JD Sports is acquiring chains at a rapid pace, but in my opinion it seems a bit hasty and the value given to each acquisition, when compared to Hibbett Sports acquisition of City Gear shows a distinct issue with how much is being paid. Could the issue be the cost of real estate in the south vs the West Coast and Northeast where Shoe Palace and DTLR/Villa are located?
Possibly… but that isn’t the biggest issue. FootLocker is rightfully looking towards private label and acquisitions of businesses that can operate beyond the relationship with Nike. FootLocker’s business is going to face headwinds because of their real estate and locations primarily located in dying malls. Their investments help in a number of ways, but all of these companies are going to be squeezed by one major factor.
In 2015 Nike announced a goal of getting to 50 Billion a year in revenue. They obviously aren’t close. Covid-19 has helped Nike to expedite a few questionable business decisions that aren’t being given scrutiny because they happened during this pandemic. In order to hit 50 Billion Nike is opening another 30 stores, but to attain that elusive 50, Nike will either have to increase their share of the market through wholesale relationships, or they will have to continue with their Consumer Direct Acceleration and build more doors to reach their customer.
This doesn’t bode well for anyone carrying Nike products. Think about Apple and you can see the future for Nike.
Sites shown in this video:
https://finance.yahoo.com/news/jd-sports-buys-shoe-palace-073914710.html
https://www.ft.com/content/fe765feb-a279-4fc6-a3c5-141fd2cca8bd
The Overlooked Aspect of JD Sports’ $558 Million Acquisition of Finish Line $FINL | Business
https://hibbettsportsinc.gcs-web.com/news-releases/news-release-details/hibbett-sports-acquire-city-gear
https://www.nasdaq.com/articles/foot-locker-buys-minority-stake-in-carbon38-invests-%2415m-2018-01-23
https://www.cnbc.com/2019/02/25/foot-locker-invests-12point5-million-in-retailer-rockets-of-awesome.html
Insider Ties Ep. 169 | Why Did FootLocker Invest 3 Million Into The NTWRK App?
I.T. Ep. 138 | Footlocker Makes a Major Move with 2 Million Dollar Investment In Pensole
https://news.nike.com/news/nike-inc-targets-50-billion-in-revenues-by-end-of-fy20
Biz Talk Ep. 7 | Why Nike Opening 30 New Stores Is Important
