Latest news with #ConsumerDirectAcceleration
Yahoo
22-05-2025
- Business
- Yahoo
All the Retailers Nike Left & Then Returned: Amazon & Wholesale Shift
Back in 2020, Nike made a bold move: it began cutting ties with a wide range of retail partners as part of its Consumer Direct Acceleration (CDA) strategy. The idea was simple — sell more through Nike's own stores and digital channels, and less through what the company described as 'undifferentiated' wholesale accounts. Big-name retailers like Amazon, Zappos, Belk and Dillard's suddenly found themselves without access to Nike product, as the brand focused on controlling its own narrative and margins. More from WWD Nike Makes Buzzed-About Return to Amazon Sneaker Shock: Yes, Nike Is Raising Prices Too on Select Products Amid Trump's Tariffs From Clicks to Commerce: Unlocking Sales in the Digital-First Era But just a few years later, the tides are turning. As Nike faces increased pressure to meet demand, manage inventory and keep pace with shifting consumer behavior, it's quietly rebuilding relationships with some of those same retailers. The biggest headline? Nike is returning to Amazon — a move that comes after the height of its DTC push. It's a sign that the Swoosh is rebalancing its strategy, acknowledging that wholesale — especially with the right partners — still plays a major role in how and where customers want to shop. Nike is returning to Amazon after a six-year hiatus, relaunching its official storefront. The move follows its 2019 exit, when Nike left the platform citing brand control concerns. Now, Amazon will block select third-party sellers starting July 19 to prioritize Nike's listings. Alongside the return, Nike announced price hikes this month of $2–$10 on adult apparel and equipment, and $5–$10 increases on most footwear, citing tariff-related pressures. Products under $100, kids' lines, and the Air Force 1 will be exempt. The strategy reflects CEO Elliott Hill's broader effort to protect margins while expanding was among a host of retailers caught in the crossfire of Nike's 2021 retreat from broad wholesale. Once a high-volume channel for athletic footwear, the chain lost access as Nike prioritized tighter distribution and DTC growth. At the time, Bill Jordan, president of DSW parent company Designer Brands Inc., said sales of Nike products account for less than 4% of revenue in 2019. But in October 2023, the Swoosh returned to DSW's floors — albeit under new terms. The renewed partnership includes select lifestyle and performance silhouettes, available both in-store and a mainstay of Nike's wholesale network, Macy's found itself on the outs in 2021 as Nike pulled back from dozens of traditional partners in favor of direct channels. 'Nike's decision to no longer sell to nine multi-branded wholesale accounts is positive for Nike, as it takes control of more of its own destiny,' Sushquehanna Financial Group analyst Sam Poser wrote at the time. But after a nearly two-year absence, Nike apparel and gear quietly returned to Macy's in fall 2023 —marking a calculated reversal. Macy's began carrying an expanded selection of Nike products in October 2023, including apparel, plus size women's, big and tall men's, kids, bags and gear, both online and in 'key locations nationwide,' according to CEO Jeff Gennette. Nike products were introduced to additional stores in 2022 shift toward selling directly to consumers hit Foot Locker hard. With Nike products accounting for more than 60% of its inventory at the time, the retailer was forced to scale back projections after learning it would receive fewer shipments. Shares fell, and Foot Locker quickly began cutting its reliance on a single vendor. That included bringing in Reebok through an exclusive deal with Authentic Brands Group, doubling down on Puma, and building up partnerships like with LaMelo Ball. 'Our journey to diversify our mix of business and expand our reach as a house of brands and banners is ongoing,' then-CEO Richard Johnson said at the time. By the following year, the tide had started to turn. Under new CEO Mary Dillon, Foot Locker and Nike rekindled their relationship. Nike returned to store shelves with a more curated product mix, and the two companies resumed joint planning efforts — a sign that, even with scaled-back allocations, the connection still held 2021, Nike discontinued its wholesale relationship with Urban Outfitters as part of a broader strategy to streamline its retail partnerships and focus on direct-to-consumer sales. This decision was part of Nike's initiative to reduce its wholesale accounts by over 50 percent, aiming to concentrate on 40 key retail partners and its own DTC channels. Around a year later, Nike quietly resumed wholesale with Urban Outfitters. In May 2025, Urban Outfitters launched an immersive in-store experience, 'On Rotation,' which the company says is aimed at 'meeting the evolving needs of Gen Z and deliver community-driven, memorable retail experiences.'Nike stopped shipping products to Zappos in late 2020, part of a move to cut back on the number of retailers it worked with. The company was shifting its focus toward selling through its own stores and website, as well as a tighter group of retail partners. Zappos was among several names dropped during that shakeup, alongside chains like Dillard's and Fred Meyer. At the time, Nike said it wanted to 'create the marketplace of the future,' focused on fewer, more differentiated partners. But by mid-2023, amid excess inventory and shifting consumer demand, Nike re-engaged with some of the retailers it had left behind. While not as publicly detailed as returns to Macy's or DSW, reporting from 'The Wall Street Journal' and 'Business Insider' confirmed that Zappos was among the accounts receiving product Nike implemented its Consumer Direct Acceleration (CDA) strategy, Belk was also on the chopping block of retailers no longer carrying Nike. The 2020 move reflected Nike's broader effort to prioritize digital growth and owned retail over what it called 'undifferentiated' wholesale partners. But by late 2022 and into 2023, that approach began to shift. Analysts, including Sam Poser, pointed out that Nike's direct channels weren't meeting all of the consumer demand. As a result, Nike started to send more product back into wholesale, especially to family and moderate-tier retailers — a category that includes Belk. When Nike launched its Consumer Direct Acceleration (CDA) strategy, Shoe Show was among the retail partnerships that ended. The 2020 pivot leaned into Nike's own storefronts and digital platforms, shedding wholesale partners it considered less integral. But fast-forward to late 2022, and things started to shift. Analysts like Sam Poser noted Nike's direct channels weren't fully meeting consumer demand. The brand began reallocating product back to the wholesale side — especially to moderate and family-focused retailers like Shoe Show. In Nike's December 2022 earnings call, CEO John Donahoe didn't mince words: 'Wholesale play is a very important part of that. It provides a very strong footprint, both physical footprint as well as digital.' Best of WWD Mikey Madison's Elegant Red Carpet Shoe Style [PHOTOS] Julia Fox's Sleekest and Boldest Shoe Looks Over the Years [Photos] Crocs Collaborations From Celebrities & Big Brands You Should Know
Forbes
21-05-2025
- Business
- Forbes
How Does The Dick's-Foot Locker Merger Impact Nike's Valuation?
