DSW CEO Upbeat About Nike’s Performance at Retail
It’s been just over a year since Nike returned to DSW stores after exiting in 2021. And according to DSW parent company Designer Brands Inc., the partnership is back on track.
“We continue to be very pleased with the Nike performance,” said Doug Howe, the shoe retailer’s chief executive officer, in a call with analysts on Tuesday. “They couldn’t be better partners. We’re really encouraged. It’s still a net positive for us. We have now lapped when they came back to DSW [a year ago]. But we couldn’t be more pleased with the business and the relationship. They’ve been great partners.”
Nike cut ties with DSW, along with a variety of other wholesale partners, in 2021 as it accelerated its shift towards direct channels. DSW said previously that Nike products accounted for less than 4% of revenue in 2019.
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Nike has slowly reentered wholesale relationships with partners like Macy’s and Foot Locker since 2023 as it reemphasizes the importance of the channel. However, the brand’s recent setbacks in innovation and waning demand has had a negative impact on the retail chains that carry it.
Throughout 2024, the Swoosh has set out to reduce the presence of its popular franchises, such as the Air Force 1, Air Jordan 1 and Dunk, to address a general decline in demand for Nike and Jordan products. At the same time, Nike has 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 said they have faced competition from deeper discounts during the fall season this year compared to the prior year.
“As Nike rebalances their product mix, inventory levels in the near term across the basketball classics franchises we are seeing some short-term negative impacts on our business,” Foot Locker chief commercial officer Frank Bracken said in a call with analysts last week. “We are seeing higher promotional levels in the marketplace across both DTC and competition which is having a cascading impact as we need to react and compete with those dynamics headed into the holiday season.”
At Foot Locker, Nike makes up about 60 percent of total sales. DSW did not disclose Nike’s sales percentage but said that among its top eight brands (which make up 40 percent of all sales), non individually makes up close to 10 percent of overall business.
“We’re really proud of the work the team has done on really going after the relationships with those top brands, being mindful also that we’re not becoming overly reliant on any of them,” Howe said. “We think that’s a very thoughtful approach.
Solid sales of athletic shoes during the back-to-school season led to a strong start to the third quarter for DBI. However, Howe cited an “unseasonably warmer” fall season as well as “ongoing macroeconomic uncertainty” in the latter half of the period, which contributed to slower demand and a 3.1 decline in comparable sales for Q3.
