Foot Locker Has A Nike Problem
Foot Locker sells sneakers and clothes from many of the top brands in the sportswear industry, and Nike, including its Jordan brand, is by far the label that dominates its stores. Last year, about 68% of the products Foot Locker purchased came from Nike, according to the company’s annual report. Often that arrangement has served Foot Locker well. At the moment, it’s dragging the chain down. The company reported earnings that sorely disappointed investors today (Aug. 18), including a 6% fall in sales at stores that have been open at least a year. The results prompted a drop of nearly 25% in its share price. In a statement, CEO Richard Johnson pointed the finger at sneaker brands, citing “the limited availability of innovative new products” as part of the reason. He could have added to that his company’s reliance on Nike, which hasn’t been delivering on the main sneaker style consumers want. Right now, shoppers in the US are in the market for fashion-focused casual sneakers, and not so much performance shoes. That’s been great for Adidas, which has been gobbling up US market share with huge sales of its retro sneakers and new styles such as the NMD, which has gathered momentum in fashion since its launch at the end of 2015. Nike, meanwhile, still has a heavy focus on performance basketball and running. According to market research firm NPD, Nike’s sales in athletic specialty and sporting goods stores were down 25% for the quarter. Read more at Quartz.
