Jordan continues to be a slam dunk for Nike (NKE).
The sneaker and apparel brand, which Nike launched with NBA All-Star Michael Jordan in 1997, is on track to become the second-largest footwear brand in North America, Guggenheim analyst Robert Drbul wrote in a client note titled “Lots of Air Left in Brand Jordan” on Tuesday. (The Nike brand has the top spot.)
According to Drbul, the hype is still there: In the company’s fiscal fourth quarter earnings, the Jordan brand brought in $6.59 billion in revenue — 12.9% of Nike’s total fiscal year 2023 sales.
And the brand has plenty of momentum heading into the holidays, especially around the re-release of a sneaker that first debuted in 1996.
“The sneaker industry is anticipating a Holiday launch of the Air Jordan 11, at $230, which is considered by many as one of the greatest Jordan sneakers ever,” Drbul wrote, adding that Nike plans to include new colorways and editions in the release, such as the “Gratitude,” “Defining Moments Pack,” and “Concord” colorways.
“We expect these sneakers to create a lot of brand Heat and keep Brand Jordan relevant for Sneaker Heads,” the analyst added.
Jordan an ‘attractive growth vehicle’ amid some concerns for Nike
After nearly 30 years, the Jordan brand “remains extremely relevant” and “an attractive growth vehicle” for Nike, even as the footwear space experiences some weakness, Drbul said.
Total searches for Jordan brand keywords are up on most major retailers’ websites, per Guggenheim and SimilarWeb data, which also included searches on Google, Bing, and the private browser DuckDuckGo in the results.
Searches for the brand are up 24.8% year over year on JDSports.com, 17.1% on Dick’s Sporting Goods (DKS), 16.4% on Foot Locker (FL), 10.6% on the sneaker site goat.com, 2.7% on eBay (EBAY), 1.4% on Amazon’s website (AMZN), and 0.2% on Walmart.com (WMT).
On fightclub.com, however, searches are down 39.4% from a year ago.
There’s another perk for investors: Nike is a brand that is engaging Gen Z by gaining social media hype with innovation and new products, Barclays consumer discretionary analyst Adrienne Yih told Yahoo Finance. The brand also benefits from secular lifestyle trends like health and wellness.
Yet despite the Jordan interest, Nike stock is down nearly 14% year to date.
Shares hit a rough patch over the last month, dropping over 7% after Foot Locker posted disappointing results and cut its full-year outlook. Historically, Nike accounts for more than half of Foot Locker’s total sales, Yahoo Finance’s Josh Schafer reported.
One concern for Nike is the drop in monthly downloads and usage of SNKRS, an app created by the athletic apparel giant. However, Drbul argued there have also been signs of weakness within mobile and web traffic for sneaker resellers, which led the team to believe it is “not a Brand Jordan problem.”
As signs of stress begin to show at some large retailers and “given macro uncertainties and a slowdown in discretionary spending” so far this year, Drbul added the firm believes “the weakness in the secondary sneaker market is logical.”
Another challenge in recent years has been Nike’s efforts to redo its distribution network, Oppenheimer senior analyst Brian Nagel told Yahoo Finance.
“One of the challenges for Nike over the last few or several years now has been that they’ve had to … dismantle or … reconfigure their wholesale distribution network because they had to think about where their partnerships and wholesale [are].”
Nike is expected to post its first quarter fiscal 2024 financial results on Thursday, Sept. 28, after the market close.
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].
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