Back to top

NIKE (NKE) Buys Invertex, Moves Closer to Strategic Goals

Read MoreHide Full Article

NIKE Inc. (NKE - Free Report) looks prim with its customer strategy through progress on the Consumer Direct Offense. The company recently closed its second acquisition in a month’s time, both of which should take it closer to the goals of the Consumer Direct Offense strategy.

Yesterday, the company acquired an Israel-based computer-vision company Invertex Ltd. that will strengthen its digital portals as well as the team. The acquisition is likely to aid in boosting customer involvement at every touch point with the use of computer vision and artificial intelligence technologies. The addition of this software maker to NIKE’s business is expected to improve its innovation quotient. The terms of the deal remained under covers.

Prior to this, NIKE acquired a leading data analytics firm, Zodiac Inc. for an undisclosed amount, on Mar 22. This is likely to accelerate its Consumer Direct Offense strategy by contributing to the 2x speed factor of the plan. The company targets serving customers faster and providing a more personalized experience across the globe with a particular focus on Nike+ members.

These acquisitions clearly demonstrate NIKE’s focus on its Consumer Direct Offense plan. Together, Zodiac and Invertex are likely to enhance the innovation and speed components of the plan.

NIKE remains on track with its Triple Double and Consumer Direct Offense strategies, which position it well to capture the strong global demand for athletic footwear and apparel. The company is building momentum across operating regions by making the right product available at the right time while establishing a direct connection with consumers. In doing so, it is focusing on the key aspects of the triple-double strategy – 2x innovation, 2x direct and 2x speed.

Powered by this strategy, the company is progressing on Consumer Direct Offense by doubling innovation as it creates and scales new product platforms. Through 2x direct, it is building a close relationship with its customers by creating differentiated retail concepts, leading to mobile apps, dotcom and digital partners. Lastly, with 2x speed, it is focusing on meeting consumer demand faster and delivering relevant personalized products.

Additionally, NIKE’s recently reported third-quarter fiscal 2018 results reflected a significant progress in Consumer Direct Offense, positioning it for strong profitable growth in the future. Its revenues and gross margin exceeded guidance, driven by the launch of new products and innovation platforms that will scale over time. This resulted in double-digit revenue growth across international geographies, led by Greater China.

Further, it closed the fiscal third quarter with expectations of a trend reversal in its North America business in the fiscal fourth quarter, backed by the introduction of new innovation platforms and differentiated customer experiences in the marketplace. All these factors reflect Nike’s growth prospects.

Though the NIKE stock did not react much to the news, it has improved 0.5% in the past month against the Consumer Discretionary sector’s decline of 6.4%. In the past year, this Zacks Rank #3 (Hold) stock surged as much as 22.4%, outperforming the sector’s 5.7% growth.



Looking for Some Trending Picks? Check These

Some better-ranked stocks in the same industry include Rocky Brands, Inc. (RCKY - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Skechers U.S.A., Inc. (SKX - Free Report) , carrying a Zacks Rank #2 (Buy). Investors may also consider Columbia Sportswear Company (COLM - Free Report) from the broader sector, which also sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rocky Brands has delivered average positive earnings surprise of 256.3% in the trailing four quarters. Further, the stock has returned 43.5% in the last six months.

Skechers has advanced a substantial 62.3% in the last six months. The stock has long-term growth rate of 15%.

Columbia Sportswear, with long-term earnings per share growth rate of 9.6%, surged 30% in the last six months.

Looking for Stocks With Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>



More from Zacks Analyst Blog

You May Like