Jun 21, 2017
Nike close to selling directly on Amazon
Jun 21, 2017
Nike Inc's shares rose as much as 2 percent after Goldman Sachs said the world's biggest sportswear maker could be close to selling directly on Amazon.com Inc, raising competition for brick-and-mortar sporting goods retailers.
Nike, whose products are already sold on Amazon through third-party and unlicensed dealers, could build an additional $300 million (237.59 million pounds) to $500 million (395.98 million pounds) of revenue in the United States or 1 percent of its global sales through its expansion as a wholesale dealer on Amazon, Goldman Sachs said in a client note.
Through the partnership, Nike could weed out excess, discounted inventory available at the marketplace through third-party retailers and sell more full-price products through the online channel, according to the note.
Nike shares were the top percentage gainer among Dow-listed stocks. The stock has been the worst performer among Dow stocks over the past three months.
The news comes as Nike said it would cut 2 percent of its global workforce and eliminate a quarter of its shoe styles to become nimbler in the face of intensifying competition and fast-changing consumer trends.
"Taking this step would give Nike direct economic exposure to a large and fast growing distribution channel, while improving the brand presentation and expanding access to millennial shoppers," Goldman analyst Lindsay Drucker Mann said.
A potential partnership would lead to more competition for sporting goods retailers such as Dick's Sporting Goods Inc that are seeing some market share gains due to the bankruptcies of The Sports Authority and other smaller, regional chains.
Shares of Dick's Sporting fell as much as 8 percent in early trading to hit a near one-and-a-half-year low, while Hibbett Sports Inc fell as much as 6 percent to hit a more than seven-year low.
Other chains such as Finish Line Inc hit a near 7 year low, while Foot Locker Inc hit a more than three year low.
"We expect pressures on bricks and mortar retail for the foreseeable future to result in pockets of inventory excess," Drucker Mann said. However, it would help Nike to make its brand more visible by working with Amazon to control inventory from unlicensed dealers, she added.
© Thomson Reuters 2022 All rights reserved.