// Foot Locker expects a drop in revenue for 2022 as it anticipates it will no longer be able to sell as many products from its top vendor, Nike
// The adjustments reflect the accelerated shift by Nike to sell more of its clothes and footwear directly to consumers, Foot Locker said
Foot Locker shares plummeted 34% on the back of its bleak full-year forecast that underlined the footwear retailer’s struggles as biggest supplier Nike Inc ramps up selling directly to customers.
The retailer said it expects like-for-like sales to fall 8% to 10% in its 2022 financial year.
Nike will account for about 60% of total purchases in 2022, down from 70% in the past year and 75% in 2020, Foot Locker said.
This change reflects Nike’s shift in strategy to focus on direct-to-consumer (DTC) sales.
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“We always thought that Foot Locker’s position as a ‘strategic partner’ would insulate them somewhat from Nike’s DTC push… but this is a dramatic change,” said Wedbush analyst Tom Nikic.
“We don’t really see a silver lining here.”
Nike, which has battled supply chain issues and production facility closures over the last year, has been increasingly moving toward selling direct to consumers, instead of focusing on wholesale.
In its latest quarter, DTC sales rose to $4.7 billion, accounting for about 40% of Nike’s total sales.
“We still have access to all of those products. We’ll just see different quantities flowing our way,” Foot Locker’s chief executive Richard Johnson said on the call.
In a bid to combat a drop off in sales Foot Locker has been leaning on other brands including Adidas, Puma and Timberland to mitigate the risks from Nike’s new strategy, while also expanding its clothing offer and launching private label brands to diversify.
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