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5,400 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Kobe and Ja in basketball, Metcon And Motiva in fitness and Structure and Vomero in running. Women's fitness footwear grew double digits and key apparel franchises such as $100-plus leggings, continued scaling with strong sell-through. New product journeys from Book 1 to Vomero 5 and V2K, to Lunar Roam and Travis Scott Jordan Jumpman Jack drove consumer energy and ahead of a new wave of Nike Air innovation, the Air Zoom Alphafly 3 debuted with a marathon world record and sellout launches across multiple markets around the world. As you heard from John, we believe the Paris Olympics will serve as a catalyst for our brands as we launch our newest Nike Air innovations for athletes. Most importantly, this is just the beginning. With a growing portfolio of new concepts, platforms and capabilities, our innovation teams are well positioned to continue driving breakthroughs in performance and lifestyle over the coming years. Now to maximize the impact of our new product cycle, we are accelerating several important actions lined up against key brand and sports moments. First, we are elevating and differentiating the consumer experience with our brands at retail, especially as consumers continue to shift back into physical stores. This includes increased investment to support strong seasonal retail marketing execution, breadth and depth of assortment and elevated service and product presentation. You heard John say that we will initially launch the Air Max Dn next week at more than 4,000 doors. We will increasingly leverage our full portfolio of thousands of physical doors to position our newest products in the path of consumers. Second, we are sharpening our brand storytelling to tell fewer, bigger stories with greater reach. We will focus our demand creation investments to elevate our brand and most distinctive products, leading with the voice of the athlete, amplifying our new innovation, and engaging consumers at the point of sale. As we look forward, we see that our Olympics Air for Athletes campaign will be the |
5,401 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | and engaging consumers at the point of sale. As we look forward, we see that our Olympics Air for Athletes campaign will be the boldest expression of NIKE's brand voice in many years. Third, we are in the midst of shifting our product portfolio towards newness and innovation. Last quarter, we spoke of our intentional actions to reduce marketplace supply of certain key franchises to ensure they remain healthy and strong, while feeding and scaling new products. Given the way consumers are responding to our newest product journeys, even amidst a more promotional environment, we have decided to accelerate our actions. For example, we are pulling back supply of classics, such as the Air Force 1, and we're reducing supply of Pegasus ahead of launching new innovation in the Peg 41. We've been here before. 12 months ago, our basketball portfolio was meaningfully impacted when we exited a key signature franchise. Since then, we've more than offset that impact by scaling innovation with the GT series, introducing newness to consumers in Ja, Sabrina, Kobe and Book and returned to strong double-digit growth this quarter in basketball. Looking ahead, we expect lifecycle management of key product franchises to create some near-term headwinds, particularly on digital. However, we are confident that we are taking the right actions to fuel brand momentum and return to stronger long-term growth. Last, while we continue to bring operational discipline as we manage our business through these shifts and a multiyear period of higher cost inflation, we are also positioning NIKE for the future. This includes restructuring our organization to sharpen our focus and increase our investment on the consumer and sport, which we believe will fuel our next phase of long-term growth. This quarter, we began streamlining support and operating functions, reducing management layers and shifting more of our resources towards consumer-facing activities. In particular, we are increasing investment in areas such as design, product creation, |
5,402 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | towards consumer-facing activities. In particular, we are increasing investment in areas such as design, product creation, merchandising, brand and our ground game to drive greater impact for consumers, dimensions of sport and the marketplace. Overall, our focus is on allocating our resources to drive more return while building an operating model with greater speed and better cost productivity as we grow. Now let me turn to our NIKE Inc. third quarter results. In Q3, NIKE, Inc. revenue was up slightly on a reported and currency-neutral basis with low single-digit growth in the NIKE brand, partially offset by declines at Converse. As a reminder, this follows 14% reported and 19% currency-neutral growth one year ago, as we were liquidating excess inventory in Q3 of fiscal '23. NIKE Direct was up slightly versus the prior year, with NIKE stores up 6% and NIKE Digital down 4%, wholesale grew 3%. Gross margins expanded 150 basis points to 44.8% on a reported basis, driven by strategic pricing actions, lower ocean freight rates and improvements in supply chain efficiency, partially offset by higher product input costs. This also includes 50 basis points of negative impact from restructuring charges. SG&A grew 7% on a reported basis as increased investments in demand creation was partially offset by disciplined expense management. This quarter, SG&A was also impacted by approximately $340 million in restructuring charges. Our effective tax rate for the quarter was 16.5% compared to 16% for the same period last year. Diluted earnings per share was $0.77. Excluding the impact of the restructuring charges, earnings per share would have been $0.98, up 24% versus the prior year. Now let me turn to our operating segments. In North America, Q3 revenue grew 3%. NIKE Direct grew 2% with NIKE stores up 3% and NIKE Digital up 1%. Wholesale grew 5% and EBIT grew 18% on a reported basis. This builds on extraordinary growth in the prior year, with North America revenue up 27%, including NIKE Direct up 23% and wholesale up 32% in Q3 |
