Nike formally announced its strategic partnership with
Fogdog Sports in exchange for a 12% stake in the online
retailer. Fogdog will have an exclusive position with Nike
among online-only retailers for six months, and then Nike is
free to sign deals with other online-only retailers (see THE
DAILY, 9/27). Meanwhile, Fogdog filed Monday to raise as
much as $60M in an IPO, funds of which will go toward
"general corporate purposes, including marketing and sales,
working capital and capital expenditures" (REUTERS, 9/27).
KNIGHT'S VISION: On CNBC, Nike CEO Phil Knight said,
"We believe that the consumers will want to buy a lot of
their athletic equipment on the Internet. And after looking
at the playing field for a while, we determined that Fogdog
was the most aggressive, and shared with us our goals in
terms of performance athletic equipment." Donaldson Lufkin
& Jenrette analyst Dana Cohen believes that Nike is "looking
into the future with Fogdog, when e-commerce and the
sporting goods market are expected to hit a home run."
Cohen: "I think they're being far-reaching in their thought
process, in terms of saying, 'At some point it will be
significant. And in order for it to be significant we've
got to participate, but we want to have some level of
control in terms of how that plays out.'" Knight: "I think
that Nike's Web site is very important to us and Nike.com
will continue to sell a lot of Nike shoes and clothes. But
I think that the consumer, who is the ultimate winner in
this thing, needs to be given other choices as well."
Knight added that he "does not expect online sales to be a
meaningful part of Nike's revenues for the next two to three
years." Nike shares were up 2 9/16, or 4.76% yesterday, to
close at 56 3/8 (CNBC, 9/27). CNNfn's Willow Bay asked
Knight why Nike sought a Web alliance now. Knight: "We've
always wanted to be aggressive. But we wanted to take our
time and get a feel for what was out there and who we ought
to partner up with." Knight, on sales for Nike.com:
"Basically, it's insignificant in terms of our total
picture. But it is growing at a fast rate, so out there
sometime it will be significant." Knight said the deal with
Fogdog is "exclusive" in the e-commerce category "through
March, which is a long time in Internet years. But
obviously, I think looking out three or four years, we'll
have lots of e-commerce sites" (CNNfn, 9/27).