Note: Nike's FY'24 concluded on May 31, 2024. Photo by Smith Collection/Gado/Getty Images This month marks a second significant billion-dollar transaction—following Skechers' $9.4 billion sale—Dick's Sporting Goods (NYSE : DKS) has declared a $2.4 billion purchase of Foot Locker (NYSE: FL). The agreement highlights the ongoing strength and strategic relevance of the sports retail industry, even in the face of persisting tariff pressures and varying consumer demand. Subject to s hareholder and regulatory clearances, the acquisition is anticipated to finalize in the second half of 2025. This action reflects a wider phenomenon among retail firms to future-proof their operations by achieving scale, diversifying, and enhancing leverage with leading brands like Nike (NYSE: NKE), Adidas, and Under Armour (NYSE: UA). For Nike, the ramifications are particularly notable as it navigates a shifting retail environment characterized by changes in consumer behavior, digital acceleration, and uncertainties in global trade, including tariff fluctuations. Additionally, if you seek growth with a steadier approach than an individual stock, contemplate the High Quality portfolio, which has surpassed the S&P, and achieved >91% returns since inception. In spite of a temporary relaxation of U.S.-China trade strains, with tariffs on Chinese imports cut to 30% from 145% and China reducing U.S. tariffs to 10% from 125%, Nike remains exposed. Approximately 24% of Nike's suppliers and 15% of its revenue are linked to China, and close to 50% of its footwear and 30% of its apparel are sourced from Vietnam. These dependencies render Nike vulnerable to future trade disruptions. A larger, more integrated retail partner such as the merged Dick's-Foot Locker entity could assist in mitigating some of these cost pressures, allowing Nike to optimize logistics , secure better terms, and maintain its pricing power without sacrificing margins. Nike had previously transitioned towards a Direct-to-Consumer (DTC) approach, disconnecting from certain wholesale partners, including temporarily trimming its association with Foot Locker. Nevertheless, under CEO Elliott Hill, Nike seems to be readjusting, acknowledging the significance of strong wholesale distribution—especially as consumer preferences change and macroeconomic headwinds continue. The merger brings together Nike's two largest wholesale partners, providing potential advantages such as: Broader omnichannel access: Dick's contributes solid digital infrastructure and suburban reach, while Foot Locker adds mall-based and urban retail penetration. Enhanced brand presentation: A concentrated retail presence enables Nike to bargain for premium in-store placement, effective product storytelling, and a consistent brand experience that aligns with its Consumer Direct Acceleration initiative. Strategic safeguard: A robust wholesale partner provides Nike with added flexibility during periods of DTC underperformance or inventory adaptations. Foot Locker is Nike's largest retail partner and has faced challenges with falling sales, down 6% year-over-year in the latest quarter, amid soft demand for Nike footwear. The company is poised to shut down 110 stores (4% of its footprint) in 2025. While Dick's could speed up Foot Locker's reformation, the risk of execution remains high. For Nike, achieving success depends on close collaboration with the newly merged entity to ensure fitting brand alignment and engagement with customers, especially with younger demographics that are increasingly hard to reach through traditional retail. Nike currently trades around $63 per share, or approximately 21x anticipated 2025 earnings, lower than its three-year average multiple of 30x. While analysts predict a 16% upside to a $73 target price, the short-term prospects seem challenging. In the third quarter of fiscal year 2025, which concluded on February 28, the company exhibited poor performance and has forecasted a revenue decline in the low-to-mid-teens for the fourth quarter. Furthermore, gross margin is anticipated to decrease by 4 to 5 percentage points due to aggressive inventory clearance strategies. For fiscal year 2025, revenue is projected to decline by 11%, while a slight 1% decrease is expected for fiscal year 2026, indicating a slow and gradual recovery. The Dick's-Foot Locker agreement represents a defining moment for Nike's wholesale channel. If executed effectively, the merger could offer Nike a more robust, digitally driven retail partner that could deliver scale, efficiency, and brand enhancement. However, short-term obstacles—ranging from tariff risks to DTC weakness and evolving consumer trends—demand a flexible strategy and strong execution. While it doesn't seem like there is significant near-term upside to NKE, investing in a single stock can carry risks. You may consider the Trefis Reinforced Value (RV) Portfolio, which has surpassed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to deliver robust returns for investors. What's the reason behind that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks offered a responsive way to capitalize on favorable market conditions while minimizing losses when markets decline, as explained in RV Portfolio performance metrics. It should also be emphasized that stocks can decline dramatically – 20%, 30%, even 50% –as witnessed during past market shocks. No stock is Preserve & Grow Wealth With Risk-Focused Quality Portfolios