5,403 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | growth in the prior year, with North America revenue up 27%, including NIKE Direct up 23% and wholesale up 32% in Q3 of fiscal '23. This quarter, we exceeded our expectations in North America with strong holiday sales, lighter markdowns than our competitors and unit growth versus the prior year. Inventory is also down double digits at the end of Q3. Kids grew double digits across footwear and apparel with seasonal fleece and performance footwear resonating. We also saw positive momentum in women's lifestyle and fitness with strong growth from the Dunk, free Metcon and retro running styles. Jordan Remix and Sport Performance grew double digits. And in running, Structure, Vomero and the Invincible delivered double-digit growth. In EMEA, Q3 revenue declined 4%. NIKE Direct declined 4% as NIKE stores grew 6% and NIKE Digital declined 10%. Wholesale was down 5% and EBIT declined 6% on a reported basis. As a reminder, these results compare to tremendous growth in Q3 of fiscal '23 when EMEA revenue was up 26%, NIKE Direct was up 39% and wholesale was up 20%. However, sales in the geography fell short of our expectations this quarter as we navigated increased macro volatility and softening consumer demand. That said, newness and brand distinction continues to fuel momentum in EMEA. In running, [self] Alphafly 3's launch energized our road racing portfolio. In Lifestyle, P-6000 and Vomero 5 continue to scale, and fitness grew double digits as we activated our ground game with brand activations and our trainer network. Overall, inventory remains healthy with units down double digits versus the prior year. And as we look forward, we see the launch of Air Max Dn Euro Champs '24 and the Paris Olympics as opportunities to create near-term brand momentum despite a challenging consumer backdrop. In Greater China, Q3 revenue grew 6%, in line with our revised expectations that we shared at the end of last quarter. NIKE Direct declined 1% with NIKE stores growing 6% and NIKE Digital declining 13%. Wholesale grew 12%. EBIT grew 3% |
5,404 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | quarter. NIKE Direct declined 1% with NIKE stores growing 6% and NIKE Digital declining 13%. Wholesale grew 12%. EBIT grew 3% on a reported basis with multiple points of impact from foreign exchange headwinds. Chinese New Year sales grew year-over-year with our NIKE and Jordan Year of the Dragon Express Lane collections driving excellent sell-through. And retail sales with our partners grew double digits in Q3 versus the prior year. Kids led our growth in the quarter with performance dimensions up strong double digits. In basketball, Book 1, Kobe and G.T. Cut 3 launch with strong sell-through. In running, the Structure, the Invincible and the Vomero drove strong growth this quarter. And the Jordan brand delivered double-digit growth in women's and kids with consumer anticipation building ahead of this week's opening of Jordan World of Flight Beijing, which will be the brand's first pinnacle retail concept in China. In APLA, Q3 revenue grew 4%. NIKE Direct grew 4% with NIKE stores up 18% and NIKE Digital declining 6%. Wholesale grew 3% and EBIT declined 3% on a reported basis. In Central and South America, we delivered double-digit growth and improved return on sales in the first full year of our shift to a distributor model. In Mexico, we gained brand strength and momentum with strong growth in football. And in Japan, running grew double digits. Across the APLA, football and basketball grew double digits, fueled by the Mercurial, LeBron and the GT series. And women's holistic fitness grew across all channels with Motiva and statement leggings, in particular, resonating. Now let me turn to our financial outlook. As we look forward, we are driving earnings growth and offsetting softer second half revenue with strong gross margin execution, disciplined cost controls and healthy and more productive inventory levels across the marketplace. Excluding restructuring charges, we expect to deliver on the full year earnings outlook that we communicated at the beginning of this fiscal year. More specifically, for the full |
5,405 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | on the full year earnings outlook that we communicated at the beginning of this fiscal year. More specifically, for the full year, we continue to expect revenue to grow approximately 1%. We now expect Q4 revenue to be up slightly reflecting some shipment timing benefits in Q3 and lower digital growth due to franchise lifecycle management. Q4 also has one point of negative impact on reported revenue from a stronger U.S. dollar. Moving down the P&L. I will note that our guidance includes restructuring charges of approximately $450 million in our second half, with $403 million incurred in the third quarter. This primarily impacts SG&A with approximately 15 basis points of impact to full year gross margins. We expect Q4 gross margins to expand approximately 160 to 180 basis points. This guidance continues to reflect benefits from strategic price increases, lower ocean freight rates, lower product input costs and improved supply chain efficiency. Our outlook is now partially offset by higher markdowns, reduced benefits from channel mix due to franchise lifecycle management and worsening foreign exchange headwinds. For the full year, this translates into gross margins expanding approximately 120 basis points, including approximately 60 basis points of impact from foreign exchange headwinds. We now expect Q4 SG&A to be down slightly versus the prior year, including restructuring charges, reflecting improvement versus our prior guidance. For the full year, this translates into SG&A growing low single digits, including restructuring charges, also reflecting improvement versus our prior guidance. Excluding the impact of restructuring charges, we expect full year SG&A to be roughly flat. Our guidance for other income and expense and our effective tax rate remain unchanged. Additionally, given the strategic actions we walked through earlier, I want to share some early thoughts on how we are planning for our next fiscal year. First, we expect revenue and earnings to grow versus the prior year, with operating margins |
5,406 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | planning for our next fiscal year. First, we expect revenue and earnings to grow versus the prior year, with operating margins expanding, excluding the impact of the restructuring charges in fiscal '24. However, we are prudently planning for revenue in the first half of the fiscal year to be down low single digits. As I mentioned earlier, this reflects near-term headwinds from lifecycle management of our key product franchises, more than offsetting the scaling of new products as we shift our product portfolio toward newness and innovation. This also continues to reflect the subdued macro outlook around the world. Most importantly, we are focused on amplifying brand strength and consumer impact, which is the foundation for how we drive sustainable long-term growth. Looking ahead, we are confident in our product pipeline for fiscal '25 and the momentum that we will build throughout the year, moment-by-moment, creating brand impact and deep consumer connection through sport. With that, let's open up the call for questions. |
5,407 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: [Operator Instructions] Our first question will come from the line of Jay Sole with UBS. Please go ahead.
