Foot Locker Works with Nike Amid Diminishing Demand

By Ananya Mariam Rajesh and Nicholas P. Brown
(Reuters) – Foot Locker (NYSE:FL) executives announced on Wednesday their collaboration with Nike (NYSE:NKE) to promote newer shoe models like Vomero and Air DT Max as they navigate a decline in demand amidst the holiday shopping season.

"We'll work through some of this short-term turbulence and play the long game for sure," stated Foot Locker Chief Commercial Officer Frank Bracken during an investor call.

Foot Locker, which purchased 65% of its athletic merchandise from Nike in both 2022 and 2023, is facing increased competition from brands like On and Hoka.

Following a forecast cut in annual sales and profit due to softening shoe demand, Foot Locker's shares plummeted by 20% on Wednesday. The new sales expectations predict a 1% to 1.5% drop, compared to a previous forecast of a stable or slightly positive outlook.

Nike's Vomero shoes retail between $160 and $180, with the Vomero 18 expected to launch next year featuring enhanced cushioning, while the Air DT Max offers similar benefits at a price of $170.

Recently, Nike appointed company veteran Elliott Hill as CEO to lead a business transformation aimed at strengthening retail partnerships and addressing competitive pressures from trendier brands. Foot Locker CEO Mary Dillon expressed confidence in Hill's strategy during the earnings call.

In an effort to boost sales, Foot Locker also expanded its Home Court partnership with Nike to feature exclusive product releases. Nike, aside from Foot Locker, counts Dick's Sporting Goods (NYSE:DKS) and Nordstrom (NYSE:JWN) among its retail partners.

As the holiday season approaches, Dick's plans to stock essential items like Nike fleece but is also considering increasing selections from competitors like On Holding and Hoka. Foot Locker plans to enhance their inventory of these brands as well.

"We do expect things to be promotional as we think through the rest of the shortened holiday season here," mentioned Foot Locker CFO Mike Baughan.