Nike, Under Armor and PacSun, in supply problems 0:36
New York (CNN Business) -
Starting in 2022, you won't be able to buy Nike shoes and clothing from one of the largest shoe chains in the United States.
Nike announced that it will stop selling to DSW as it breaks ties with many stores and shifts its strategy to sell more of its products through its own stores, websites, mobile apps and select retailers.
In recent years, the company has significantly reduced the number of traditional retailers it sells to in order to improve its profits and strengthen control over the presentation of its products.
This has hurt some independent shoe and athletic stores, which rely heavily on selling products from Nike, the world's largest shoemaker, to attract customers.
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Designer Brands, DSW's parent company, said in an earnings call Tuesday that Nike made the last shipment of products to the company in September.
Once DSW sells them in stores and online, Nike will disappear from the shelves.
Nike is DSW's largest supplier of sporting goods, accounting for about 7% of the company's sales in 2020.
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Nike's CFO Matthew Friend said in September that the brand has "exited about 50%" of its retail partners since announcing this strategy in 2017. At the time, the company said it would focus its resources, marketing and products major at just 40 retail partners, including Foot Locker and Dick's Sporting Goods.
Selling products on its own website and in brick-and-mortar stores is more than twice the profit for Nike as it would make selling through wholesale partners.
The company also gets much tighter control over the buyer's experience and pricing.
This is a huge advantage for a premium brand like Nike, which wants to present merchandise to customers in an attractive and consistent way, and avoid over-discounting products.
Its rivals Under Armor and Adidas are following suit, pulling out their retail partners and building the direct-to-consumer sales channel.
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Meanwhile, despite losing Nike, DSW believes it can make up for revenue by growing other sports brands.
"We are seeing good results across our entire portfolio of sports products," Designer Brands CEO Roger Rawlins said in a meeting with analysts on Tuesday.
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