Jay Sole: Great. Thank you so much. Maybe just to start, Matt, I want to ask you about the fiscal '25 commentary you made. You're talking about low single-digit growth for the first half year. You said operating margin, I think you said grow, actually restructuring charges and EPS growth. Can you give a little bit more to mention around what you expect for operating margin next year, like what kind of growth you expect? Will growth on the reported numbers from this year or will it be sort of below that? And then, I guess just a bigger picture, if we could take a step back. Just talk about the operating model. The company switched to a men's-women's-kids construct a couple years ago, away from the category offense. How has that changed? How have you perceived that change? Has it been what you expected it to be? Does NIKE plan to make any changes to the operating model? Thank you so much. |
5,408 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Matt, why don't I take the second part of that question and then you take the first. So Jay, as I mentioned, we are making, and started nine months ago, important adjustments in our offense. And that started with putting the consumer and sport squarely back into our offense. And so that allows a sharpness across men's-women's-kids and Jordan around sport. And so, there's a sharpness around running, end-to-end, around fitness, around basketball, around football, and around lifestyle. So we brought the best of the category offense right back in, along with the sort of gender umbrella. And that resulted in consumer-led, sport-focused teams that are back on our front foot, as we talked about, building a strong innovation pipeline. And in classic NIKE form, it's not just one or two products. It's building a three-year pipeline so that we can bring innovation season after season in each sport. In fact, we were just, this week, we had 300 or 400 of our top leaders here for spring '25. That addition of the next round of innovation, I can tell you, our teams are excited. And it's not just one season. It's a full three-year pipeline. We're combining that with elevating our brand and bigger, bolder stories, grounded in sport and athletes that cut through, and connect with impact. And again, you'll see that in the Olympics. And you saw that a little bit with Caitlin Clark and with Sabrina, most recently, little examples of it, getting back to what we do best, and we're doing that with brand. Then in the marketplace, while we have a sport focus, we're combining both the best of our direct offense. But a reinvestment with our wholesale partners, so we bring a more holistic offense that grows the market and gets in the path of our consumer. And so, that's what's driving our growth. We've made the necessary adjustments to bring the best of what's worked in our proven formula so that we move forward. |
5,409 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: And Jay, the way I think about fiscal '25, is that we are taking our product portfolio through a period of transition. We talked about this last quarter, in terms of our focus on scaling newness and innovation, and the green shoots that we were seeing in terms of the way the consumer, is responding to the newness that we're bringing to market. And this quarter only gave us more confidence that that is where we need to focus and how we will continue to create greater impact, and distinction from a brand point of view. And so this quarter, we saw a majority of our top 20 growing footwear products, be new products that have been created this year. And those products are on a trajectory to deliver multi-billions of annual run rate of incremental revenue. And that's where our focus is. At the same time, we're managing some of our largest lifestyle franchises, and some of our performance franchises back, to make space for the newness. And that's going to have a corresponding offsetting impact. And because we've been missing some product newness at scale in our portfolio over the last several seasons, these actions are resulting in a decline of low single-digits, is how we're thinking about the first half of the year. But we believe we will inflect in the second half, and grow next year on the top line. And when we step back and think about the importance of newness and innovation, and not just to drive the top line, but to create consumer impact at scale, that's the foundation for us driving long-term growth.
Operator: Our next question will come from the line of Matt Boss with JPMorgan. Please go ahead.
Matthew Boss: Great. Thanks. So John, could you elaborate on the new multi-year innovation cycle and how best to think about the timeline for transition to the next chapter of growth that you cited? And maybe Matt staying on that topic, high level, any material changes to consider with the top line growth profile, or your high teens margin target, as we think about this next chapter of growth? |
5,410 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Yes, Matt. Well, I can't tell you the change in the feeling, of our innovation design and product creation teams, getting back on their front foot. And it's not just about a product or an item here and there. It's around building a robust pipeline of innovation. So I mentioned in my remarks, Air. Air has been probably the single largest innovation platform in NIKE's history. And we continue to innovate with Air, both in performance, which you'll see in the Olympics, and you'll see it impact almost every sport dimension. And you get to see that in a couple of weeks and measurable performance benefits. Again, classic NIKE innovation. And then also in lifestyle. Let me just take Air Max DN. We're launching Air Max DN next week, but we already have next year's Air Max and the following year developed, which are further innovations in Air. So that it's not just one year, its three years in the pipeline that we're working on improving and improving and improving, as we bring it with power to consumers. Beyond that, let me take running. I was over, Matt and I were over in the running room. It was yesterday, I think, Matt, wasn't it? It was yesterday. And the three-year pipeline of innovation is clear across Vomero, Structure, and Peg. So we'll have Peg 41 launch in June. Peg Premium will be as well as other members of the Peg family, Peg Trail, all coming in the second half of the year. And we're clear what's coming in '25 and '26 across Peg, Vomero, and Structure. Again, pipeline. Same thing in women's. We went into the women's room. Amy Montagne and team have lined up not just what's coming in the short-term, but what's coming season-after-season, which is what allows NIKE to drive innovation at scale and consistency. |
