Months after cutting ties with nine retail partners, Nike has notified another six retailers—including DSW and Urban Outfitters—that it will no longer sell them product, according to Sam Poser, an equity analyst at Williams Trading.
The list also includes Shoe Show, Dunham’s Sports, Olympia Sports and Big 5 Sporting Goods, Poser wrote in a research note. Nike also plans to no longer sell apparel to Macy’s, but will continue to offer footwear under its Finish Line partnership, Poser said.
As an analyst previously engaged with Susquehanna Financial Group, Poser had reported in August that Nike was closing its accounts at Fred Meyer, Zappos, Dillard’s, City Blue, VIM, EbLens, Belk, Bob’s Stores and Boscov’s. Given that the last shipments to those retailers arrived in February and March, Poser estimated that the last shipments to the latest round of affected businesses would come around October.
“Nike is moving fast to increase its brand strength as well company sales and margins,” Poser wrote. “While we are startled by Nike’s decision to no longer sell the multi-branded retailers listed below, we are not surprised.”
DSW’s parent company Designer Brands Inc. confirmed that Nike is indeed ending its wholesale relationship with the retailer.
“Designer Brands’ current business strategy is to continue to offer a wide assortment from our brand partners,” a Designer Brands spokesperson said. “No single brand is material to our operations and DBI’s broad assortment across multiple categories is what differentiates our model from many others.”
Nike’s decision to sever its connections with yet another round of retailers comes amid a larger push toward a direct-to-consumer business model. Last summer, the company unveiled what it called its Consumer Direct Acceleration (CDA). Described as “a new digitally empowered phase of Nike’s strategy to unlock long-term growth and profitability,” Nike’s CDA has seen the company making continued investments in digital capabilities. Per the brand’s July announcement, it expected the strategy to lead to a net loss of jobs across the company and pre-tax one-time employee termination costs of approximately $200 million to $250 million.
The pivot makes sense given the brand’s most recent earnings report, released last week. Nike’s direct-to-consumer sales climbed to $4.0 billion in the quarter ended Feb. 28, a 16 percent bump on a currency-neutral basis. Total revenue, meanwhile, declined 1 percent on a currency-neutral basis over the same period.
“We remain confident that the demand for Nike product will remain exceptionally high, and that Nike sales and margin growth will accelerate as it increases the control of how it goes to market,” Poser said.