Nike expands distributor business model in South America
American sports and footwear giant Nike, Inc. announced on Thursday that it is transitioning its Nike brand business in Argentina, Brazil, Chile and Uruguay to strategic distributor partnerships with local partners Grupo Axo and SBF.
Under the new deals, Grupo Axo will acquire Nike’s operations in Argentina, Chile and Uruguay, while Grupo SBF will take over the brand’s operations in Brazil through a wholly owned subsidiary.
“Nike manages successful distribution businesses around the world and expanding this model in the rest of South America will help drive sustainable, profitable growth,” commented Elliott Hill, Nike, Inc’s president for consumer and marketplace, in a release. “Our partners are committed to serving local consumers and elevating retail and digital experiences and share Nike’s values and commitment to employees.”
Founded in Mexico in 1994, Grupo Axo has exclusive distribution rights for more than 30 big-name brands in Mexico and Chile, from Calvin Klein, Kate Spade and Tommy Hilfiger, to Abercrombie & Fitch, Bath & Body Works and Victoria’s Secret.
It also has an existing partnership with Nike, operating five stores for the brand in Mexico.
The company uses a strategic multi-channel operation model and operates over 2,000 points of sale in department stores and more than 600 boutiques.
Based in São Paulo, Grupo SBF owns the Centauro brand and operates the largest sporting goods retailer in Brazil and across Latin America, boasting 209 stores.
Its deal with the American sportswear brand will see the company take control of 24 Nike Factory locations and 15 stores run by partners, as well as the local Nike e-commerce site.
According to a release published by Grupo SBF, the deal closed for R$900 million (approximately $210 million) and has a duration of 10 years, with an option for renewal.
Nike revealed that it expects to take a one-time charge of around $425 million related to foreign exchange due to its transactions with both South American companies, deals which are part of the Beaverton, Oregon-based company’s wider plans to focus on its direct-to-consumer business.
This strategy has involved Nike redirecting its attention towards online sales, improvements in supply chain and new product launches.
Nike highlighted that its deals with Grupo Axo and Grupo SBF will not change its relationship with any athletes, sports teams or federations in the affected countries.
Both transactions are expected to be completed by mid-2020. The deal with Grupo Axo is subject to local government approval, while the Grupo SBF transaction depends on approval from Brazil’s antitrust authority.
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