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Nike May Start Selling Directly To Amazon, Sports Retail Stocks Decline

By Zacks Investment ResearchStock MarketsJun 21, 2017 01:40AM ET
www.investing.com/analysis/nike-may-start-selling-directly-to-amazon,-sports-retail-stocks-decline-200196690
Nike May Start Selling Directly To Amazon, Sports Retail Stocks Decline
By Zacks Investment Research   |  Jun 21, 2017 01:40AM ET
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On Wednesday morning, Goldman Sachs (NYSE:GS) analyst Lindsay Drucker Mann said Nike, Inc. (NYSE:NKE) is close to selling directly through Amazon.com (NASDAQ:AMZN) , citing channel checks. Nike stock rose 1% as shares of Amazon gained 0.30% in morning trading.

This announcement has already negatively affected popular athletic retail chains as this move by Nike raises their competition with Amazon. So far today, Foot Locker, Inc. (NYSE:FL) and Dicks Sporting Goods, Inc. (NYSE:DKS) are down 6% each. Shares of Hibbett Sports (NASDAQ:HIBB) have also lost 6% and Finish Line, Inc. (NASDAQ:FINL) lost 4% in late morning trading.

Dick’s Sporting Goods fell as much as 8% in early morning trading, hitting an almost one-and-a-half-year low, while Hibbett Sports fell as much as 6% to a more than seven-year low.

Currently, Nike sells on Amazon-subsidiary Zappos, but only sells on Amazon through unlicensed third-party resellers. Selling directly through Amazon will allow Nike to limit discounted inventory by third-party sellers and push full-price products.

Nike’s shift to selling directly on Amazon’s Marketplace could see a 100 basis points increase. Mann said this could amount to $0.6-1 billion in retail sales globally. The company’s stock has been the worst performer among Dow stocks over the last three months.

“Taking this step would give NKE direct economic exposure to a large and fast growing distribution channel, while improving the brand presence and expanding access to Millennial shoppers,” Mann said in a client note.

Nike follows the lead of popular athletic wear company Under Armour Inc. (NYSE:UAA) , which already sells directly on its own, customized page on Amazon. Licensed third-party sellers also sell the company’s products on Amazon Marketplace. This arrangement has allowed Under Armour to release its newest merchandise before Nike.

Mann also said this could affect the selling strategies of other sportswear companies. “NKE’s move could inspire other wholesale brand, many of which have so far resisted a partnership with Amazon.com, to directly engage.”

So far, the announcement hasn’t had as big of an impact on other sportswear companies’ stock. Under Armour and Adidas (DE:ADSGN) AG (OTC:ADDYY) are both down 1%, while Puma SE (OTC:PMMAF) was up 0.05% in morning trading.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Foot Locker, Inc. (FL): Free Stock Analysis Report

The Finish Line, Inc. (FINL): Free Stock Analysis Report

Dick's Sporting Goods Inc (DKS): Free Stock Analysis Report

Hibbett Sports, Inc. (HIBB): Free Stock Analysis Report

Nike, Inc. (NKE): Free Stock Analysis Report

Adidas AG (ADDYY): Free Stock Analysis Report

Under Armour, Inc. (UAA): Free Stock Analysis Report

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Nike May Start Selling Directly To Amazon, Sports Retail Stocks Decline
 

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Nike May Start Selling Directly To Amazon, Sports Retail Stocks Decline

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