By Darion Curtis
- Nike will begin testing Jordan-branded stores in North America in fiscal 2023
- The sneaker resale market is estimated at $2B
The sneaker resale is creating new markets and services with incumbent sneaker producers wanting in on the action. Nike (NKE -2.98%) will begin testing Jordan-branded stores in North America in fiscal 2023 as part of its direct-to-consumer strategy to disrupt the market. Sneaker culture has buoyed Jordans to be treated as a bona fide asset class product worthy of informed investment valuation, like any other commodity and Nike stands to make even more money with an efficient DTC plan.
Why This Matters: According to TheStreet, Nike’s digital sales now represent 26% of the company’s revenue. The company has already opened Jordan-branded stores in China, Korea, the Philippines and Brooklyn, NY that carry exclusive releases. Nike’s Air Jordan 1’s now tote their own investment opportunities with the sneaker resale market estimated to be worth $2 billion. StockX’s best selling sneaker of 2020 was the Air Jordan 13 Retro Flint. With Nike seeing revenue of $4.7 billion surpassing CEO Mark Parker’s goal of $4.5 billion, it seems like the right time for brick and mortar Jordan-branded stores to stomp onto North American shores.
In terms of an exclusive or hyped release the alternative class component becomes relevant. Without a doubt the Jordan brand is high-demand and because of this the price is high with low production. Cowen, a full service investment bank, recently published an insight into sneaker reselling where they concluded sneaker reselling to be a “booming alternative asset class”. Alternative assets are believed to increase a portfolio’s risk-adjusted return.
Situational Awareness: PayPal’s (PYPL -4.39%) explosion onto the web in the early 00’s solidified sneaker reselling as a viable side hustle. Sites such as eBay(EBAY -4.04%), Sole Collector and NikeTalk have become online meeting places for reselling nostalgic and hard-to-find shoes as well.
It’s almost impossible to predict what will happen with Nike’s earnings following the release of more Jordan-branded stores in North America. However, if you are looking to diversify or clear some risk from your portfolio, sneaker resale may be a nice addition.
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