5,411 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: And I'll just, I'll hit on the question, Matt. On the timeline of transition, I'll just reiterate what I just said, which is we believe that transition is going to occur in the second half of fiscal '25. You will continue to hear us talking about the way we're scaling newness and innovation from this point forward. The products that are already out in the market, we expect to continue to scale. And then John's referenced the DN, the Peg 41, and we've got other things that are coming in the first half of this year. And so that's what we're excited about, offset by the way we're managing some of our franchises. When I think about your question about material changes to the long-term, I'm going to hit on maybe a couple of points here. I think the first one I'd say is that, while our strategy over the last few years has been consumer-led. What I would say is that the - last year or so, we've been more focused on trying to achieve mix of marketplace targets than we have serving consumer demand where the consumer is shopping. And so, there's been more focus on trying to achieve the 40% digital metric or the 60% direct metric when that was always a consumer-focused strategy. The consumer is still clearly shopping in multi-brand retail. And we need to elevate our brand and our positioning, to be able to serve the consumer and to have the maximum impact, from the new innovations that we're bringing to market. And so, those measures are not measures that are guiding our forward-looking plans, okay. The second I'd say is that when we look at the industry and step back overall, stepping back from being in a moment of transitioning our product portfolio. We continue to see strong growth potential in our sector. We think we continue to have industry tailwinds, consumer interest in sport, more people participating in running events and marathons, to more people focused on fitness and living a healthy lifestyle. There are natural consumer tailwinds that are going to continue, to drive growth in our sector, and |
5,412 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | living a healthy lifestyle. There are natural consumer tailwinds that are going to continue, to drive growth in our sector, and we expect to grow and to take share like we always have. As it relates to our long-term margin target, I think this quarter and this year, has been a great proof point on us, recapturing some of the transitory cost headwinds that have been in our face the last couple of years. But also showing how we can execute to deliver gross margin expansion, and be disciplined in the way we're managing costs, while we're investing in the consumer. When I look forward, I think we can continue to drive more profitable growth, and the margins that we've discussed and the opportunity for margin expansion is still significant within our model, but having a strong brand is the foundation for us to be able to drive long-term growth and profitability. And we're focused on what it takes through this flow of innovation - being authenticated in sport, and elevating our presence across the marketplace. And if we can do this, we think we can drive attractive growth and high profitability. And when we get to Investor Day later this year, what we'll do is we will update our algorithm and our expectations, over the next five-year period. |
5,413 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: Our next question will come from the line of Brooke Roach with Goldman Sachs. Please go ahead.
Brooke Roach: Good afternoon. And thank you for taking our question. I was hoping to get your updated thoughts on the pricing power of the NIKE brand and the markdown opportunities that you see as you build into this new multi-year innovation cycle. Are there any near-term or medium-term offsets that we should contemplate as you work through franchise management and the current macro? And how are you thinking about the most important drivers of operating margin expansion into next fiscal year? Thank you. |
5,414 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Yes, let me start. By talking about pricing power, one of the biggest benefits to a strong brand, an innovative brand, a brand that's continuing to bring freshness and newness to the consumer, is pricing power. And over the last couple years, given our brand strength, we've been able to implement strategic pricing in order to be able to offset, some of the headwinds that we've been facing. But as we look forward, we believe that more newness, more freshness, products that are more connected to stories that are relevant to consumers, should give us the ability on a structural basis, to continue to expand our profitability. And the point, I was trying to make in response to Matt's question is that when the brand is strong, the biggest driver of growth and margin expansion is strong consumer demand for the products we have. And high levels of full price realization. And that ultimately is the fundamental as we carry forward. In the near term, one of the headwinds that we're going to see is that not surprisingly, our digital business carries a higher mix of the biggest franchises that consumers love. And so, as we manage the supply of our larger franchises, we do expect that there will be a near term channel mix headwind, from transitioning our product portfolio. But we view that as being a near term factor, because ultimately for NIKE to grow at the rates that we aspire to grow to, we have to grow units across the marketplace. We have to go grow units in NIKE Direct, through digital in our stores, and we've got to grow units through our partners. And so that is where our focus is, dimensionalized through sport, our fields of play, the way we've always segmented the marketplace to grow. So that we can work and serve the consumer, where the consumer is at. As far as operating profitability long-term, we continue to believe that we can expand gross margins by running our operating model and also driving value out of some of the things that we've talked about in the past, like product cost initiatives to |
5,415 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | model and also driving value out of some of the things that we've talked about in the past, like product cost initiatives to lower our input costs. We're actually already starting to see some benefits on that, in the back half of this year, continuing to drive supply chain efficiency. And then, as I mentioned, the way that we're thinking about managing our SG&A, shifting more of our resources to be consumer facing, we're focused on building an operating model that's got greater speed and drives greater productivity as we grow. And we think that will also be a source of long-term margin expansion for the company. |
5,416 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: Our next question will come from the line of Michael Binetti with Evercore ISI. Please go ahead.
