Nike Inc. will test stores in North America that only sell the popular Jordan brand, the company said during its earnings call.
The effort is part of the athletics giant’s ongoing strategy to build its direct-to-consumer (DTC) relationships through stores and digital channels.
“Since the start of the pandemic, we have seen how creating the Market of the Future will deepen our connections with consumers, fuel market growth and expand the profit pool for Nike and our wholesale partners,” said Matthew Friend, Director financier of Nike. , during the earnings call, according to a FactSet transcript.
The test will begin in fiscal year 2023 and will leverage “a popular consumer experience that has been wildly successful in Greater China, the Philippines, and Korea,” Friend said.
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The company is also investing in its Nike NKE,
stores to expand both Jordan’s business and that of women, areas where he sees opportunity.
Nike executives talked about the various ways it reaches consumers, including live streaming, which began last year and has grown into select product launches.
And in the third quarter, the company launched its first NFT.
“Nike is operating from a position of strength within its Nike Marketplace strategy by reducing wholesale gates (down >50%; final adjustments including Foot Locker completed), innovating new DTC formats (Nike Live stores, testing stand-alone Jordan North America stores in [fiscal] 2023) and digital experiences, and partnerships for multi-channel membership models,” Baird wrote in a note.
Baird has an outperform rating on Nike shares and cut his price target to $165 from $192.
Nike on Monday night reported better-than-expected fiscal third-quarter results and sales, although China remains a challenge.
Last month, Foot Locker Inc. FL,
Shares plunged after revealing a merchandise strategy that includes less Nike gear.
To see: Foot Locker shares plunge as Nike continues to shift away from wholesale to sell more of its own gear
Nike reiterated the importance of its relationship with Foot Locker during the call.
“To be clear, Foot Locker has always been and always will be an important and important partner of Nike, and it will continue to be so, and it will have a very distinct role in our market strategy as a wholesaler with particular emphasis .on basketball culture, on sneaker culture and on kids, which is a really big and important opportunity for us,” general manager John Donahoe said on the call.
Wedbush analysts took note of the statement, but say investors will continue to be wary.
“While this statement is somewhat encouraging for Foot Locker, we believe investors can remain cautious on Foot Locker until there is clearer evidence that the relationship is on solid footing,” the investors said. analysts.
Wedbush rates Nike shares to outperform with a price target of $163.
Analysts remain optimistic about Nike, which says its range of innovations, its ties to the world of sports and more remain advantages.
“Our key takeaway from Nike’s 3Q22 report is that the company still has levers it can pull to deliver both near-term EPS beats and long-term growth,” UBS wrote in a note.
“Things that Nike can control – its brand, its product innovation engine and its strategy are strong. This, along with its size and scale, gives it the ability to change tactics when the macro environment changes in order to achieve their financial goals.
UBS rates Nike shares as a buy with a price target of $173.
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“With sentiment on Nike worsening in recent weeks amid headwinds from China and uncertainty in Europe, we expect the 3Q print to be the ‘all clear’ signal to be bullish for Nike. 23 as advanced brand DTC strategies and improved inventory position Nike for a rollback in sales and EPS in FY23 (including China) and for its high single-digit EBIT margin outlook low double digits/high for teens through FY25,” Wells Fargo wrote in a note.
Wells Fargo rates Nike shares overweight with a price target of $165.
Nike stock rose 2.8% in Tuesday trading and was down 3.2% from a year ago.
The Dow Jones Industrial Average DJIA,
is up 6.4% over last year.
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