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Nike is aggressively opening new stores as it pushes forward on its plan to sell directly to consumers. Wall Street isn't sold on the strategy.

  • Nike is pushing forward on a plan to open as many as 200 stores within a two-year timespan.
  • The stores are popping up all over the US and significantly increase Nike’s store footprint. 
  • The new stores are part of Nike’s shift to more direct, digital sales.

Nike is accelerating its brick-and-mortar strategy as part of its evolving direct-to-consumer push, dubbed Consumer Direct Acceleration.

The strategy includes opening as many as 200 new stores in the US and Europe. The stores, which focus on digital technology — such as self-checkout through the Nike app and in-store pickup for online orders — will play a critical role in Nike’s work to get products to customers faster, including shipping from stores.

Nike CEO John Donahoe announced the store plan in 2020 during a quarterly earnings call.

Analysts largely missed the announcement, which took place on the same day Nike reported a $790 million quarterly loss and quarterly revenue $1 billion below Wall Street expectations.

“We’ll be opening somewhere between 150 and 200 new stores,” Donahoe said in June 2020. “They will be small footprint, digitally enabled mono-brand stores.”

Fast-forward to 2022, and Nike’s store strategy is finally coming into view, with new stores in the works in Louisville, Kentucky; Lexington, Kentucky; Liverpool, England; Harlem in New York City; Fresno, California; and Silver Spring, Maryland; according to news reports. Social-media posts by Nike employees indicate stores are opening in Washington, DC; the North Bronx in New York City; and outside Salt Lake City.

Nike is also hiring for corporate real estate and in-store jobs. Nike is looking for a North America real-estate finance manager, which the listing says is part of the company’s “multi-year strategy of growth in the North America Marketplace.” Other recent job openings include a real-estate business-development specialist and a real-estate marketplace-development specialist.

In August, the company hired Jeff Gaul as vice president of global store development, according to his LinkedIn profile. He previously worked as a vice president in charge of store development for Sephora.

Nike didn’t respond to an email seeking comment for this story. The company is set to report quarterly earnings on Thursday.

Fewer stores than competitors

Nike had 344 US stores on May 31, according to its most recent annual report.

But its footprint is heavily tilted toward clearance, or “factory” stores. At the time of the filing, the company had 209 clearance stores and 48 full-price stores. The other 87 Nike stores were for its Converse brand.

Nike’s store footprint is smaller than that of its peers.

Vans, which is owned by VF Corp., has more than 700 stores, according to VF’s most recent annual report. Even much smaller competitors, such as Allbirds, operate nearly as many full-price stores, roughly 35, as Nike does.

Though the mix of the new stores (full-price and discount stores) is unclear, Simeon Siegel, a senior analyst at BMO Capital Markets, previously told Insider it benefited Nike to open more full-price stores given it’s working to establish the company as a premium brand.

“It’s important to remember that stores are a part of direct sales,” Siegel said. “If the whole reason to pivot is to elevate the brand and pricing power, stores need to be full-price and brand-elevating.”

As part of its direct-to-consumer strategy, Nike is overhauling its digital infrastructure and making it easier to search its inventory on its apps and websites.

The plan isn’t without challenges and critics, including boutique retailers that have lost Nike accounts and Nike technology workers who complain about a loss of talent amid restructuring. Some analysts, including Siegel, are wary of the perceived benefits of direct-to-consumer sales.

Wall Street also has its doubts about Nike’s direction. The Barclays analyst Adrienne Yih downgraded the company’s shares this week, partially out of concern about excess inventory. In a recent note, Yih also said Nike is opening itself up to demand volatility by emphasizing DTC over the recurring revenue wholesale partnerships bring in. Nike shares are down nearly 41% this year, while the S&P 500 is down 23%.

But Nike remains bullish.

At the company’s annual shareholder meeting 2 ½ weeks ago, CFO Matt Friend noted Nike’s gross margin — a metric closely watched by Wall Street — expanded 2.6 percentage points to 46%, in the past two years.

“Fundamentally the Consumer Direct Acceleration strategy is changing our financial and operating model resulting in healthy profitable growth for Nike,” he said.

Nike’s new stores interact with the company’s apps, including the ability to scan codes and immediately purchase outfits online.

Courtesy Nike



Nike’s future stores will be smaller, and hyperlocal

In 1990, Nike opened the first Niketown, a multistory, 20,000-square-foot emporium in Portland, Oregon, that doubled as a sportswear museum. The company eventually opened Niketowns in several other cities.

Nike’s days of opening giant, overwhelming retail experiences seem to be over. The future is smaller, more intimate stores, driven by the data Nike captures on its apps and website.

In 2018, Nike opened the first Nike Live, a small-format store concept, in the Melrose neighborhood of Los Angeles. Instead of the massive floor plan of a Niketown, the Melrose store was 4,500 square feet and stocked with a curated selection of merchandise popular with local residents. The store worked hand in hand with the company’s apps by letting people reserve products online and then try them on in the store.

In 2020, Nike introduced “Unite,” a concept that’s been described as a “reimagination” of the company’s outlet stores.

Nike’s new stores opening in the US and Europe appear to be a mix of the recently introduced Live and Unite formats.

“I would characterize this investment in these new doors as continued investment in our digital future,” Donahoe said, on the 2020 earnings call.

He added: “With soft goods like apparel they may want to reserve it online and try it on in the store. They may want to be in a store and buy something that is not in the store because of inventory and the associate uses a digital device to buy it and gets shipped home. And so consumers increasingly want a consistent, seamless physical and digital experience, and so that’s what we’re committed to providing.”

Do you work at Nike or have insight to share? Contact reporter Matthew Kish via the encrypted-messaging app Signal (+1-971-319-3830) or email (mkish@insider.com). Check out Insider’s source guide for other tips on sharing information securely.

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