Executive Briefings

Nike Is Fed Up With 'Mediocre' Retailers

Struggling retailers beware: Nike is going to downgrade you if you don't up your game.

Nike Is Fed Up With 'Mediocre' Retailers

The sportswear giant updated investors last week on its plans to hit $50bn in sales by 2020, a target that has been met with some Wall Street skepticism. Those plans do not include retailers that can’t get their act together and make themselves more attractive shopping destinations.

Some 40 percent of Nike’s wholesale business comes from what executives called “differentiated” retailers, or stores that are inviting and present its products in a sophisticated way. The company plans to get that 80 percent by 2022, executives told Wall Street analysts on an afternoon-long presentation that was webcast. As Nike Brand president Trevor Edwards put it, “undifferentiated, mediocre retail won’t survive,” adding ominously: “We will be shifting away from this over the next five years.”

He didn’t name names, or say Nike would actually drop any accounts, but he did point out Nordstrom and Foot Locker as strong retail partners. Nike is rolling out a program later in 2017 with Foot Locker. (Foot Locker reporter awful quarterly results in August.)

Noticeably absent from the list of retailers getting a shout out were the likes of specialty chain Dick’s Sporting Good and department stores Macy’s, J.C. Penney and Kohl’s, which all have ridden Nike’s explosive growth in recent years to mitigate their overall soft sales and which have made an effort to showcase Nike more elaborately. Kohl’s, for one gets about $800m in sales a year from Nike. Overall, as one executive put it, Nike is eager to get out of “the heavily promotional environment we see today,” given how much discounting hurts its cachet and trains shoppers to expect deals.

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The sportswear giant updated investors last week on its plans to hit $50bn in sales by 2020, a target that has been met with some Wall Street skepticism. Those plans do not include retailers that can’t get their act together and make themselves more attractive shopping destinations.

Some 40 percent of Nike’s wholesale business comes from what executives called “differentiated” retailers, or stores that are inviting and present its products in a sophisticated way. The company plans to get that 80 percent by 2022, executives told Wall Street analysts on an afternoon-long presentation that was webcast. As Nike Brand president Trevor Edwards put it, “undifferentiated, mediocre retail won’t survive,” adding ominously: “We will be shifting away from this over the next five years.”

He didn’t name names, or say Nike would actually drop any accounts, but he did point out Nordstrom and Foot Locker as strong retail partners. Nike is rolling out a program later in 2017 with Foot Locker. (Foot Locker reporter awful quarterly results in August.)

Noticeably absent from the list of retailers getting a shout out were the likes of specialty chain Dick’s Sporting Good and department stores Macy’s, J.C. Penney and Kohl’s, which all have ridden Nike’s explosive growth in recent years to mitigate their overall soft sales and which have made an effort to showcase Nike more elaborately. Kohl’s, for one gets about $800m in sales a year from Nike. Overall, as one executive put it, Nike is eager to get out of “the heavily promotional environment we see today,” given how much discounting hurts its cachet and trains shoppers to expect deals.

Opens external link in new windowRead Full Article

Nike Is Fed Up With 'Mediocre' Retailers