Retail

Nike Abandons ‘Mediocre’ Retail

Nike

Nike told investors that it would be shifting its approach to brick-and-mortar retail, according to news from The Wall Street Journal. The company will be narrowing its focus to a few dozen stores and boosting its presence online.

Nike said during a presentation that it had ongoing plans to sell more of its goods online, a shift away from selling through sports apparel stores and traditional athletic wear retailers. The sportswear market has become more competitive, and some traditional retailers have gone out of business.

Traditional partners Sports Authority and City Sports have both liquidated, said the WSJ, and sales have slowed at other sporting goods chains. Basketball shoes have fallen out of fashion in favor of shoes manufactured by Nike rival Adidas.

The company intends to continue its relationships with 40 partners, which include retail stalwarts like Foot Locker and Nordstrom, but also online shopping retailers like Amazon and luxury boutique Farfetch. Nike is also working with its partners on new mobile apps and in-store experiences.

“Undifferentiated, mediocre retail won’t survive,” said Nike Brand President, Trevor Edwards. “We will be shifting away from this over the next five years.”

Nike shares rose 2.9 percent to $54.94 on Wednesday (Oct. 25), the WSJ reported.

The company did not update its revenue forecast of $50 billion by 2020. Nike expects that revenue will grow in the mid-single digits over the span of the next five years.

A FactSet poll of analysts suggests that they expect Nike to reach $40.9 billion in revenue by 2020, the WSJ said. Nike’s goal is for online shopping to reach 30 percent of revenue within the next five years, up from 15 percent today. This figure includes both direct and third-party eCommerce sales.

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