Nike’s direct-to-consumer push is prompting Foot Locker to reevaluate its product assortment strategy.
The footwear retailer said on Friday that Nike’s “accelerated strategic shift to DTC” has impacted what products the retailer will be able to source and sell in its stores. As part of this shift, Foot Locker said no single vendor will represent more than 55% of total supplier spend, down from 65% last year. Foot Locker also posted a downward outlook for 2022, during which it anticipates sales falling between 4% and 6% and same-store sales falling by 8% to 10%. Foot Locker shares were down more than 30% at 2:45 p.m. on Friday.
In light of the shift, Foot Locker discussed its plan to diversify its vendor mix and product assortment by leaning into other popular brands.
In Q4, Foot Locker said the the majority of its top 20 vendors posted gains in 2021, with brands like Adidas, Puma, New Balance, Timberland, Ugg and Crocs seeing particular strength. The plan is to elevate these existing brands and categories to “deliver exclusive product storytelling” for consumers.
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Reebok, which is being acquired by Authentic Brands Group from Adidas in a deal set to close this month, is positioned as a major opportunity for Foot Locker in 2022. Foot Locker and ABG have inked an exclusive arrangement for the retailer to exclusively carry certain Reebok shoes in U.S. stores and websites.
The partnership will make Foot Locker the exclusive distribution channel for certain hot Reebok products, such as basketball shoes and silhouettes from Allen Iverson and Shaquille O’Neal.
The program, Foot Locker said, will complement the company’s existing exclusive partnership with basketball star LaMelo Ball and Puma, another major brand for Foot Locker which will continue to be an area of focus.
Johnson acknowledged that other brands don’t sell out as fast as Nike product, but bringing in “high-heat collaborations” with growing brands — like Crocs — can drive demand.
Johnson also brought up the demand for New Balance, which he described as “one of the hottest brands” across its markets in all geographies.
Still Foot Locker CEO Richard Johnson noted the outstanding power of the Swoosh that is difficult to imitate.
“There is nothing like a retro Jordan launch that comes in on a Friday and sells on a Saturday, right? I mean that’s a tough dynamic to overcome,” he said. “But I think there is enough heat, and we do a great job with storytelling and demand creation that we will continue to be productive in our boxes and our omnichannel efforts.”
