(Reuters) - Foot Locker (FL.N) shares jumped 20 percent on Wednesday after third-quarter results showed shoe sales turning back to growth thanks to a boost from Nike’s latest lines, heading off fears it was losing out to Amazon (AMZN.O) and other online stores.
The retailer’s same-store sales from footwear climbed in the three months ended Nov. 3 after falling for six consecutive quarters, Foot Locker said, as U.S. shoppers bought Nike’s new Air Max shoes.
Analysts have feared that Nike’s (NKE.N) move about two years ago to begin selling via Amazon and its own stores would hurt Foot Locker and other third-party sellers which rely on relationships with manufacturers to pull shoppers.
But Tuesday’s results suggested that Foot Locker’s tie-up with Nike was intact, and even growing, leading at least seven Wall Street analysts to raise their 12-month targets on the New York-based retailer’s stock price.
“Foot Locker’s position continues to improve and it remains a top destination for Sneakerheads and a strong partner for multiple brands, including Nike,” Wedbush Securities analyst Christopher Svezia said in a report.
Its ability to continue collaborating with Nike to launch products exclusively for its core shoppers is keeping sales humming, said Cristina Fernández at Telsey Advisory Group.
The two companies have tied up to improve the customer experience in stores by hiring trained associates to inform shoppers about exclusive sneaker launches by Nike.
In Los Angeles Foot Locker launched a Jumpman store with an investment from Nike’s Jordan brand to house curated Jordan collections.
“I get excited about launches, but I get more excited about the collaborations that we’ve got with our great vendor partners,” Richard Johnson, Foot Locker’s chief executive officer, said on Tuesday’s conference call with analysts.
Nike’s own resurgent shoe sales, especially of Air Max shoes, is benefiting Foot Locker, Jefferies analyst Janine Stichter said.
“While we don’t see the bear case around (Nike’s) push toward a Consumer Direct strategy going away just yet, we do think that (Foot Locker’s) commentary around the strength of their relationship with Nike should help to quell some fears,” she said.
Stichter raised her price target on Foot Locker shares by $2 to $62. The stock was last up 15 percent at $53 in premarket trading.
If the gains hold, Foot Locker shares are on track for a five-month high, setting them on course to finish higher in 2018.
Reporting by Nivedita Balu in Bengaluru; Editing by Sai Sachin Ravikumar