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The Sports Retailers Disrupting the Industry Heading into 2019

Welcome to the latest episode of the Full-Court Finance podcast from Zacks Investment Research where Associate Stock Strategist Ben Rains breaks down what Farfetch’s FTCH acquisition of sneaker startup Stadium Goods means for sports retail. The episode also dives into how giants like Nike NKE have adapted with the times to become even more powerful.

The London-based luxury online marketplace Farfetch, which went public earlier this year, announced last week its $250 million acquisition of New York-based sneaker startup Stadium Goods. Farfetch has spent years trying to convince luxury retail apparel companies to dive into the e-commerce world. But unlike more entry-level high-end brands like Michael Kors Holdings KORS and Ralph Lauren RL, they took some more convincing.

Farfetch, which boasts investors such as Alibaba BABA competitor JD.com JD, saw its 2017 revenues surge roughly 60%. Farfetch’s substantial bet on Stadium Goods shows just how important sportswear has become in the world of expensive fashion. Stadium Goods and others have capitalized on the quickly expanding secondary market for everything from Nike’s Jordan Brand to Adidas’ ADDYY Yeezy shoes.

Stadium Goods, which can be considered a sort of higher-end eBay EBAY for the sportswear world’s must-haves, has found a niche in the broader e-commerce market dominated by Amazon AMZN. The company’s relatively quick success also highlights Nike’s ability to drive demand and create brand loyalty through limited releases and partnerships with trendy brands that have exploded in the age of Instagram FB and Twitter TWTR.

Noticeably left off Stadium Goods’ website is Under Armour UAA, which has failed to create the styles consumers are willing to spend upwards of $2,500 for. On top of this broader sportswear and athleisure trend that the likes of Lululemon LULU have capitalized on, lies a larger disruption of the traditional retail world. Even giants like Walmart WMT have jumped into the trendy fashion world through its purchases on Bonobos and Moosejaw, which sells outdoor sports-based apparel from Patagonia, Canada Goose GOOS, V.F. Corporation’s VFC The North Face, and more.

Meanwhile, Coca-Cola KO has invested in upstart sports drink firm BodyArmor that hopes to challenge Gatorade’s PEP dominance of the industry. Meanwhile, Kobe Bryant, LeBron James, and others have used their clout to start e-commerce-based retail businesses that hope to grab market share from industry giants.

As a reminder, if you feel that we missed something, or if you have any topic suggestions, shoot us an email at podcast@zacks.com. Make sure to check out all of our other audio content at zacks.com/podcasts, and remember to subscribe and leave us a rating wherever you listen to your podcasts.

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