Nike transitions operations with local distributors in South America

Nike transitions its brand in Latin America. The US distributor has reached an agreement with two local strategic distributors to sell its business in Argentina, Brazil, Chile, and Uruguay. The economic terms of the operation have yet to be disclosed. 

Grupo Axo will be in charge of the distribution in the three Spanish-speaking countries, while Grupo SBF will assume control of Nike’s business in Brazil. The US company has indicated in a statement that this transition will be “more profitable, capital efficient and value accretive business mode.”

Currently, Axo has the exclusive distribution of thirty brands in Mexico, and Chile, and specializes in the segment of fashion and premium sports. The group already works with Nike in Mexico, where it manages five of its stores. Meanwhile, SBF distributes the Centauro brand in 209 stores, which is “the largest omnichannel retailer of sporting goods in Latin America,” according to Nike’s report.  

Nike sells its business in Argentina, Chile, Uruguay, and Brazil to two local distributors   

Consequently to this transaction, during the third quarter of its fiscal year, which runs from June to May, Nike will “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.”

Nike ended its first six months of its fiscal year 2020 with a revenue of 21.1 billion dollars, up 9%. Net profit, on the other hand, shot up 28%, up to 2.5 billion dollars, boosted by China and by the direct consumer offensive initiated two years ago.