A Nike-Amazon deal has sporting goods chains running scared
NEW YORK - Shares in several major sports chains hit 52-week lows on word that Nike (NKE) may soon be selling its gear directly on Amazon (AMZN).
Goldman Sachs (GS) said Wednesday it believed the deal would give Nike better exposure to Amazon's huge retail channel and customer base, especially millennials.
Nike goods can already be found on Amazon subsidiary Zappos.com, and its shoes and gear can be found through third-party sellers on Amazon. Goldman believes the deal would give Nike better control of its brand's presentation on the site.
But investors saw mostly the gravitational pull of Amazon, sending shares of Dick's Sporting Goods (DKS), Hibbett Sports (HIBB), Big 5 Sporting Goods (BGFV), Finish Line (FINL) and Foot Locker (FL) plummeting between 4 percent and 5 percent in Wednesday trading.
It's the third sector in less than a week that has been ravaged over fears that Amazon would soon become a disrupting force.
Amazon said Friday that it would buy Whole Foods (WFM) for $13.7 billion, pummeling shares of grocers like Kroger (KR). Retail clothing companies, already in danger as people increasingly shop online, or just elsewhere, took a dive Tuesday when the online behemoth announced its Amazon Wardrobe program for Prime members.
Wardrobe essentially creates a dressing room at home, allowing customers to order clothes with no money up front, keep them for a week and send whatever they don't want back in a resealable, postage-paid box.
Deep hurting felt by those to sectors spread to sports chains Wednesday on the Goldman Sachs report.
It doesn't take much to spook investors in the sporting goods sector, however. The years since the 2008 recession have not been kind.
Sports Authority, MC Sports, Sports Chalet and Eastern Outfitters have all filed for bankruptcy since then. Those that remain are hoping a sector consolidation will ease competition.
The sale of Nike goods on Amazon is unlikely to make anything easier for sports retailers.
