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Nike (NKE) Stock Climbs, Confirms Deal with Amazon

Shares of Nike, Inc. NKE gained 9% in midday trading Friday after the company confirmed on Thursday that it will start selling a limited product assortment directly on Amazon.com AMZN.

Nike is one of the best-selling brands on Amazon, but until now the company’s products have been sold only by third party vendors. In exchange for selling directly to them, Nike won concessions from Amazon for the online retailer to be stricter in policing counterfeits and unsanctioned sales of Nike products.

While the deal is still in the early stages of development, Nike will offer products such as athletic footwear, apparel and accessories. If the profits from these sales look positive, Nike may expand the number of products sold via Amazon.

Nike could see revenue increases of $300 to $500 million from this partnership, analyst Lindsay Drucker Mann estimated in a client note. Drucker Mann, from Goldman Sachs, was the analyst who reported earlier this month that a Nike-Amazon partnership could be near.

Nike also announced plans to sell products through Facebook’s FB Instagram. Because of recent retail bankruptcies, such as The Sports Authority, and the weakening traffic at stores like Macy’s M, J.C. Penney JCP and Kohl’s KSS, Nike has been searching for new ways to engage with consumers online.

“We are looking to improve the Nike consumer experience on Amazon by elevating the way the brand is presented and increasing the quality of product storytelling,” Nike CEO Mark Parker said.

This announcement comes on the heels of Nike’s positive fourth-quarter fiscal 2017 results. The company posted earnings of $0.60 per share and revenues of $8.68 billion. This beat Zacks’ earnings and revenue estimates, which were $0.49 per share and $8.61 billion, respectively.

NKE remains a Zacks Rank #3 (Hold). Zacks estimates that the company will have positive year-over-year growth next year.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Facebook, Inc. (FB): Free Stock Analysis Report
 
Macy's Inc (M): Free Stock Analysis Report
 
J.C. Penney Company, Inc. Holding Company (JCP): Free Stock Analysis Report
 
Kohl's Corporation (KSS): Free Stock Analysis Report
 
Nike, Inc. (NKE): Free Stock Analysis Report
 
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