reuters/Valentyn Ogirenko
A man wearing a protective face mask amid the outbreak of the coronavirus disease (COVID-19) walks past a Nike brand store central in Kyiv, Ukraine…
By Marc Bain
Published Last updated

Nike is facing a loss of trust among its most loyal customers, the die-hard sneaker fans who show up every week to buy limited releases of its shoes and share their scores on social media.

Nike CEO John Donahoe spoke to staff in an internal meeting yesterday to address the frustrations and mistrust these shoppers have expressed around the company’s sneaker launches, according to Complex, a fashion and pop culture site that obtained a recording of the event. It reported that Nike will audit its process around releases.

Nike hasn’t publicly contested the accuracy of the story. The company did not reply to a request for comment.

The meeting came in response to the uproar following a Feb. 25 report in Bloomberg Businessweek about sneaker resellers that revealed a prolific reseller to be the son of a longtime Nike executive. Resellers have become a persistent nuisance for sneaker fans in recent years. They buy up limited-run shoes the moment they launch online, typically with automated computer scripts called bots that speed through checkout far faster than a human. They then flip the sneakers on the secondary market for a profit. Ordinary shoppers are often unable to get shoes they want without paying a sometimes hefty markup over the retail price.

Bloomberg’s story featured reseller Joe Hebert, whose business West Coast Streetwear was able to make tens of thousands in profit on a single sneaker release. It noted his mother was Ann Hebert, who was then the vice president and general manager of Nike’s North American business.

Joe Hebert used bots to buy most of his inventory and told Bloomberg his mother wasn’t involved in his business. He did, however, use her credit card to make his purchases. Complex later spoke with other resellers who said bots were Hebert’s main means of getting inventory, though his family connection did put him in touch with other Nike employees who sometimes helped him. Nike has maintained that Ann Hebert disclosed her son’s company in 2018 and did not violate any company policies.

Still, the story has prompted speculation about how Joe Hebert’s connections benefitted his business and fueled frustration around Nike’s sneaker releases. On March 1, Nike announced Ann Hebert’s departure from the company.

During today’s meeting, according to Complex, Heidi O’Neill, a president at Nike, reiterated that Ann Hebert did not break company policy. But she hadn’t continued providing Nike with sufficient disclosures as the business grew.

Donahoe said Nike will update its policies for employees and their family. He also emphasized that Nike has been working on technology to counter bots for years but said the company needs to step up its efforts.

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