Nike’s pilot program with Amazon could lift its global sales by 1%

While Nike has managed to rein in costs, its sales have exceed analysts’ expectation.

Nike, the world’s largest footwear manufacturer has disclosed, it would be launching a pilot program with Amazon.com to sell a limited assortments of its wares on its website.

Shares of Nikes, were up by 8.2% at $57.54 after the ringing of the bell. Nike’s quarterly profits and sales have topped analysts’ estimates.

Nike has confirmed it would be directly selling its products on Amazon, rather than through third-party and unlicensed dealers.

“We’re looking for ways to improve the Nike consumer experience on Amazon by elevating the way the brand is presented and increasing the quality of product storytelling,” said Mark Parker, Nike’s CEO on a post-earnings call.

If this pilot project were to turn into a more meaningful partnership, its revenues are slated to increase by $300 million to $500 million in the US, wrote Lindsay Drucker Mann, an analyst with Goldman Sachs in a note to clients.

According to Beaverton, Oregon-based Nike, its core brands including Jordan, along with its sportswear and running categories saw good sales; its selling, general and administrative expenses have come down by 4% to $2.7 billion in the fourth quarter ended May 31.

Earlier in June, the company had stated it would cut 2% of its global workforce as well as trim a quarter of its shoe styles as the company go about with its strategic restructuring.

Although its North American sales were flat, the same in Western Europe, its second-biggest market, were up by 4% in the fourth quarter.

Sales in Greater China have surged by 11%. The hike can be largely attributed to its tie up with the Alibaba Group Holding Ltd’s Tmall.

Nike’s revenues have risen by 5.3% to $8.68 billion, beating analysts’ average estimate of $8.63 billion, according to Thomson Reuters I/B/E/S.

Excluding certain items Nike earned 60 cents per share, well ahead of analysts’ average estimate of 50 cents.

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Categories: Creativity, Entrepreneurship, HR & Organization, Strategy

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