Nike smashed forecasts for both sales and earnings and says the robust results for its fiscal second quarter are evidence that its digital brand-building efforts are paying off.
Sales at the company jumped 17% to $13.3 billion, compared to $11.4 billion in the same period a year ago. On a currency-neutral basis, Nike gained 27%. Direct sales increased 16% to $5.4 billion. And digital sales notched a 25% gain–and a 34% increase on a currency-neutral basis.
Net income for the period came in flat at $1.33 billion.
It also raised its sales forecasts for the months ahead and indicated that it’s pleased with its ability to clear excess products, minimizing the risk of more aggressive clearance tactics.
The results are “much better-than-expected,” writes Brian Nagel, an analyst who follows the company for Oppenheimer. He calls the report “decidedly upbeat and suggestive of a now even more powerful, digitally-driven business model.”
Revenues at Converse added 5% to $586 million, led by double-digit growth in North America.
In a call webcast for investors, John Donahoe, Nike’s president and chief executive officer, explained how the company’s direct connection to consumers is powering its gains.
“Our work directly connecting with consumers is founded on a simple consumer insight: Consumers want to get what they want, when they want it, and how they want it. Consumers have told us they want a consistent, seamless and premium shopping experience, digitally and physically.”
Donahoe also detailed the ways membership strengthens connections, leading to more sales. The quarter “was our biggest member demand quarter ever, and we saw double-digit growth in member engagement. Today, we have roughly 160 million active members who engage with us on a regular basis.”
Repeat buying members spend “at an even faster pace of high double-digits as they continue to be an important growth engine for our business. Our members also shop seamlessly across the marketplace. In addition to digital, a key member on-ramp for us is through our Nike stores. More than 50% of store demand comes from members. And cross-channel members are even more valuable, with higher demand per member than single-channel members.”
And after two years of disruption, the company heralded a 6% gain in Greater China.
In general, “Nike outperformed our expectations in fiscal 2023’s second quarter despite concerns of slowing consumer spending due to inflation and widespread industry discounting,” writes David Swartz, an analyst who follows the company for Morningstar.
Swartz notes that Nike's ongoing strength in ecommerce “affirms that its digital sales strategy is paying off and is not just a product of the pandemic.”