Translation: "Sportswear Giant Nike in Transition: A Market in Motion

Nike, the giant of the sports goods industry, is currently undergoing an exciting transformation after a new CEO took the helm to combat a decline in sales. Meanwhile, the rest of the athletic footwear market is flourishing as retailers increasingly diversify their brand offerings, moving beyond the famed Swoosh. Foot Locker, one of the world's largest sneaker retailers, saw growth in comparable store sales last quarter, partly due to a broader product selection that extends beyond Nike. Designer Brands, known for its DSW shoe stores in North America, is expanding its sneaker offerings, while Fleet Feet, a U.S. chain specializing in running shoes, reports unprecedented strength in trainer brands. Designer Brands' CEO Doug Howe recently informed investors of a strategic realignment that increased the share of athletic shoes from 32 percent in 2017 to 42 percent this year. Although total sales at DSW stores in the U.S. recently declined by 3 percent, sales of athletic shoes, including Nike, rose by 16 percent. Positive trends are observed in sneaker chains across all consumer segments—from fashion and family to specialization. This indicates a general sense of optimism in the athletic footwear sector, even if not specifically for Nike. This month, the Swoosh withdrew its financial forecast for the year and reported a 10 percent drop in revenue for the three months up to the end of August. Matt Priest, CEO of the U.S. footwear trade association, noted that shoes can, in some ways, be recession-resistant: People prefer buying shoes over a new car or washing machine, even amid high, albeit declining, interest rates. Global retail sales of athletic shoes reached $165 billion in 2023, according to Euromonitor, a 23 percent increase since 2018, led by a 38 percent rise in Latin America. In the U.S., where 99 percent of shoes are imported, sneakers are gaining popularity. Imports of athletic shoes increased by more than 10 percent by August compared to the previous year, in contrast to an overall footwear import increase of only one percent. Industry experts and retailers partly attribute the success to the increasing "casualization" of society, where sneakers are increasingly accepted as suitable for work and going out. Foot Locker's fortune was once so closely tied to Nike that for years, both companies cited each other as their only significant customers in official documents. The share of Nike stock at Foot Locker and its subsidiary Jordan peaked at 75 percent in 2020 and dropped to 65 percent last year. At an investor conference last month, Mary Dillon, CEO of Foot Locker, highlighted the chain's expanded product range, which includes brands like Hoka, New Balance, and On. Some of the increased competitiveness in the athletic footwear sector is due to factors caused by Nike. An aggressive strategic plan in 2017 shifted sales toward direct consumer distribution, creating space for other brands at retailers like Foot Locker. However, Nike representatives admitted that the company has pushed too far into direct and online sales and failed to keep pace with consumers returning to stores after the pandemic measures. Foot Locker expects a "return to growth" with Nike this year. Nevertheless, there are also weaknesses in the global athletic footwear market: The British chain JD Sports reported declining profits for the half-year, mainly due to operational changes and the closure of a distribution center. Overall, brands beyond Nike have delivered. For example, Foot Locker showcased offerings like Timberland boots and Ugg slides prominently alongside New Balance and Hoka in its New York store in the fall.