Shoe Retailers Can’t Stop Talking About Nike: Is That a Good Sign for the Swoosh’s Recovery?

Nike doesn’t report earnings for its most recent quarter until next week. But the Swoosh has still been a hot topic among other shoe retailers that have reported earnings in the last few weeks.

Foot Locker, Academy Sports + Outdoors, Designer Brands Inc. and JD Sports have all called out Nike Inc. in calls with analysts discussing their most recent earnings results. In some cases, the commentary has been positive. Academy Sports + Outdoors this week announced it would deepen its relationship with Nike and add an expanded offering of product from the brand into more stores in 2025. Executives at Designer Brands Inc. also called out a strong partnership with Nike this week following the brand’s return to the retailer two years ago. (The Swoosh exited DSW temporarily back in 2021.)

Related Stories

“We continue to be very pleased with Nike’s performance,” said Doug Howe, DBI’s chief executive officer, in a call with analysts on Tuesday. “They couldn’t be better partners. We’re really encouraged.”

It other cases, the news has been less upbeat. Foot Locker, for example, last week reported a sales and earnings miss in the third quarter, which was in part driven by softness at Nike, its largest brand partner.

Part of the reason for this disparity stems from Foot Locker’s outsized reliance on Nike compared to other chains. Nike is Foot Locker’s largest brand and makes up 60 percent of its brand mix. Comparatively, the Swoosh is also the largest vendor at Dick’s Sporting Goods, but makes up only 24 of its brand mix at that chain. And at the DBI-owned DSW, Nike’s percentage is currently unclear but the brand only made up less than 4 percent of revenue in 2019. As such, Foot Locker is more vulnerable than others when it comes to challenges at Nike.

“As people like to say, when Nike gets the sniffles, Foot Locker gets the flu,” Matt Powell, advisor at Spurwink River and senior advisor at BCE Consulting, told FN in an interview. “When Nike business isn’t great — and it still isn’t great — Foot Locker is going to be one of the retailers that really struggles.”

Nike, which has been helmed by company veteran Elliott Hill since October, has recently utilized promotions to manage higher levels of inventory that have accumulated as a result of slower than expected retail sales. As such, partners like Foot Locker have faced competition from retailers with deeper discounts during the fall season.

“That’s why we see Foot Locker putting more emphasis on smaller brands to try to differentiate away from Nike,” Powell said.

In addition to general brand mix, Foot Locker is also suffering from a lack high-heat product from Nike as the brand tries to retool its product mix in the marketplace. Due to recent weak demand, Nike has set out to reduce the presence of its popular franchises, such as the Air Force 1, Air Jordan 1 and Dunk, a move that has disproportionately hurt Foot Locker compared to its specialty retailers that carry more performance-focused product.

“Foot Locker is being hit by Nike’s rebalancing,” said Jane Hali & Associates analyst Jessica Ramirez. “Dick’s and Academy have mostly true athletic product, not necessarily lifestyle.”

Like Foot Locker, JD is one of the larger chains that has been impacted by this re-balancing as well. In November, the retailer reaffirmed its strong relationship with its key brand partner, Nike, but noted that the pullback some of its key Jordan products has impacted results in Q3. However, JD CEO Regis Schultz said the retailer is still on track to receive hot products from Nike for important sales moments moving forward.

“We will see some high heat products for the key holiday period. We have some Jordan high heat product and some Nike high heat product,” Schultz said in a call with analysts. “For me, it’s all good news in terms of the relationship, in terms of the way of thinking and the way of working. We feel really good about what will happen in the U.S. market following the appointment of Elliott.”