Nike has been steadfast in its commitment to direct-to-consumer (D2C) efforts since 2017, which led to a reduction in its retail partnerships. However, the sportswear giant is now changing its tune, not because its prioritization efforts have failed, but because it’s looking to add some oomph into its already working strategy.
Nike has chosen to alter its course by reestablishing wholesale relationships with various retailers and sellers, despite having severed ties with them in the past.
During an earnings call on Thursday (June 8), Designer Brands CEO Doug Howe revealed that Designer Shoe Warehouse (DSW) will renew its partnership with Nike, after the athletic brand had withdrawn from the collaboration in 2021.
Starting in October, DSW will offer a diverse range of Nike products for men, women, and children through both its physical stores and digital platforms, as announced by Howe.
“We’ve had ongoing dialogue for the past several months and we’re super excited to be able to bring that back across men’s, women’s and kids’. That will happen in Q4,” Howe said during the call.
Read more: Nike Renewing Relationships With Retailers in Shift From D2C Focus
In 2017, Nike underwent a strategic transformation to prioritize D2C sales. By September 2021, Matt Friend, Nike’s finance chief, confirmed that around half of the company’s retail partnerships had been terminated.
Among the retail partners that were affected by Nike’s revised strategy were Big 5 Sporting Goods, Dunham’s Sports, Urban Outfitters, Dillard’s and Zappos. Nike did maintain its association with significant accounts such as Foot Locker and Dick’s Sporting Goods. However, in February 2022, Foot Locker projected a substantial decrease in its Nike inventory, as the focus of Nike shifted toward D2C sales.
But now, Nike has decided to reevaluate some of its previous exits.
Just recently, Macy’s CEO Jeff Gennette revealed that starting from October, Macy’s stores and websites will once again offer Nike apparel. In 2021, Nike had scaled back its partnership with Macy’s, although the companies had continued to maintain a collaboration through Finish Line. This renewed partnership signifies a significant expansion in the range of Nike products that will be available at Macy’s.
“This is going to be, we believe, a real catalyst without cannibalizing much else in the balance of the apparel assortments,” Gennette said on an earnings call. “This is a win for us. And we think it’s a win for Nike.”
In addition, Nike is actively working toward strengthening its partnership with Foot Locker. In March, Foot Locker CEO Mary Dillon expressed enthusiasm for a “renewed” relationship with Nike. During an earnings call in May, she revealed that teams from Foot Locker and Nike had come together in Portland to strategize their plans for rejuvenating their Nike business by 2024.
Dillon also mentioned a close collaboration between the two companies in terms of data sharing and enhancing their collective ability to generate customer demand and thrive in the marketplace.
While Nike has chosen to revisit some of its previous partnerships, the company’s D2C efforts were successful.
In March, PYMNTS reported that the sportswear giant’s efforts paid off. Nike reported its revenue for the third fiscal quarter to be $12.4 billion, above projections of $11.48 billion, marking a 14% increase from the previous year.
Nike reported strong performance in its direct sales channels, comprising its website and owned-and-operated stores. The company observed an increase in member buying frequency and witnessed store sales growth across all regions, resulting in a notable year-over-year surge of 17% to reach $5.3 billion. Furthermore, Nike’s digital sales exhibited robust growth, with a significant 20% increase.
“Nike’s strong results in the third quarter offer continued proof of the success of our Consumer Direct Acceleration strategy,” Nike President and CEO John Donahoe said in an earnings release.
See also: Nike’s D2C Sales Strategy Pays off, Company Reports Higher Sales Growth
Nike faced a notable hurdle in the previous year due to its surplus inventory, but the company has made progress in tackling the issue by implementing discounts during the holiday season.
Despite the challenges posed by China’s “zero-COVID” policy, which led to store closures and lockdowns impacting Nike and its competitors, the company achieved single-digit growth in the country.
Following a challenging period spanning several quarters, Nike saw signs of progress in the region as China eased certain restrictions in November and December.
Nike’s recent earnings release reveals that the company currently has inventory valued at $8.9 billion, representing a 16% increase compared to the same period last year. The rise is primarily attributed to the impact of higher product input costs and elevated freight expenses.
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