Nike to cut ties with several big retailers in favor of direct to consumer move

As part of Nike's "Consumer Direct Offense" strategy, the company will no longer sell to nine major wholesale retail partners including Belk, Dillard’s, Zappos, Boscov’s, Bob’s Stores, Fred Meyer, EBLens, VIM and City Blue, according to a note to investors by Susquehanna Financial Group analyst Sam Poser.

“Nike’s decision to no longer sell to nine multi-branded wholesale accounts is positive for Nike, as it takes control of more of its own destiny,” Poser wrote.

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The decision comes as brick and mortar retailers are struggling in part due to changing consumer habits and the coronavirus pandemic. The loss of a major brand like Nike won't help in getting shoppers to return to stores.

"As part of our recently announced Consumer Direct Acceleration strategy, we are doubling down on our approach with Nike Digital and our owned stores," a spokesperson for the company told FOX Business.

Nike unveiled its plan to sell directly to consumers three years ago. During its fourth quarter earnings call in June when it revealed the acceleration strategy, Nike said the move would  bolster its transformation into a "digital-first company."

Still, the athleticwear kingpin will, according to the spokesperson, continue working with "a smaller number of strategic partners who share our vision to create a consistent, connected and modern shopping experience."

Ticker	Security	Last	Change	Change %
NKE	NIKE INC.	94.12	+0.18	+0.19%

By cutting these ties the company plans to ramp up investments in e-commerce and technology, as well as simplify its “consumer construct” of men’s, women’s and kids’ businesses. It also plans to open up to 200 smaller, digitally-enabled stores across North American and Europe-Middle East-Africa countries.

The company also has undergone a series of leadership changes over the past month and announced it would be laying off 500 employees at its headquarters in Oregon as it revamps its wholesale strategy.

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Susquehanna analyst Poser said that Dick’s Sporting Goods, Hibbett Sports and Shoe Carnival will likely be the biggest beneficiaries of Nike’s decision to cut ties with other retailers due to their location.

Ticker	Security	Last	Change	Change %
DKS	DICK'S SPORTING GOODS INC.	207.12	+2.91	+1.43%
HIBB	HIBBETT INC.	86.15	+0.05	+0.06%
SCVL	SHOE CARNIVAL	34.53	+0.27	+0.79%
CAL	CALERES INC.	36.94	+0.55	+1.51%
DBI	DESIGNER BRANDS INC.	9.65	+0.33	+3.49%
FL	FOOT LOCKER INC.	21.98	+0.05	+0.23%

He added that the move could also give a boost to Famous Footwear, Designer Brands' DSW, and Foot Locker "to some degree."

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