Despite supply-chain constraints that cut into sales, Nike’s second-quarter results narrowly topped Wall Street expectations.
Revenues rose 1% to $11.4 billion, pinched by product shortages. Sales at the Nike brand came in flat at $10.8 billion, with a 9% gain in direct sales offset by lower wholesale orders. And digital sales jumped 12%, led by a 40% increase in North American sales. Net income climbed 7% to $1.3 billion.
Expenses for demand creation climbed 40% to $1 billion, primarily for brand campaigns and digital marketing.
At Converse, sales gained 16% to $557 million.
In remarks prepared for investors John Donahoe, president and chief executive officer, said the pandemic challenges “create opportunity for strong brands to get stronger. We are now in a much stronger competitive position today than we were 18 months ago.”
He said holiday sales prove that point, with Black Friday digital sales in North America soaring up 40%.
He also cited examples of how the company is building on customer experience. First, it launched new fitness content starring Megan Thee Stallion in the Nike Training Club app, which drew twice as many daily active users.
Donahoe also called out the new partnership with Dick’s Sporting Goods, which allows shoppers to link their Nike member account with their Dick's account “to unlock exclusive offers, products and experiences.”
While Nike has worked hard to develop its own experiential retail stores, the partnership with Dick’s “is a new model for how brands and retailers work together -- delivering product, experience and connection service to delight consumers at scale,” said Donahoe.
Nike continues to have “an attractive multiyear outlook,” writes Jonathan Komp, who follows the company for Baird, in a preview note. Between its “direct-to-consumer and digital leadership, pricing power and positive consumer engagement,” the company is well-positioned for “a sharp earnings recovery” in the next fiscal year.