Foot Locker, whose suppliers also include Adidas and Puma, predicted that this year’s sales in stores that have been open for at least a year will drop 8% to 10%. Shares are down about 40% for the year.
The apparel company has significantly reduced the number of traditional retailers it sells in recent years to improve profits and tighten control over how its products are presented. In December, Nike announced that it would stop selling to DSW.
Nike’s go-it strategy alone has hurt some independent sports and shoe stores, which rely heavily on selling Nike – the world’s largest shoe maker – to attract customers.
Selling merchandise on its own website and physical stores makes Nike more than double the profit you would get from selling through wholesale partners. The company is also gaining tighter control over the shopper experience and pricing. This is a huge advantage for a premium brand like Nike that wants to present merchandise to customers in attractive and consistent ways, and prevent products from being discounted drastically.
Under Armor competitors and Adidas are following in Nike’s footsteps, stepping back from retail partners and building a direct-to-consumer sales channel.
CNN Business Nathaniel Myerson and Reuters contributed to this report.
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