By Sabrina Escobar

Nike stock was rising Tuesday after the company said it is teaming up with Kim Kardashian's Skims to develop a new line of activewear for women.

The new brand, called NikeSKIMS, will launch this spring in the U.S. with a range of training apparel, footwear, and accessories that Nike says combine the company's sport science with Skims' "obsession for the female form."

"This partnership brings together the best of both brands and unlocks an incredible opportunity to disrupt the industry with our shared passion and commitment to innovation," said Heidi O'Neill, president of consumer, product, and brand at Nike. "We will invite even more athletes into sport and movement with product that makes them feel strong and sexy."

Nike stock was up 4.6% Tuesday at $76.39. The S&P 500 was up 0.1%. Nike shares have gained 1% this year.

This is the first time Nike has joined with an outside company to launch a new brand, notes Anna Andreeva, an analyst at Piper Sandler.

Markets have long been clamoring for Nike to ramp up innovation. Analysts argue that the lack of new product and brand launches has weighed on the company's sales growth and market-share gains -- a reality new CEO Elliott Hill has since acknowledged.

"Traffic in Nike direct -- digital and physical -- has softened because we've lacked newness in product, and we're not delivering inspiring stories," Hill said on the company's December earnings call.

The partnership with Skims could be a good way to bring customers back. Skims has emerged as a fierce competitor in the apparel space, expanding from its core product -- women's shapewear -- into lingerie, loungewear, swimsuits, and men's apparel. Its most popular products often sell out within minutes, and have garnered a cult-like following among younger shoppers. The privately held company was last valued at around $4 billion.

"We view this announcement as a positive and outside-the-box step under Hill's new leadership to further accelerate the women's business," Andreeva added. She upgraded the stock to Overweight in January, arguing that Hill is taking the right steps to correct course.

Winning over women has been a sore spot for Nike -- particularly in apparel, where brands such as Lululemon Athletica, Alo Yoga, and Athleta tend to dominate. Nike's women's business has recently seen some "green shoots," Andreeva wrote, but bringing Skims into the fold will likely help Nike get a better foothold in the market.

"On the margin, we see this as a red flag for LULU," Andreeva wrote.

Lululemon has also had a rough go of it lately. The stock is down 4% this year and 18% over the past year, dragged lower by investor concerns that, like Nike, the company is losing market share to upstarts such as Alo Yoga, Vuori, and to a lesser extent, Skims.

The race to corner the female-athlete market is on.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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February 18, 2025 12:26 ET (17:26 GMT)

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