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As retailers suffer, Nike wants to just sell things itself
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Nike will report earnings after the markets close today. The athletic shoe and apparel giant is looking to reduce how much it relies on retailers and sell more products directly to consumers.
Retail bankruptcies and store closures have hurt Nike’s already-sluggish sales. Wedbush analyst Christopher Svezia said Nike wants fewer middlemen.
“It’s just a laundry list of retailers that are closing space,” Svezia said. “This is just Nike trying to control a little bit more of their own destiny.”
Nike is slashing 2 percent of its workforce and will focus on selling through its own website and Nike stores. Plus, Goldman Sachs reports Nike will soon sell directly on Amazon. Svezia said right now you can buy its products there, but not from Nike itself.
“You have third-party resellers selling a substantial amount of Nike product, with no pricing integrity,” Svezia said.
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A pair of Nike VaporMax running shoes costs $190 in stores. Average price on Amazon? About $300. Andrew Burns, a research analyst at D.A. Davidson, said look at other active lifestyle brands, like Under Armour, Adidas and Lululemon. Most have direct-to-consumer strategies.
“And it’s one of the fastest-growing components of their business,” Burns said.
Who loses? Maybe Foot Locker, Finish Line and Dick’s Sporting Goods. They saw shares tumble on news that Nike wants to “just do it” itself.
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