Sources: Instagram/@footlocker
Foot Locker is counting on Adidas, the second largest athletic footwear vendor, to help compensate for the loss of business as Nike, the largest, Nike, pulls back some of its business.
The retailer in February announced that Nike is expected to account for about 55 percent of fourth-quarter sales and continue at that level into 2023 — down from 65 percent in the 2021 fourth quarter. That includes reduced allocations of “high heat” products, such as Air Jordans.
The reduction reflects Nike’s moves to consolidate wholesale accounts in a direct-to-consumer (DTC) push. Foot Locker guided comps down eight to ten percent this year, with the biggest Nike impact expected in the fourth quarter.
Foot Locker earlier this month announced an enhanced Adidas relationship that establishes the retailer as the lead partner for Adidas in basketball, heightens collaboration on “energy and hype” launches, and prioritizes franchises across women’s, kids and apparel. The Adidas collaboration targets over $2 billion in retail sales by 2025, nearly tripling levels from 2021.
In the first quarter, non-Nike comps increased in the high teens as Foot locker made progress diversifying its assortments. Beyond Adidas, the retailer drove gains with Puma as well as 50 percent growth from New Balance, Crocs and Converse.
Foot Locker also sees growth in performance running with expansion plans set for two upstarts, On and Hoka One One, that are looking to reach younger consumers. Accelerated private label apparel growth is also expected to help offset Nike’s retrenchment.
Overall quarterly comps slid 1.9 percent due to difficult year-ago comparisons against stimulus payments.
Analysts appeared particularly concerned about Foot Locker’s ability to compete in the basketball category with fewer Nike products.
On the quarterly analyst call, Dick Johnson, Foot Locker’ CEO, said in addition to Adidas, Puma and New Balance, which both recently returned to the performance basketball category, as well as classic basketball products from Reebok, are expected to support the retailer’s basketball push.
Mr. Johnson said, “We just feel good about basketball in general and firmly believe that Adidas is going to be one of the key players along with our existing portfolio of Nike hot silhouettes and the others.”
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- Foot Locker Inc. (FL) CEO Richard Johnson on Q1 2022 Results – Earnings Call Transcript – Seeking Alpha
- Will Foot Locker be better off long-term with fewer Nike shoes on its shelves? – RetailWire