Michael Binetti: Hi guys, thanks for all the detail and diagnosis about - a lot of the moving parts in the business here today. Very helpful. I guess as we look at the second quarter in a row, I guess wholesale in China has grown a lot faster than DTC. Obviously, that's a very important market for you, a lot of important things for us to think about in that market. Can you help us a little color in the different trends in that market that you see? And then, I guess as we think about how you'll manage these franchises into next year, we've also heard some good growth rates in some parts of the wholesale channel, for the first half of your fiscal year. So, I'm assuming we'll see more of that franchise management on the DTC side. And if so, considering that's an important channel for the rest of the P&L, I'm assuming we can orient ourselves around gross margin pressure, in the start of next year as you work your way through that, before we see the influence of returning to growth down the P&L? |
5,417 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Yes, Matt, why don't I take the first part of that, you take the second. So, Michael, on China, interestingly, Angela Dong and her team and all of our top partners, were here for the last week. As you know, we have 6,000 model brand doors. They were here for innovation. And a couple of things are clear. Sport is strong in China and NIKE's strong in China. Our growth in Q3 was 6%, which was in line with our plan. And we're gaining share. We're gaining share certainly against the global brands, and we're gaining share against the local brands. So, NIKE's brand is strong in its back. With regard to channel mix in your specific question, part of what's driving that is the consumers back on the street. And so, I would say that the physical retail channel in China is stronger than digital. And then within digital, Tmall, which was historically the biggest digital driver, is experiencing less growth. We're still the number one sports brand on Tmall. And social commerce, Douyin is growing. And we're not yet on Douyin. We're just getting on Douyin. And so, you'll see us expanding our growth into social commerce, which is the growing digital channel in China. But I can tell you, Matt and I had a chance and Craig Williams and others to meet with our partners from China. They came away seeing our innovation pipeline that I've been talking about, Matt and I have been talking about on this call, what we've got in store coming. And they, it was the first time they'd been on our campus in four years since COVID. And they came away excited, leaning in. And so, we are very optimistic about the future in China. And we will grow across multi-channels to grow the market. It's probably the area of the world we do that the best. |
5,418 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: Yes. And to John's point, not only do we have 6,000 stores, but China is a monobrand market. And so, whether it's owned or partnered, it's a monobrand market, which gives us the ability to have the best expression in front of the consumers, to be able to direct the assortment, so that as we bring newness and innovation and new stories, we partner with our partners. And the last thing I was going to say, Michael, is just the penetration of NIKE Direct in China is lower than what it is across our other geographies. In terms of your question about where we'll see the franchise management, yes, you're right. It will be more in NIKE Direct. And primarily because we continue to see a heavy level of promotional activity happening across digital, across all of our geographies. And while we continue to see, as we've supplied our largest franchises to our wholesale partners, we're actually seeing incredibly strong weekly sell-through on these franchises. We're seeing high levels, high above our targets of full price realization. And so, our franchises are healthy. In fact, we could sell more of these products if we wanted to. But we don't think that's the right thing to do, from a brand point of view. And we know that we manage these franchises for long-term health. And so, we're focused on scaling the newness and creating the consumer space, for us to tell stories about new things that, we're bringing to drive energy. And that's where our focus is. And so, that's ultimately where our teams are spending their time. And that's what's influencing the near-term transition that I highlighted a little bit earlier. As far as the margin question goes, what I'll say is that we're going to grow revenue and earnings next year. And we expect to drive operating margin expansion, excluding the impact of the restructuring charge. And that's going to come through gross margin expansion first. And then, continuing to be disciplined in the way we manage SG&A in order, to be able to drive more productive growth. |
5,419 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: Our next question will come from the line of Alex Straton with Morgan Stanley. Please go ahead.
Alex Straton: Perfect. Thanks for taking the question. Just a couple from me. On the front half '25 revenue guidance down those single-digits, can you give us any color on how you're thinking about it by geography or channel? And then, just bigger picture on this kind of wholesale reentering, are you having any trouble kind of rebuilding the muscle there, facing any difficulty as you reenter? Has NIKE's criteria changed at all in terms of how you think about the right partners or distribution going forward? Thanks a lot.
Matthew Friend: Okay. John, why don't I take the first part and then I'll start the second one
John Donahoe: Okay. |
5,420 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: If you want to jump in on that and go for it. So, Alex, I think the only thing I would say at this point, is the way that we're thinking about the geography splits, is we're not assuming that economic conditions in the international markets in particular get better. It assumes a status quo, relative to where we are today. And next quarter, I'll provide more tangible insights into not only the first half, but our full year growth over fiscal '25. On the wholesale side, what I would say is that I think the biggest thing to take away, is that we don't like the way our brand is showing up in wholesale. And we own that. And we need to focus, on elevating the experience for consumers, when they come into interaction with our brand. If you segment our marketplace by dimension and by, where we sell our units, our seasonal units on a full price basis. Our wholesale partners represent three quarters of the market, from a unit perspective. And so, the importance of being able to elevate, and to position our brand correctly and to tell stories about the products that, we're bringing to market in that environment, is an absolutely critical way not only, to help consumers fall in love with the products we have, but to also give consumers that tangible ability, to come into real life connection with the NIKE brand. And so, what we're focused on, beginning with the DN, is we're going to see and you'll feel the DN launch in 4,000 doors initially across the marketplace. And then when we look at the way we're going to scale that innovation over the next several seasons through product journeys with different partners, telling different stories in different parts of the marketplace, we continue to. We're very excited about the impact that that could have on the market. And we know that it's what we need to do. And so, the investments will be in things like seasonal marketing campaigns, elevating the presentation of our product, investing in the breadth and depth of the assortment, including color, so the consumer |
5,421 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | the presentation of our product, investing in the breadth and depth of the assortment, including color, so the consumer gets more choice off of the products that we care about the most, in order to be able to create that kind of impact across the market. We think we've got the right partners, but our strategy and our approach to the marketplace is constantly evolving, based on where the consumer is, based on where the consumer is shopping, and who's connecting most with the consumers. So, apart from some of the areas that we've been talking about where we need to create new distribution, because we see growth opportunities that don't line up with our current partners. Our focus is on our current partners right now and elevating the experience of our brand with them. |
5,422 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: And I just build on what Matt said, Alex, the first part of your question. Our partners want us. They need NIKE to help grow the market. They want newness. They want NIKE freshness. They want us to lean in with them. And that's exactly what we're doing. So, the reception has been very strong and very good. And we'll continue to capitalize on that and leverage that, so that we collectively grow the entire market in service of the consumer.
