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Nike to Cut Ties With Several Big Retailers, Favoring DTC Move

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Key Points

  • Nike will no longer sell to nine major wholesale retail partners, including Belk, Dillard’s, Zappos, Boscov’s, Bob’s Stores, Fred Meyer, EBLens, VIM, and City Blue, as part of the company’s “Consumer Direct Offense” strategy.
  • Nike announced its intention to sell directly to consumers three years ago.
  • The company said the move would bolster its transformation into a “digital-first company” during its fourth-quarter earnings call in June when it announced the acceleration strategy.
  • Visit The Financial Today’s homepage for more stories.

Nike will no longer sell to nine major wholesale retail partners, including Belk, Dillard’s, Zappos, Boscov’s, Bob’s Stores, Fred Meyer, EBLens, VIM, and City Blue, as part of the company’s “Consumer Direct Offense” strategy, according to a note to investors by Susquehanna Financial Group analyst Sam Poser.

“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,” Poser wrote.

The decision comes as brick and mortar retailers are struggling in part because of changing customer preferences and the coronavirus pandemic. The loss of a big brand like Nike isn’t going to help bring customers back to the stores.

“As part of our recently announced Consumer Direct Acceleration strategy, we are doubling down on our approach with Nike Digital and our owned stores,” a spokesperson for the company told FOX Business.

Nike announced its intention to sell directly to consumers three years ago. The company said the move would bolster its transformation into a “digital-first company” during its fourth-quarter earnings call in June when it announced the acceleration strategy.

Still, the athleticwear kingpin will continue to collaborate with “a smaller number of strategic partners who share our vision to create a consistent, connected, and modern shopping experience,” according to the spokesperson.

By cutting these ties the company plans to increase investments in e-commerce and technology as well as simplify its “consumer construct” of men’s, women’s, and kid’s businesses. It also plans to open up to 200 smaller, digitally-enabled stores across countries in North America and Europe, the Middle East, and Africa.

The company has also undergone a number of changes in leadership over the past month and has announced that it will lay off 500 employees at its Oregon headquarters as it revamps its wholesale strategy.

Susquehanna analyst Poser said that because of their location, Dick’s Sporting Goods, Hibbett Sports, and Shoe Carnival are likely to be the biggest beneficiaries of Nike’s decision to cut ties with other retailers.

He added that the move could also give “to some degree” a boost to Famous Footwear, Designer Brands’ DSW, and Foot Locker.

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