Chuck Taylor: Nike Sets a Power Brand Free and Reaps Billions

In fact, Chuck Taylor was an amateur basketball player from a much-earlier era and, in addition, a coach and shoe salesman. Born in 1901, Taylor joined a traveling basketball team in 1921 for the Converse Rubber Shoe company, which had introduced its first basketball shoe, the Converse All Star, four years earlier. Taylor made numerous suggestions to improve the shoe, and was such a successful promoter of the sneaker that the company eventually added his name to the ankle patch.

Photo: Converse.com

Today, Converse is a billion dollar brand owned by Nike (NYSE: NKE ) , which acquired the company in 2003 for $305 million. Nike decided, at the time of acquisition, to allow Converse to operate independently, a wise one considering how Chuck Taylor sneakers, lovingly called "Chuck Taylors" by their fans, and the larger Converse brand, have appealed to both athletically minded and fashion-conscious shoe buyers, as well as many subcultures, over the decades.

In the last year, Nike divested itself of its well-known Umbro and Cole Haan brands, in order to focus on just four brands: Nike, Jordan, Converse, and the Hurley surf-wear line. Converse and Hurley, together with Nike Golf, comprise a segment which Nike labels "Other Businesses." This segment accounts for for 9.5% of Nike's revenue, and nearly 14% of Nike's Earnings Before Interest and Taxes, or EBIT. Converse's share of the "Other Businesses" revenue has grown steadily: three years after the acquisition, Converse accounted for 23% of "Other Businesses" revenue. As of year-end 2012, Converse accounted for 43% of the segment's revenue, and this number is likely to have grown once we see the full results for fiscal 2013 later this summer.