While Nike may have rekindled its relationships with wholesale partners Macy’s and DSW, the apparel and footwear giant isn’t looking to go full throttle on wholesale, unless consumers want it. Well, maybe. Let’s dig into that.
Earlier this month PYMNTS reported that Nike would be reversing course not because its efforts have failed, but because it was looking to add some oomph into its already working strategy.
In an earnings call on June 8, Designer Brands CEO Doug Howe announced that Designer Shoe Warehouse (DSW) will be renewing its partnership with Nike. This collaboration between the two brands was reestablished after Nike had previously withdrawn from the partnership in 2021.
According to Howe, starting in October, DSW will begin offering Nike products for men, women and children through DSW’s physical stores and digital platforms.
“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 a similar tune, Macy’s CEO Jeff Gennette shared during the retailer’s first quarter earnings call that Macy’s stores and websites would also reintroduce Nike apparel, starting in October.
“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.”
Furthermore, in a statement made by Foot Locker CEO Mary Dillon, she expressed her enthusiasm for a “renewed” collaboration with Nike in March. Subsequently, during an earnings call in May, Dillon disclosed that teams from Foot Locker and Nike had convened in Portland to develop strategies for revitalizing their Nike business by 2024. The joint effort highlights the commitment of both companies to strengthen their partnership and drive future growth.
In 2017, Nike embarked on a strategic transformation that placed a strong emphasis on D2C sales. By September 2021, Matt Friend, Nike’s finance chief, confirmed that about half of the company’s retail partnerships had been concluded as part of this shift in focus.
Nike’s revised strategy had an impact on several retail partners, including Big 5 Sporting Goods, Dunham’s Sports, Urban Outfitters, Dillard’s, and Zappos. However, Nike maintained its collaboration with prominent accounts like Foot Locker and Dick’s Sporting Goods. But in February 2022, Foot Locker projected a significant decrease in its Nike inventory, aligning with Nike’s shift toward D2C sales.
When it comes to serving the customer, Nike President and CEO John Donahoe is all about “giving them what they want, when they want it and how they want it.”
During the company’s latest earnings call Thursday (June 29), Nike said its strategy from 2017 has remained unchanged, but that it would be strategically expanding its reach through selective new openings and partnerships in the multibrand wholesale sector as the company recognizes the role played by wholesale partners in its growth strategy.
Additionally, while maintaining larger multibrand partners such as Dick’s, JD, Footlocker and Sports Direct, Nike also emphasized the importance of local neighborhood stores that help authenticate its brand.
Nike acknowledged the diversity of consumer segments and price points. Nike noted that its direct business remains a key driver of growth, but it will continue to pursue its marketplace strategy.
“Nike’s strong results make clear that our strategy is working,” said Donahoe in a statement. “FY23 was a milestone year for Nike.”
In the fiscal year, Nike revenues reached $51.2 billion, a 10% increase. This growth was driven by double-digit expansion in both Nike Direct and the wholesale business. Nike Direct revenues grew to $21.3 billion, a 14% increase fueled by a 24% expansion in Nike Brand Digital and 14% growth in Nike-owned stores.
Converse also grew, with revenues reaching $2.4 billion, up 3% reported and 8% currency-neutral, driven by strong performance in North America despite declines in Asia.
Net income, however, for the year amounted to $5.1 billion, a 16% decrease, while diluted earnings per share stood at $3.23, down 14% compared to the prior year.
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