- The sneaker retail chain on Monday hosted an investor day.
- Foot Locker rolled out a new business plan that includes a “revitalized” relationship with Nike.
- Even so, don’t expect to see more of the hottest Nikes and Jordans at Foot Locker stores.
Mary Dillon wore Nikes to work on Monday.
The Foot Locker CEO, sporting gold Nike Air Max 97 sneakers, announced a renewed partnership with Nike at the company’s investor day, addressing one of the core analyst questions facing the sneaker retailer.
“I have spent a great deal of time with Nike, revitalizing our partnership, developing a shared vision of the future marketplace, aligning on growth plans in key strategic areas like basketball, kids, and sneaker culture,” Dillon said. “The fruits of our renewed commitment to one another will begin to show up in holiday this year.”
Dillon, who started as Foot Locker CEO in September, is widely praised for her previous work as CEO of Ulta, where she led the company through an extraordinary period of growth before stepping down in the summer of 2021. With expected growth from non-Nike brands, Foot Locker expects total annual revenue to increase from $8.5 billion to $9.5 billion by 2026.
Speculation had been building about Foot Locker and Nike working more closely together again since December when Nike CEO John Donahoe mentioned spending time with Dillon on a Nike earnings call.
Dillon also said Foot Locker has “restarted” joint planning and data and insight sharing with Nike. This could mean Foot Locker will be Nike’s next “connected inventory” partner, a Nike effort to capture more information on customer behavior and more closely monitor the products on the shelves at retail partners.
At one point, Nike accounted for around 70% of Foot Locker’s revenue before dipping as a result of Nike’s direct-to-consumer strategy. It’s unclear how low Nike sales dropped, but Foot Locker now expects to grow revenue from Nike sales to be between 55% and 60% of total revenue by 2026, according to the company’s investor presentation.
In 2021, 68% of Foot Locker’s merchandise came from Nike. In 2022, the company said it expected that percentage to decline.
The updated partnership doesn’t mean more limited edition Nike shoes like Dunks and Jordans for Foot Locker.
Instead, Chief Merchandising Officer Chris Santaella said this year’s holiday season would feature more LeBron James and Kevin Durant retro Nike shoes, as well as LeBron James signature sneakers and Air Force 1s.
As part of the new partnership with Nike, Foot Locker will use its House of Hoops brand to highlight performance basketball shoes for rising NBA stars such as Jason Tatum of the Boston Celtics.
While sneakers like the LeBron James and Kevin Durant retros are important products for Nike, they are not the sneakers that call for sneakerheads to camp outside of stores or crash apps due to high demand. The highest heat Nike products will still be sold through Nike’s own channels and a small number of boutiques, what it calls “Tier 0” partners.
“Nike will continue to be the largest brand partner, and we’ve revitalized our Nike relationship, and both companies are committed to growth,” Santaella said. “The partnership is focused on creating a strategy that is complementary to the Nike direct-to-consumer strategy.”
Since Nike started its direct-sales focus in 2017, sneaker retailers, including Foot Locker, have turned to up-and-coming brands to fill space on the shoe wall. As part of its new strategy, Foot Locker wants to double sales of non-Nike brands, such as Hoka On, and Crocs by 2026.
“The broadening consumer base has created a broader brand portfolio as more consumers are seeking more brands to satisfy their footwear occasions,” Santaella said.