Nike said that it will "change how it works with retailers over the coming years, focusing on just a few dozen of them as it works through a challenging market for sportswear makers," according to Sara Germano of the WALL STREET JOURNAL. In presentations to investors yesterday, Nike execs "emphasized the company’s ongoing plans to sell more goods digitally and directly to consumers." Nike plans to "continue working closely with 40 partners, ranging from brick-and-mortar standbys" like Foot Locker and Nordstrom to "newer partners like Amazon and online luxury boutique Farfetch, on new apps and in-store experiences." The company said that it "wouldn’t eliminate the thousands of other retail accounts that it currently manages." However, Nike Brand President Trevor Edwards said “undifferentiated, mediocre retail won’t survive.” Nike "stopped short of updating its forecast" of $50B in revenue by '20, a target it set in '15 (WSJ.com, 10/25) Nike Chair, President & CEO Mark Parker said the company plans to "achieve our $50 billion target within the next five years." He added, "What we laid out today was a high single-digit revenue growth and mid-teens EPS target" ("Closing Bell," CNBC, 10/25). In Portland, Jeff Manning notes Parker and his team "barely acknowledged the sales slowdown, which prompted the company to lay off 1,400 workers over the summer." Execs did "acknowledge that digital technology and changing consumer preferences have created chaos in the retail sector." The company brought Kobe Bryant to the stage to "offer a sneak peak at the Kobe 360 basketball shoe" (Portland OREGONIAN, 10/26).
STIMULATION OVERLOAD? In Portland, Clare Duffy noted Nike "plans to put" 25% fewer styles to market starting in January. This move, "called 'edit to amplify,' will allow the company to focus more on its most popular and successful styles, as well as speed-up production." Nike President of Categories & Product Michael Spillane said, "We’re editing to amplify on the power products that consumers love." Through the company’s partnership with manufacturing company Flex, Nike is "bringing manufacturing closer to the crucial North American market." In doing so, the company "hopes to soon take products from design to the retail shelf within six months ... with same-day service in select cities" (BIZJOURNALS.com, 10/25).
LOOKING AHEAD: CNBC's Sara Eisen noted investors liked the fact that three-quarters of Nike's projected growth "is going to come from international." That currently accounts for around half of growth right now. Parker said, "China's a really critical market, and it's a big part of that growth potential. But we also see that in Asia Pacific, Latin America and then of course Europe." He noted the "appetite for Nike in China, as the No. 1 brand, is incredibly strong." Parker noted Nike's partnership with Amazon is "still in the pilot stage," and the company is "still conversing on how to best move forward." Parker: "We're encouraged and we've seen a lot of learnings on both sides over the past few months" ("Closing Bell," CNBC, 10/25).
