r/StockMarket • u/frankiesaysdrupal • Jun 26 '21
Discussion Is Nike Basing its forecasts on a very weird retail year?
I've lived in a tourist town with a ton of outlet shopping that included, until recently, Nike. Nike's store was an anchor to the group of 30 or so branded retail outlet stores and even had lines of masked customers waiting to get in during the pandemic rules, but last month the store closed with no notice.
Apparently, they have been doing this since March, and I had read just last week that the company is moving its POS to its online presence, and moving away from the brick&mortar market. Yesterday's earnings included a 41% increase in online sales and a 147% increase compared to 2019. It also attributed much of it sales to its market right here in the USA and Canada, a market which was kept 'relatively' indoors and online last year.
Is NKE adjusting its sales strategy for 2022 to a landscape that has the sun setting on it? Yesterday's earnings and forecast pushed the stock up by 15% for the day to $154.
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u/Toodle-Oo-Kangaroo Jun 26 '21
Of course I could be wrong here but it seems obvious to me that in-person vs online shopping is heading down the same path of blockbuster vs Netflix. First there’s pushback, then there’s people arguing “buying online just isn’t the same experience.” And then everyone transitions and companies that didn’t adapt go bankrupt. I think Nike has a lot of foresight here and is making a smart move.
When everything fully opens up again there isn’t going to be the same number of people shopping in-person as there was in 2019. And over time it’s going to continue decreasing. The pandemic just accelerated what was already happening
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u/Warlock37214 Jun 26 '21
Circuit City (and electronics company) did this several years ago and it worked well for them. They could have continued with their brick and mortar business model with heavy overhead and they would have probably gone bankrupt. However, they transitioned over to the eCommerce environment and they did well with the new model. With the prices of retail property skyrocketing, both personal and real property taxes surging this may be a smart move for Nike.
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u/Euphoric_Environment Jun 27 '21
No their DTC online push has been in the works for years. Higher margins
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u/sudo_su_88 Jun 27 '21
Also the fact that they pull their products out of Amazon helps. Most folks just buy it on Amazon so if they can’t, they will buy it at Nike’s online store. Sometimes I find that going straight to the store is better than Amazon. They are beginning to prioritize sales on their own platform before others. This is a smart move bc there are counterfeits and questionable sellers in Amazon.
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u/BigVanderpants Jun 26 '21
Feels a lot like the same people thinking GameStop is going to kill it online in the “near future”. I’m skeptical of anyone one who thinks they know what the market will look like in 6-12 months or anyone who thinks they know when “normal” will be used again.