Nike Sneaker Deal shows it’s getting even bigger for Foot Locker

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

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

Foot Locker will begin selling exclusively 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 that Nike is still dependent on Foot Locker outlets even as the clothing giant pushes its direct-to-consumer strategy, a group of analysts led by Janine Stichter said in a note sent to clients on Wednesday.

“We think Nike was actually double slaughter on its commitment to Foot Locker, while reducing its non-essential partner base, and their launch of an exclusive product and consistent marketing campaign with the company speaks to this,” they said.

In a Monday note, analysts said that Foot Locker helps Nike reach a customer who would not otherwise purchase from its website, as approximately 30% of Foot Locker purchases are made with cash.

They also found that Nike accounts for nearly 70% of Foot Locker’s merchandise purchases, and Foot Locker’s quarterly comparable store sales have a strong correlation of 79% with Nike sales growth in North America.

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

The group estimates Foot Locker shares will climb 24% to $65.00 and maintain a “Buy” rating on the company.

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

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Ethel Jiang/Business Insider


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