Nike will return to DSW stores, website this fall (2024)

Dive Brief:

• Constituting another reversal in its pivot away from wholesale, Nike will be returning to DSW this fall. The news comes just a week after Macy’s announced Nike would return to “key locations” and its website with apparel, bags and gear.
• The Nike partnership will give DSW an “athletic offering across men’s, women's and kids that gives our customers a premium, physical and digital assortment,” Designer Brands CEO Doug Howe said on an earnings call Thursday. The new relationship is set to begin in October.
• Nike pulled back on its DSW partnership a couple of years ago as part of a larger direct-to-consumer sales push that also saw it exiting Macy’s and Urban Outfitters. Nike did not immediately respond to questions about why it is returning to DSW and how this impacts its DTC strategy.

Dive Insight:

In an otherwise challenged quarter, where net sales fell nearly 11%, comps were down 10.4% and full-year guidance was lowered, Designer Brands’ announcement of a new partnership with Nike was a bright spot.

“Obviously we’re very excited about the changes that the teams are making in the overall product portfolio — elevating our relationship with Nike is obviously among them,” Howe said. “We've had ongoing dialogue for the past several months and we're super excited to be able to bring that back across men's, women's and kids.”

The executive noted that the assortment will include both stores and digital and will likely be available to customers in November. As to how much of DSW’s sales Nike will make up — UBS analyst Jay Sole noted Nike used to be 6% or 7% of DSW’s business — Howe did not get into specifics.

“We'll thoughtfully, with their partnership, build that business back,” Howe said. “Big opportunity, I think, for both of us, just given our No. 3 market share penetration in women's — and the customer will vote. But we’ll continue to evolve our portfolio with them and other partners as well.”

In addition to strengthening ties with national brands like Nike, Designer Brands has also focused on building out its portfolio of owned brands, which recently has included the acquisition of Keds, Le Tigre and Topo Athletic.

For Nike, the new relationship with DSW marks something of a reversal, since the athletics retailer pivoted to a DTC-led strategy a few years ago that included paring back on its wholesale partners. As part of that strategy, Foot Locker last year said it expected the amount of Nike product it received to “decline meaningfully,” from a high of 75% in 2020 to about 55% going forward. But in March this year, new CEO Mary Dillon said the retailer had revitalized its partnership with Nike.

Nike itself emphasized in May that it values both wholesale and DTC channels, and is looking for more ways to connect those channels, including through efforts like connecting its loyalty program with wholesale partner Dick’s Sporting Goods.

Some analysts have questioned whether Nike’s shift away from wholesale was the correct approach, with BMO Capital Markets analyst Simeon Siegel saying last year that the focus on direct has not lifted margins. Wholesale can offer benefits to brands like sales volume and raising brand awareness.