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Nike and Foot Locker Are ‘Revitalizing’ Their Relationship With a Focus on Basketball, Kids, Data Sharing

Foot Locker Power Store Compton California
A rendering of the mural outside the Foot Locker Power Store in Compton, Calif.
Courtesy of Foot Locker

Foot Locker CEO Mary Dillon and other top execs want to send a clear message on her first investor day: Foot Locker is back on track with Nike.

“My team and I have spent a great deal of time with Nike revitalizing our partnership, developing a shared vision of the future marketplace,” said Dillon who called out that she was donning a pair of Nike Air Max 97s during the presentation this morning. She added that Foot Locker and Nike are focusing on key strategic areas such as basketball, kids and sneaker culture, and are sharing data and insights to plan their strategies together.

“The fruits of our renewed commitment to one another will begin to show up in holiday this year as we build increasing momentum to 2024 and the 50th anniversary of Foot Locker,” she said.

Foot Locker chief merchandising officer Chris Santaella added that the partnership is focused on creating a strategy that is “complementary to the Nike direct-to-consumer strategy.”

As the standout brand in the retailer’s portfolio, Nike will make up between 55% and 60% of Foot Locker’s total sales mix by 2026, Santaella said. Nike made up 70% of sales in 2021 and 75% of sales in 2020.

The news marks a rapid turn of events in the relationship. Last year, Foot Locker said the amount of Nike product in stores would be significantly less as the Swoosh accelerated its shift towards DTC sales. This move initially caused the retailer to post a bleak outlook for 2022, though Foot Locker said it managed to churn out better-than-expected results for the third quarter, the first period in which the diminishment of Nike product was meant to be be felt in stores. Nike sales were also higher than expected in the fourth quarter.

Prior to the reversal, analysts were hopeful that under Dillon’s stewardship, the Nike-Foot Locker partnership could be restored to some of its former glory.

“Since Dillon came aboard last August, the tone of the Nike-Foot Locker relationship seems to have become warmer, and it’s possible that they strike a positive tone on the business with Nike,” wrote Wedbush analyst Tom Nikic in a note to investors last week.

In addition to a renewed focus on basketball product, Santaella said Foot Locker and Nike will work in tandem to “develop the next generation of sneaker enthusiasts” by aligning on product for Kids Foot Locker. He also noted that Nike and Foot Locker will continue to partner on celebrating key sneaker moments. This year, both companies will partner to celebrate the 25th anniversary of the Tuned Air franchise. And in 2024, the two will partner on a product concept to celebrate Foot Locker’s 50 year anniversary which will also celebrate the retailer’s partnership with Nike.

The retailer also plans to integrate paths to join both Foot Locker’s and Nike’s loyalty programs as well, further cementing the relationship between the two entities.

Nike’s wholesale revenues grew 30% on a currency-neutral basis in Q2, compared to Nike Direct, which grew 25%. According to some analysts, the growing momentum in Nike’s wholesale business as compared to its oft-lauded DTC channels could be a good sign for wholesale partners like Foot Locker. In an earnings preview for the Swoosh last week, Williams Trading analyst Sam Poser said growth in the sneaker giant’s direct business “is not sustainable” and a renewed focus on its wholesale arm might be a necessary next step in 2023. (Nike reports earnings for the third quarter on March 21.)

While Nike will remain a key brand partner for Foot Locker, Santaella and Dillon noted that the retailer plans to lean into other brands such as Adidas, Puma, New Balance, Crocs, Hoka, On and Under Armour.

“There are more consumers seeking more brands to support their desire to wear sneakers on more occasions,” Santaella said.

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Nike Remains Foot Locker's Top Brand Under 'Revitalized' Partnership
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