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NIKE 8-K Shows Strategic Distributor Partnerships In Brazil, Argentina, Chile, Uruguay

NIKE, Inc. (NYSE:NKE) today announced it is transitioning its NIKE Brand business in Brazil, Argentina, Chile and Uruguay to strategic distributor partnerships, enabling a more profitable, capital efficient and value

Benzinga · 02/06/2020 12:35

NIKE, Inc. (NYSE:NKE) today announced it is transitioning its NIKE Brand business in Brazil, Argentina, Chile and Uruguay to strategic distributor partnerships, enabling a more profitable, capital efficient and value accretive business model. This move demonstrates NIKE’s ongoing approach to optimize country operating models across its global portfolio, with sharpened focus and investment against its biggest growth opportunities through the Consumer Direct Offense.*

NIKE remains firmly committed to serving consumers in these countries with the best of NIKE product innovation, services and experiences, while leveraging these partnerships to foster sustainable, profitable growth.*

“As NIKE continues to successfully implement the Consumer Direct Offense we are dedicated to serving consumers more personally and investing against the company’s long-term growth opportunities,” said Elliott Hill, NIKE, Inc. President, Consumer and Marketplace. “NIKE manages successful distribution businesses around the world and expanding this model in the rest of South America will help drive sustainable, profitable growth. Our partners are committed to serving local consumers and elevating retail and digital experiences and share NIKE’s values and commitment to employees.”*

NIKE’s relationship with and commitment to its athletes, clubs and federations in these countries will remain unchanged.*

When the transition is complete Grupo Axo will acquire NIKE’s operations in Argentina, Chile and Uruguay, and Grupo SBF S.A., (B3: CNTO3), through its wholly owned subsidiary, will become the owner of substantially all of NIKE’s operations in Brazil.*

Grupo Axo is a leading strategic multichannel operator and distributor with exclusive distribution rights for more than 30 well-recognized brands in Mexico and Chile. Grupo Axo brings more than 25 years of experience as a premium brand steward and also has an existing partnership with NIKE in Mexico operating five NIKE stores. Grupo SBF owns the brand “Centauro” and operates the largest sporting goods retailer in Brazil and across Latin America, operating 209 stores with strong omni-channel capabilities.

Both Grupo Axo and Grupo SBF have proven management teams who are committed to a well-coordinated business transition, with the aim of completing the transactions by mid-2020. Grupo Axo’s transaction is subject to local government approval and Grupo SBF’s transaction is subject to Brazil Antitrust Authority approvals.*

As a result of the transactions, during the third quarter of fiscal 2020, NIKE will classify the assets and liabilities of the entities to be sold as held for sale on the Consolidated Balance Sheet and will recognize a one-time, non-recurring charge related to foreign exchange of approximately $425 million. This charge primarily reflects the anticipated release of associated non-cash cumulative foreign currency translation losses and could fluctuate due to changes in exchange rates up to the date of close.*