Overheard On Wall Street: Nike & Rack Room Shoes

Nike Lunar Midnight Pack
Nike Lunar Midnight Pack.
Courtesy of Nike

Outside of earnings chatter, it has been a quieter week on The Street. Nevertheless, FN’s business editor rounded up a couple of shoe business stories that you may have missed.

Read on for the buzz.

Nike Continues To Grow In China

On March 9, Citi Research analyst Kate McShane, along with a few of her colleagues, released the findings of their proprietary survey of independent Nike Inc. retailers in China. The survey sought to address sales trends during Nike’s third quarter, the competitive landscape and current footwear trends.

Based on the survey, Nike’s Q3 sales increased mid-single-digits year-over-year in China, with apparel up 5.6 percent and footwear up 5.5 percent year-over-year, according to McShane.

“While mid-single-digit growth is slower than what Nike has reported, we attribute the difference to the survey measuring ‘sell-through’ vs. ‘sell-in,’ ” McShane said, adding that the majority of retailers (66 percent) indicated that sales were mostly unit-driven in Q3.

“Retailers noted that sales were stronger around this year’s Chinese New Year shopping period than last year, with increased traffic from marketing and select promotions; however, promos on Nike product appeared to be very limited compared to other brands (and lower than prior years),” McShane added.

Greater China is Nike’s fourth largest geographic segment at 10 percent of total sales, McShane said.

China-based retailers cited product innovation, color and new brands as the key drivers of athletic traffic this quarter.

Rack Room & Off Broadway Host First Joint-Management Meeting

While the firm is not publicly traded and therefore doesn’t often land on Wall Street’s radar, Rack Room Shoes also made a few business moves this week.

The Charlotte, N.C.-based firm and its counterpart Off Broadway Shoe Warehouse, which Rack Room acquired in 2002, hosted its first-ever joint managers’ meeting in Orlando, Fla., this week.

The decision to host the event, the company said, reflected president and CEO Mark Lardie’s vision to “strategically unite business operations.”

During the next two years, the company plans to add 40 to 50 new Rack Room Shoes locations and 10 new Off Broadway Shoe Warehouse locations. Lardie, Rack Room said in a release, also signaled that more acquisitions could be in the works, in order to “increase the company’s buying power and visibility.”

“Both the Rack Room Shoes and Off Broadway Shoes brands have proven foundations built on discipline and creativity,” Lardie said. “Rack Room Shoes focuses on the millennial mom, a woman who values her time, efficiency and trend-right products, while Off Broadway Shoe Warehouse targets the style-conscious shopper, ages 25 to 34, who embraces a braver fashion approach, yet loves a good deal.”

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