Nike CEO John Donahoe admits that the brand went too far in favoring its own stores and website over wholesalers, but has since corrected the mistake and is investing heavily with retail partners.
Nike CEO John Donahoe acknowledged that the brand went too far when it iced out wholesalers in favor of its own stores and website.
The sneaker giant has been working to drive direct sales but has recently renewed partnerships with wholesalers like Macy's and DSW.Illuminated trademark of the American athletic footwear and apparel corporation Nike, Inc. seen on the Nike Store window in Antwerp, Belgium. "We recognize that in our movement toward digital, we had over-rotated away from wholesale a little more than we intended," Donahoe told CNBC'sfrom Paris. "We've corrected that.
However, it's a tough strategy to pull off and one that can pressure margins in the short term. Shifting to a direct model is capital-intensive and saddled Nike with the headaches of returns and owned inventory, which had typically fallen on wholesale partners. The change comes at a difficult time for Nike, which has faced criticism for falling behind on innovation and losing market share toto reduce costs by about $2 billion over the next three years. It also cut its sales guidance as it warned of softer demand in the quarters ahead., or more than 1,500 jobs, so it could invest in its growth areas, such as running, the women's category and the Jordan brand.
Nike CEO Wholesalers Retailers Investment Mistake Correction
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