NKE: Ditching the Money Losers

 

Nike announced this morning that it is closing down the Denver NikeTown. This is a good thing. For those of you that have not been in a NikeTown, they’re massive flagship stores that do nothing but hemorrhage cash.

 

That’s probably not an entirely fair statement, as running SOME of these stores  -- the ones that are strategically positioned in high-quality, high-traffic locations – help build brand awareness in a way that marketing dollars would otherwise be spent.

NikeTown Denver joins Costa Mesa and Honolulu as the mammoth stores closed over the past several years.  

 

The good news is that this really leaves only one major money-loser – which is NikeTown Portland. Why such a money loser? It disproportionately relies on tourists, as locals are going to know at least someone who works at Nike who can get them gear at the employee store at half price.  As it relates to tourists -- although Portland is a  beautiful city, it is not a travel destination like New York, Las Vegas or London. But in the end, it’d probably be both embarrassing, and politically unpopular for the company to close down its presence in downtown Portland.  

 

The positive impact here is less than a penny per share. So it really doesn’t move the needle. But it’s the kind of move Nike shareholders should want to see.  Most importantly, it does NOT signify a shift away from retail, but rather a step toward profit.

 

NKE: Ditching the Money Losers - NKE NikeTown 4 11

 



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