Operator: Our final question will come from the line of Bob Drbul with Guggenheim Securities. Please go ahead.
Robert Drbul: Hi. Good afternoon. Just two quick questions from me. The first one is in the running area, you know, when you talk about wholesale, you talk about any progress that you're seeing with the RSG as partners. And then the second question is, Matt, you mentioned just the opportunity or the ability to see a catalyst in sales from the Olympics. Can you just talk about your opportunity to capitalize on, some of those products and your expectation from that? Thanks. |
5,423 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Bob, as I mentioned earlier, we've had a chance to be with Heidi and her teams on looking at the running pipeline, the everyday running pipeline. And there are clearly already some early green shoots. The Vomero 17 and the Structure 25 out in the market today, both growing double digits to very strong reception. As I mentioned earlier, the Peg family, starting with Peg 41, Peg Premium, Peg Trail coming in the second half of the year, the order book is looking good. We're also, in direct answer to your question, investing in our ground game, with more focus and specificity around running than before. That includes being where runners are. So, being at the marathons, at the local races, at the local runs. We had a strong presence of the LA Marathon and activations there with very positive response. In fact, we had a shoe exchange effort that went crazy, with so many people switching over to NIKE, because we're there with them. We'll continue to do that. And then in the RSG channel, as you mentioned, we've increased our focus and penetration and RSG's and other new partners that authenticate our brand. And we've doubled our EKINs. And as you know, our EKINs are the experts who provide our partners with even greater NIKE expertise and personal engagement. So, if you take the combination of strong, innovative product portfolio and pipeline with more ground game and presence where runners are. Combined with a greater marketplace distribution, including RSG's and with our EKINs in the field, we feel like we're already seeing some green shoots of progress in everyday running. And we'll continue to see that quarter-after-quarter. It won't happen overnight, but we're already seeing momentum in North America. And we believe that will continue around the world. |
5,424 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: Yes, Bob. And another indicator of a green shoot for us, is that our bookings for fall '24, which is the fall season coming up in running footwear, delivered strong growth. And to John's point, that's across our $100 plus products, but also us coming back into market with a new line of core running footwear. And so, it's another green shoot for us that we see momentum in running in particular, and one that we're focused on continuing to ignite. And I think the Olympics actually will help that as a segue to your second point. The opportunity that we see starts with our brand. The opportunity starts with our Air for Athletes campaign that we're going to be bringing through the Olympics, combined with the products that John referenced. So, ones that you will see on the track, on the streets, vis-a-vis the marathon, to on the football pitch with visible Air, to the basketball court. With Air being visible, leveraging this similar technology that we've leveraged through the Alphafly 3. And so - we're excited about the innovation we're bringing, but it's an ignition point, because there is material value from the products that we will sell that we've sold in around these Olympic stories, but it's about igniting the Air platform as we go forward. And so, the way we think about it is that it's a catalyst from both a brand and a business point of view, because it will be an important moment on - the world's biggest stage to showcase the best and greatest innovations in these sports. And then, the connection of the innovation, to the pipeline of product that's coming that we expect will drive growth through their balance of '25 and into '26. Especially as you think about the next Air iteration and the one after that, which we already have in development. So, from our perspective, it's a tremendous opportunity to catalyze energy, but more importantly, to reposition NIKE at sport with the athlete and drive the next chapter of growth for us. |
5,425 | NKE | 3 | 2,024 | 2024-03-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: And that does conclude our conference for today. We thank you all for joining. You may now disconnect your lines. |
5,426 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: Good afternoon, everyone. Welcome to NIKE Incorporated Fiscal 2024 Second Quarter Conference Call. For those who want to reference today's press release, you'll find it at investors.nike.com. Leading today's call is Paul Trussell, Vice President of Corporate Finance and Treasurer. Now, I would like to turn the call over to Paul Trussell.
