Nike (NYSE:NKE), the maker of athletic footwear, has rehired Tom Peddie, a seasoned executive who retired from Nike in 2020, Bloomberg reported. Tom Peddie has now been appointed as Vice President of Marketplace Partners.
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Peddie’s appointment aims to fortify Nike’s wholesale strategy amidst slowing sales, increased competition, and strained relationships with retail partners.
Nike Faces Challenges with Shift to DTC Model
In recent years, Nike has shifted from a wholesale-centric model to a direct-to-consumer (DTC) approach. The DTC channel includes sales through Nike’s stores, website, and apps. This transition has boosted profits and enabled Nike to leverage customer data more effectively.
However, the DTC model is costly, requiring more money for marketing and infrastructure. It also means Nike now has to handle returns and inventory, which wholesale partners used to do. In an interview with CNBC, Nike CEO John Donahoe said the company focused more on its DTC strategy, which affected its relationships with wholesale partners like Macy’s (NYSE:M) and Designer Brands (NYSE:DBI).
Nonetheless, Donahoe said Nike is working to fix these relationships.
Renewed Focus on Wholesale
During the Q3 Fiscal 2024 conference call, Nike’s leadership highlighted the importance of wholesale partners in driving innovation and connecting with consumers. They unveiled plans to increase investments in wholesale to bolster and expand the overall marketplace.
This renewed emphasis aims to harmonize Nike’s DTC strategy with robust wholesale partnerships, address present challenges, and position the company for future growth.
Is Nike Stock a Good Buy Now?
Nike stock is down about 32% year-to-date, reflecting pressure on its top line. Wall Street analysts maintain a cautiously optimistic outlook on Nike stock as the company focuses on product transition and innovation.
With 13 Buys, 17 Holds, and two Sell recommendations, Nike stock has a Moderate Buy consensus rating. Analysts’ average price target on NKE stock is $92.48, which implies 26.6% upside potential from current levels.
