apparel and retail

Nike Posts Major Sales Gains



Volatility? What volatility? Nike's latest financial reports show the apparel giant hurdling past supply chain issues and struggles in China, posting numbers well above expectations.

Revenues grew 5% to $10.9 billion, while sales from Nike Direct gained by 15%, rising to $4.6 billion. And digital sales for the Nike brand notched a 19% jump, with total Nike brand sales climbing 8% to $10.3 billion. Converse sales lost a step, slipping 1% to $567 million.

John Donahoe, president and CEO, credited digital for the strong performance. "Fueled by deep consumer connections, compelling product innovation and an expanding digital advantage," he said in the company's announcement, "we have the right playbook to navigate volatility and create value through our relentless drive to serve the future of sport."

In greater China, sales dropped a worrisome 8%. But the company says it sees sequential improvements just ahead. And that decline was offset by double-digit growth in North America and other regions.



The Beaverton, Oregon-based company says it spent more on marketing, with demand creation costs rising 20% to $854 million. Nike says that's due to the "normalization of spend against brand campaigns and continued investments in digital marketing."

Net income slipped 4% to $1.4 billion, better than analysts had forecast.

The company continues to impress observers with its D2C efforts. Its D2C digital sales "reached 26% of sales, with mobile now greater than half of digital sales," writes Jonathan Komp, an analyst who follows the company for Baird, in his note on the results. "Nike is operating from a position of strength within its Nike Marketplace strategy by cutting wholesale doors," with those reductions now greater than 50%.

New store formats are also encouraging optimism. Those include Nike Live stores, which the company says is showing promising sales-per-square foot levels. The testing of stand-alone Jordan North America stores, scheduled for next year, is promising. (That concept is already popular in China, Korea and the Philippines.)

Komp, who continues to rate the company as "Outperform," is also encouraged by coming innovations in running, women's bras and manufacturing processes.

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