DSW Says Nike Penetration Is Nearing Pre-Covid Levels
Designer Brands Inc. is clearly benefiting from its Nike revival.
In the fourth quarter of 2023, kids’ athletic sales at the DSW-parent company were up 15 percent compared to the prior year. In a call with analysts, DBI chief executive officer Doug Howe said this growth was “in part due to the return of Nike.” He added that since Nike returned to DSW stores in September, sales of the brand have almost returned to pre-Covid levels and that it is already one of the retailer’s top national brands.
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“Being able to offer the largest athletic brand to our customers shopping for men’s, women’s and kids is a tailwind as we ramp up our casual and athletic offerings across our entire assortment,” Howe said.
The return of Nike product at DSW came as the Swoosh re-entered or reinvigorated its wholesale partnerships with other retailers after exiting several in 2021 in pursuit of a stronger direct-to-consumer focus. In the last year, Nike resumed relationships with Macy’s and Foot Locker, as well as DBI. Given Nike’s wholesale push, some analysts have become increasingly skeptical of the company’s alleged DTC focus, a concern that will likely be a focal point of the Swoosh’s earnings after markets close on Thursday.
While Nike sales were a green shoot at DBI in Q4, overall comparable sales declined in the fourth quarter and year. DBI’s net sales decreased 0.8 percent to $754.3 million in the fourth quarter of 2023, with comparable sales down 7.3 percent. Adjusted net loss was $25.3 million, with loss per diluted share of 44 cents.
Howe described Nike sales as having an overall “positive halo effect” on other business segments. But despite the emphasis on the Swoosh, DBI re-affirmed its goal to double sales from its owned brands and Camuto Group national owned and licensed brands to almost one-third of total sales by 2026. Penetration for owned brands, which include athletic brands like Le Tigre, was flat in Q4 though sales in the brand portfolio segment were up 37.7 percent.
In January, DBI tapped Andrea O’Donnell for the role of brands president, EVP of Designer Brands, to oversee the sourcing, design and distribution of Designer Brands’ growing roster of owned and licensed brands, including Keds, Vince Camuto, Topo Athletic, Hush Puppies, Le Tigre, Lucky Brand, Jessica Simpson, Kelly & Katie, Crown Vintage, Mix No. 6 and more. The company also said on Thursday that it is rolling out a new system to track the way it sells its owned brands to other segments to maintain greater consistentcy.
“We’re maintaining our commitment in owned brands,” Howe said. “We’ll continue to evolve, but we’re feeling really good about the green shoots we’re seeing already with the changes that the team has made in the format.”
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