Nike’s plan to drive sales from women’s products
Nike’s (NKE) women’s business clocked sales of $5.7 billion in fiscal 2015 on a wholesale equivalent basis. Nike is the world’s top athletic brand for women according to Jeanne Jackson, Nike’s President of Distribution & Merchandising. The company estimates that global sales from its women’s business will nearly double in five years, reaching $11 billion by fiscal 2020.
Nike is looking to drive sales, via both its owned stores and partnerships with retailers like Foot Locker (FL) and DICK’S Sporting Goods (DKS). The company recently opened a number of women’s only stores in California, Shanghai, and London.
Nike is looking to have as many as 1000 premium spaces dedicated to women’s products, both within its owned stores and those owned by sporting goods retailers by fiscal 2020. It has opened 173 such spaces over the last year according to comments by Christina Shi, Nike’s President, Direct-to-Consumer.
Peers focus on women
Under Armour (UA) is upbeat abouts the prospects of its women’s business. At its 2015 Investor Day, the company mentioned that its sales from women’s products could equal or even exceed sales from men’s products over the longer-term. Under Armour is projecting total sales of $7.5 billion in 2018, up from $4 billion expected in 2015.
Lululemon Athletica (LULU) on the other hand, primarily caters to women. It’s growing its men’s business.
According to Trevor Edwards, President of Nike Brand, “women who are part of our service ecosystem spend more than two times with us than those who aren’t.”
Digital is key for driving sales of women’s wear for sports gear firms. A majority of the users on digital training apps are women. The membership numbers are growing exponentially in the millions. For example, the Nike Training Club has recorded about 21 million downloads and offers about 100 different workouts.
Higher recorded training sessions means higher workouts and translates to higher demand for workout clothing and footwear. Also, Nike’s Run Clubs and Training Clubs are hugely popular, and tend to drive sales both at stores, some of which work as meeting hubs, and online.
Nike, Lululemon Athletica and Under Armour have also benefited from the singular shift towards athleisurewear in developed markets. A number of apparel firms including Tory Burch, The Gap (GPS), and L Brands (LB) have launched their own lines. Nike’s competitor, Columbia Sportswear (COLM) purchased the prAna line of yoga wear in May 2014, to benefit from the growth in the category.
Nike constitutes 0.77% of the holdings in the iShares S&P 100 ETF (OEF).