Finance

Nike sneaker deal shows it’s becoming even more important to Foot Locker

Published

6 years ago

August 23, 2018

Ethel Jiang

Consumer shopping at House of Hoops during the Foot Locker 34 th Street grand opening.AP/Bennett Raglin

Foot Locker has launched a “Discover Your Air” campaign in which it will exclusively sell a number of Nike sneakers.
Nike represents nearly 70% of Foot Locker’s merchandise purchases.
As Nike improves, so too should Foot Locker, according to Jefferies analysts.
Watch Foot Locker trade in real-time here.

Nike is becoming even more important to its partner Foot Locker, according to Jefferies analysts.

Foot Locker will start exclusively selling Nike sneakers including the Air Max Plus, Air Max 97, and Air Max 95 on Thursday, as part of its ‘Discover Your Air’ campaign. This new collaboration between the two companies shows Nike is still reliant on Foot Locker outlets even as the apparel giant pushes its direct-to-consumer strategy, a group of analysts led by Janine Stichter said in a note sent out to clients on Wednesday.

“We believe Nike has been actually double downing on its commitment to Foot Locker, while shrinking its base of non-core partners, and their launch of exclusive product and a cohesive marketing campaign with the company is a testament to this,” they said.

In a Monday note, the analysts said that Foot Locker helps Nike reach a customer who wouldn’t otherwise purchase from their website because around 30% of Foot Locker’s purchases are done in cash.

They also found that Nike represents nearly 70% of Foot Locker’s merchandise purchases, and Foot Locker’s quarterly same-store sales have a strong 79% correlation with Nike’s North American sales growth.

“We continue to believe the resurgence in Nike will ultimately translate to improvement at Foot Locker,” they said.

The group believes Foot Locker’s stock will soar 24% to $65.00 and maintains a “Buy” rating on the company.

Shares of Foot Locker are up 11% this year and Nike’s are up 55%.

Ethel Jiang/Business Insider