Nike's direct-to-consumer offense is 'on steroids:' Analyst
NKE) from $130 to $150 off the strength of what the Swoosh brand calls its “consumer direct offense.”
“I think business is really good. Nike is switching gears … to be more direct to the consumer,” SIG analyst Sam Poser told Yahoo Finance.
upcoming layoffs of 7% to 10% of its workforce as focus rapidly moves further to direct consumers. FX tailwinds will drive Nike beyond its FY23 $50B revenue target,” Poser wrote in a note to clients entitled “Nike, Inc.: Consumer Direct Offense on Steroids; Digital/ DTC Transformation = LT Tailwinds.”” data-reactid=”22″>“We think the improving trends and cost savings from upcoming layoffs of 7% to 10% of its workforce as focus rapidly moves further to direct consumers. FX tailwinds will drive Nike beyond its FY23 $50B revenue target,” Poser wrote in a note to clients entitled “Nike, Inc.: Consumer Direct Offense on Steroids; Digital/ DTC Transformation = LT Tailwinds.”
SIG is confident that Nike CEO John Donahoe can lead the Swoosh brand through its digital evolution.
“Nike has accelerated plans to morph into a more digitally centric company spurred by Mr. Donahoe’s Consumer Direct Acceleration strategy that augments Nike’s Consumer Direct Offense. We expect digital growth in FY21 to remain exceptionally strong as Nike continues to invest heavily in its digital infrastructure.”
Direct-to-consumer (DTC) growth accounted for 33% of the Swoosh brand’s revenue in FY20, up 3% from FY19. SIG expects Nike’s DTC growth to continue to outpace wholesale growth for the foreseeable future. The firm is also confident that the company will close in on 50% penetration well within the next five years.
DKS) and Foot Locker (FL)
“Nike is very good at … the scarcity model. They talk about that all the time. I don’t think that’s going anywhere. Let’s say Foot Locker or Dick’s or Hibbett is buying …10,000 pairs of a big Jordan shoe. Let’s say X pairs get put in the stores, and then X pairs get sold online,” he said.
“The online portion of that money will not be sold down the road, won’t be sold to the stores anymore. … They’ll get, let’s say a commission for the sale, through their website,” he said.
However despite the overall positive sentiment, SIG believes that Q1 of 2021 will be challenging for the sportswear giant. Poser expects Nike to get back into form by Q2 of 2021.
@ReggieWade.” data-reactid=”70″>Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.
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