Paul Trussell: Thank you, operator. Hello, everyone, and thank you for joining us today to discuss NIKE Inc's Fiscal 2024 Second Quarter Results. Joining us on today's call will be NIKE, Inc. President and CEO, John Donahoe; and our CFO, Matt Friend. Before we begin, let me remind you that participants on this call will make forward-looking statements based on current expectations and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in NIKE's reports filed with the SEC. In addition, participants may discuss non-GAAP financial measures and non-public financial and statistical information. Please refer to NIKE's earnings press release or NIKE's website, investors.nike.com, for comparable GAAP measures and quantitative reconciliations. All growth comparisons on the call today are presented on a year-over-over basis and are currency neutral, unless otherwise noted. We will start with prepared remarks and then open up for questions. We would like to allow as many of you to ask questions as possible in our allotted time. So, we would appreciate you limiting your initial question to one. Thanks for your cooperation on this. I'll now turn the call over to NIKE, Inc. President and CEO, John Donahoe. |
5,427 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Thank you, Paul, and hello to everyone on today's call. NIKE is the market leader in sport. It's a role we take seriously. We create innovation that pushes human potential. We expand the world of sport inviting new generations all around the globe into the community of athletes. And we fuel the energy and excitement of sport itself, both on a global stage and on-the-ground in community and cities everywhere. One thing that distinguishes NIKE, more than any other brand in the world is that we get our inspiration from athletes and sport. And it was a great quarter for NIKE and the athletes who inspire us. Here's just a few examples. Kelvin Kiptum broke the marathon world record wearing the Alphafly 3, which built on our proprietary system of speed that continues to set the standard. A'ja Wilson earned WNBA Finals MVP after leading the Las Vegas Aces to their second straight title. LeBron James and Anthony Davis led the Lakers to the first ever NBA in-season tournament championship. Aitana Bonmati won the Women's Ballon d'Or and Sha'Carri Richardson was named USA Track and Field Female Athlete of the Year. Being inspired by world-class athletes like these, keeps us focused on what's - redefining what's possible. That's what sets us apart. No one changes the game like NIKE, from our breakthrough innovation for toddlers with the Swoosh 1 shoe to being able to elevate beloved products like Toby's into an entire franchise to NBA players increasingly choosing to play in the Sabrina 1, a shoe deeply resonating across gender. Again and again it's NIKE that pushes what's possible to break the status quo. Now in addition to creating best-in-class innovation, great companies must also focus on strong execution. And that's what we did in Q2, delivering our second $13 billion quarter. This one on top of last year's extraordinary 27% growth and we drove more than 20% growth in earnings per share this quarter. Simply put, this is the result of relentless execution by our team in an uneven macro backdrop. Looking at |
5,428 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | share this quarter. Simply put, this is the result of relentless execution by our team in an uneven macro backdrop. Looking at holiday, we outpaced the industry, driving growth of close to 10%. NIKE Digital had its strongest Black Friday week ever and a record number of consumers shopped in our stores over the long Thanksgiving weekend. And in Greater China, brick-and-mortar grew double-digits during National Day holiday and NIKE once again outperformed the industry during Double Eleven is the number one sport brand on Tmall. These holiday results when combined with Q2's earnings growth and our continued healthy inventory, showcase how we're executing against our priorities even in the face of a highly promotional environment and increasing macro volatility. Last quarter, I talked about how we're getting back on our front foot, accelerating the flow of our innovation and executing with excellence across our winning formula of innovative product times distinctive storytelling times differentiated marketplace experiences. Let me give you a few examples of where we demonstrated progress. Within our running business, we are driving deeper connections with the running community. We recently launched our most innovative trail shoe yet, the Ultrafly at the world's Pinnacle trail race. We hosted over 1,000 runners for uniquely NIKE experience which drove energy and positive feedback from both elite runners and the broader trail running community. And we partnered with top RSG doors for a series of community activations centered on the Ultrafly and other key products like Peg Trail and WildHorse. All this led to growth of over 20% in our trail running portfolio for the quarter. In global football, we're fueling growth through strategic only NIKE athlete storytelling. As you know, we have a three-silo construct in men's football, having paired Erling Haaland with a Phantom boot, Jamal Musiala with the Tiempo, and Kylian Mbappe and Marcus Rashford leading the Mercurial. With the game's greatest showcasing our product |
5,429 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | with the Tiempo, and Kylian Mbappe and Marcus Rashford leading the Mercurial. With the game's greatest showcasing our product superiority and our seamless execution to pull this innovation through the marketplace, all three franchises are up strong double-digits even lapping last year's strong performance with the Men's World Cup. And in lifestyle, we're driving a women's led geo by geo marketing acceleration behind V2K, a standout shoe in our fast-growing retro running line. It's being fueled by a tongue-in-cheek campaign that's resonated with this consumer and a creator partnership strategy that's delivered head to toe style inspiration into her preferred media channels. All this catalyzed the V2K to very strong sell through in the quarter with exciting potential for this style still to come. All three of these examples offer an early indication of the growth we aspire to. We have real opportunity to drive progress across many dimensions of our business and that's our priority moving forward. At NIKE, we'd like to say we're on the offense always. When we see something that needs solving, we don't wait around, we solve it. And so, as we look to the future, we know where we must focus. Three areas will always drive our distinction and competitive separation. Product innovation, storytelling that connects and marketplace execution. When NIKE's at its best, we create impact on a scale that can't be matched, routed in sport, centered in youth culture, inviting consumers around the world into our brands. The second half of fiscal '24 represents the start of a multi-year product innovation cycle that will introduce new franchises concepts and platforms, elevating our full portfolio. And while there'll be some key moments in the second half, this new innovation cycle will take some time to fully ramp up, given our size and scale. Now, we know we have an outsized opportunity to drive long-term profitable growth. And we have areas of significant growth potential like Women's Jordan brand and running, each of which |
