Report: Nike drops DSW, Urban Outfitters, Macy's in quest for more DTC sales
By Cara Salpini
Published March 26, 2021
In its shift toward a more DTC-driven business, Nike has notified another seven wholesale accounts that they will be shut down, according to Williams Trading analyst Sam Poser. Nike did not immediately respond to a request for comment.
Among those cut are big names, including DSW, Urban Outfitters and Macy's, along with Big Five, Olympia Sports, Duhnams and Shoe Show. (Nike will no longer sell apparel directly to Macy's, but the Finish Line at Macy's business will still receive products, according to an emailed analyst note from Poser.)
The news comes after the athletics retailer dropped nine wholesale accounts last August, including Belk and Zappos. "While we are startled by Nike's decision to no longer sell the multi-branded retailers listed below, we are not surprised," Poser said.
Nike is on a mission to reduce its presence at undifferentiated wholesale partners and expand its own DTC sales, and that means even some big retailers are getting burned.
For this latest round of cuts, the exact date of the cutoff is unknown, but Poser noted that February or March 2021 was when the last shipments were made to the nine wholesale accounts dropped in August. "We would expect the last shipments to the 7 companies listed above will be around October 2021," Poser said.
It's the latest move in Nike's strategy to focus more on its own DTC sales and limit wholesale to only certain "strategic partners." The Consumer Direct Acceleration strategy also hinges on investing more in digital and the rollout of up to 200 small-format stores in the model of its digitally enabled Nike Live concept.
The athletics retailer is joined by Adidas and Under Armour in the quest to make more profitable sales through DTC channels. Under Armour in October said it would shutter up to 3,000 wholesale doors, while Adidas earlier this month outlined a plan to have DTC account for 50% of its sales by 2025.
Analysts have widely praised Nike's strategy, and the company's accelerated focus on digital has been especially timely as the pandemic has increased consumer reliance on e-commerce. Already, DTC sales make up 35%, or $12.4 billion, of Nike Brand revenues, and its total digital sales have grown to be 35% of the business as well.
"We remain confident that the demand for Nike product will remain exceptionally high, and that Nike sales and margin growth will accelerate as it increases the control of how it goes to market," Poser said. "We also remain confident that the 4Q21 guidance will prove conservative."