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Could Nike Be Dragging Foot Locker Down?

The Foot Locker thrives off of sneaker culture, and after its announcement of a disappointing second quarter last week, the retailer might have Nike to blame.

Foot Locker sees much of its success from partnerships with big-name brands like Nike, but with companies putting an emphasis on direct-to-consumer and athleisure, retailers like Foot Locker feel the effects.

“Sales of some recent top styles fell well short of our expectations and impacted this quarter’s results. At the same time, we were affected by the limited availability of innovative new products in the market,” said Foot Locker Chairman and CEO Richard Johnson in a statement concerning the second quarter of 2017. “We believe these industry dynamics will persist through 2017, and we expect comparable sales to be down three to four percent over the remainder of the year.”

Meanwhile, according to a Quartz report, due to Foot Locker’s less than stellar second quarter earnings report, the company’s shares have dropped almost 25 percent, unsurprising during a time when shoppers are reaching more for the casual, fashion-sneaker than the performance shoe.

This does not bode well for Nike, as the brand continues to tout performance over athleisure, especially as far as its basketball and running styles are concerned. According to an NPD report, Nike’s sales in athletic specialty and sporting goods stores dropped 25 percent for the quarter.

“In an effort to reverse their sagging wholesale sales, several brands have ramped up their direct-to-consumer efforts,” said Matt Powell, NPD VP and industry analyst, sports, in his latest Sneakernomics blog post. “The branded athletic outlet business is robust, as is online discounting. But this devalues the regular product sold in core retail.”

NPD also said that overall sales were down in the quarter, meaning Foot Locker is not the only one feeling the athletic retail slump.

After news that Nike will begin selling its styles through e-commerce giant Amazon, anything could happen in the sports retail sector.