(My thoughts are placed in the parenthesis)
Nike’s unrivaled scale allows for over indexing, while delivering expanded profitability.
CDO is redefining shareholder value.
Nike Inc increased 10% due to acceleration in North America
Nike Direct grew 12% and Nike Digital grew 34% Digital outpaced all channels.
Tax rate 14%
As of August inventory is flat. (This is amazing and I can now refer to the post I wrote last year about the Nike Flash Sale below)
The Nike Flash Sale Is an Extension of the Consumer Direct Offensive | Marketing
North America has returned to sustainable growth.
Q1 grew 6%
Wholesale also returned to growth, but they are still implementing strategies to grow beyond wholesale.
Jordan Brand reset the approach and is bringing the icons to life and the brand is back to full market. Extended sizes for women and new collaborations.
Performance basketball presents a growth opportunity. (Performance sales are down, but Nike understands that sport innovation drives casual style.)
EMEA Q1 Revenue grew 9% due to sportswear, running and Jordan. Nike digital grew at a double digit rate. AMEA is home to 5 Key Cities. Nike is rate #1 in those 5 Key Cities. Both Finalists in World Cup were Nike teams and had 50 million views on Phantom football franchise with sell through. Jordan Branded St. G Football. Nike has not reached full potential in Europe.
Greater China 17 consecutive quarters of growth there. Key Cities of Shanghai and Bejing. Nike digital accelerated in Q1 and with TMALL and WeChat. Bai Li in China has 2500 touchpoints leveraged via digital. (WeChat is important as it is the Instagram of China and Nike’s recent foray into digital in London with IG may serve as another touchpoint possibly.)
APLA grew 14% fueled by footwear and apparel, led by Japan Mexico and Korea. Women’s growth is accelerating. Nike digital is also growing at 70%!!! Nike SNKRS App is preparing for rollout in Mexico and Brazil. Preparing for Tokyo Olympics. (Nike digital is the guide for retail)
7% Growth for Converse, but declines in wholesale in the US and UK. (Converse is being disrupted by Vans, Fila and Puma. I don’t expect this to stop.)
Growth is exceeding expectations.
Nike is expecting revenue growth in high single digits.
CDO is creating brand distinction and creating competitive advantage.
Questions:
Bob with Guggenheim: Could you address brand creation advertising and the controversy around it?
A: We’re motivated to inspire our consumer, connect, engage and inspire. We know JDI has resonated quite strongly in both North America and around the world. We’ve seen record traffic due to the campaign.
Lauren with Morgan Stanley: Anything you can share on North America DTC growth and any signs of slowdowns in China?
A: Strong growth in digital in North America. We’ve removed friction and allocated product to that channel. We’re using data sensing to align supply digitally. In inline stores traffic and conversion is up. Conversion is a result of brand distinction and product to market. Sell through is strong and off price sale is down. Factory stores have gaps because of digital. They’ve identified the problem.
A. We have strong relationships in digital with China. We have great momentum. Jordan Brand is incredible strong in China. We aren’t seeing any pushback with consumers and we feel confident in our growth in China. We are mindful of the dynamics there.
Mark on new product introduction will there be a gap in innovation? 720 Product in the pipeline, adaptive footwear entering performance soon. Throughout the fiscal year an incredible pipeline with a balanced introduction and we can improve Air, React, ZoomX which still has a lot to leverage. I can’t shed too much light, but I’m extremely excited about the build up to the Olympics. The 12-18 months things will ramp up.
Nike is really excited about Future Series with Kids and Brand Jordan growth.
Jet.com relationship is exciting and is about creating a compelling consumer experience and leveraging Nike membership and ensuring a clean consumer product across that platform. Jet is one of several initiatives with digital. It’s a more focused assortment of product tailored to the consumers with a brand friendly consumer experience. Amazon is performing well and we’ve seen good sell through on limited product offerings.