30.06.2017

Nike confirms deal with Amazon to enter in e-commerce

400Nike, the world's largest footwear maker, said on Thursday it would launch a pilot program with Amazon.com to sell a limited product assortment on its website.

In a call with analysts Thursday, Nike CEO Mark Parker said that Amazon would carry "a limited Nike product assortment" of footwear, apparel, and accessories, and that Nike was seeking to improve its presence on the e-commerce site. "We're in the early stages, but we really look forward to evaluating the results of the pilot," Mr. Parker said.

Nike's revenue could increase by $300 million to $500 million in the United States, or 1 percent in global sales, if the pilot turns into a more meaningful partnership, Goldman Sachs analyst Lindsay Drucker Mann said in a client note.

Beaverton, Oregon-based Nike, which saw greater demand for its core brands including Jordan, and in sportswear and running categories, said its selling, general and administrative expenses fell 4 percent to $2.7 billion in the fourth quarter ended May 31.

In the face of intense competition in North America, Nike has been focusing on its new and core brands such as ZoomX, Air VaporMax and Nike React. The company earlier in June said it would cut 2 percent of its global workforce and trim a quarter of its shoe styles as it looks to become nimbler.

Nike's partnership with Amazon follows nearly a decade of meetings between the two companies and long-running resistance by Nike to Amazon's pitches. A contracting sportswear retail industry coupled with an expanding marketplace for Amazon's third-party sellers helped spur the agreement, according to people familiar with the matter.

The upside for Nike is that it will get access to Amazon’s many millions of users, including the estimated 80 million in the US who are high-spending Prime members. Amazon is rapidly growing into the top e-commerce destination for apparel and footwear in the US, and recently announced a new program called Prime Wardrobe that will allow members to order clothes for free and only pay for those they decide to keep.

While Nike's North America sales were flat, sales in Western Europe, its second-biggest market, were up 4 percent in the fourth quarter. Sales in Greater China jumped 11 percent, the company said.

In China, Nike has revamped stores and increased online efforts with Alibaba Group Holding Ltd's Tmall in a bid to reinvigorate demand in the world's No. 2 economy.

Revenue rose 5.3 percent to $8.68 billion, beating analysts' average estimate of $8.63 billion, according to Thomson Reuters I/B/E/S.


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