5,430 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | profitable growth. And we have areas of significant growth potential like Women's Jordan brand and running, each of which requires focused investment to reach full potential. We also must get deeper traction on our key speed initiatives. Today, we know we must be faster, increasing the pace of innovation, increasing the pace of market to consumer and increasing our agility and responsiveness. To drive this, we will embrace a significant savings plan to create investment capacity to fuel profitable growth at speed and scale. Areas of potential savings include simplifying our product portfolio, increasing automation and the use of technology, streamlining our organization and leveraging our scale to drive greater efficiency. Let me just acknowledge that this work will be led with respect and thoughtfulness as we move to improve the ways in which we work and build a leaner and stronger company for the future. Matt will provide more detail on this later in the call. Now, we've made some progress as we look to accelerate growth in our business. And I want to walk through two key areas today where we're investing for future and further growth. Our Women's business and Jordan brands. Both Women's and Jordan are opportunities that are grounded in performance and the ability to drive culture and lifestyle, with the latter providing even greater scale and growth opportunities. First, let's discuss Women's which is already a roughly $9 billion business and that's just the NIKE brand excluding Jordan and Converse. Our Women's business has grown high single digits on average over the past three years. And while we are encouraged by this progress, we now have line-of-sight into what we believe is the best plan we've ever had to accelerate growth in Women's. Our plan makes us even more confident in serving her through sport and style. Today, about 40% of our members are women consumers. They make up a bigger proportion of new members and their demand per member is growing faster. We see great opportunity to better serve this |
5,431 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | a bigger proportion of new members and their demand per member is growing faster. We see great opportunity to better serve this consumer by responding to her needs across the spectrum of performance and lifestyle. Let me first touch on performance where we're focused on innovating for her to create new opportunities we did not previously served. We've now built a collection of bras and leggings across different price points. This includes our statement leggings, Zenvy, Go and Universa, all of which are above $100, our price point we were not previously in. These leggings serve her with a whole new approach to fit and comfort, thanks to new material innovation. And we're holistically elevating our retail presentation and storytelling to help her find the right product for her exact needs. More and more women are joining our brand by purchasing these leggings. In fact all told, statement leggings fueled our fitness apparel growth in women's for the quarter. And in footwear, we're seeing very strong sell-through for the Motiva, a shoe with a comfortable and distinctive design. This shows how we dimensionalize performance and to walk in. And Free Metcon is also performing very well serving her need for versatility by expanding a fitness shoe into comfortable every day wear. And at the same time, when we look at women's lifestyle, we've established our leadership position in women's sportswear through a focus on style and comfort. With iconic franchises like Air Force 1, Dunk, Court and Fleece, all of which drive continued momentum with new energy and design. And we're also fueling the rapidly growing retro running trend with our portfolio of styles like the Vomero 5, V2K and P-6000. In fact, even with that sequentially increasing the supply, demand for this entire line is so strong, there remains tremendous opportunity to grow further. We're excited to scale these styles over the next few seasons. And so today we're taking the right steps to serve our women consumer with energy and sharpness and we're fully aligned |
5,432 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | And so today we're taking the right steps to serve our women consumer with energy and sharpness and we're fully aligned and accelerating our offense to raise our game with an eye to the immense opportunity we see going forward. Now let's discuss Jordan brand, which is on a clear path to become the number two footwear brand in North America, the biggest brand not named NIKE. We're fueling the strong momentum in Jordan by growing a Monday to Friday business with a more diverse product portfolio on top of our very successful launch business. Over the past few years, we've driven strong growth in the Jordan business by bringing more dimensions into the brand. We're proving that Jordan can be more than retro, more than footwear, more than men's and more than North America. And approach to growth will continue to bring life and growth over the coming years. And this is just the beginning for Jordan brand as we see even greater growth potential through our plan for deeper investment, which for Jordan will come in areas like merchandising, marketing and marketplace. For instance, today, Jordan brand performance product is outpacing overall growth with Jordan reigniting it’s on core presence in basketball with the strongest signature portfolio ever as Tatum, Luka, and Zion pushed the brand to new heights, both on and off the court. Jordan is also expanding beyond basketball into, for example, golf, global football and American football. And Jordan Women's and Kids continues to lead the brand's overall growth. Women's and kids' business share within Jordan have increased seven points over the past three years. And Jordan Apparel is now a roughly $1 billion business, averaging almost 20% growth over the past three years. We're also building new dimensions in the iconic AJ1 franchise across high, mid and low as well as through women's led dimensions such as the Elevate and the Brooklyn boot. And I'd also like to spotlight Jordan's strategic approach and success with our remix footwear line which again has already surpassed |
5,433 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | also like to spotlight Jordan's strategic approach and success with our remix footwear line which again has already surpassed the $1 billion annual revenue mark with high double-digit growth, led by styles like the Max Aura and the Stadium 90. Remix has increased Jordan's accessibility through more affordable price points and an expanded distribution with key partners. And last but not least, Jordan share from international markets continues to expand as we bring the brand to global cities in an authentic way. This is shown up as we pilot the Jordan destination tab in the NIKE commerce app in EMEA with strong early results and the Jordan World of Flight doors in Milan, Tokyo and Seoul have emerged as the company's most productive retail concepts. The sky is the limit for Jordan as we continue to invest and explore what's possible for one of the world's leading brands. In the end, we are moving with confidence against the opportunities we see. And looking ahead to the next calendar year, we remain single-minded in our focus to compete and win. I wouldn't trade our position with anyone. And with that, I'll turn the call over to Matt. |
5,434 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: Thanks, John, and hello to everyone on the call. NIKE's second quarter financial performance reflected our proactive marketplace management and disciplined execution with tremendous delivery by our teams in a dynamic environment. Revenue was up slightly versus the prior year growing 1% on a reported basis as we compare to 17% reported and 27% currency-neutral revenue growth one year ago. Gross margins expanded despite a highly promotional marketplace. And combined with disciplined SG&A management, earnings per share and free cash flow accelerated. As I said last quarter, we believe we are turning the corner and driving more profitable and sustainable growth. At the same time, there were a number of puts and takes in the quarter. So before I walk through our financial results, let me share some perspective on our performance in light of current macro and consumer trends as well as additional insight into our business direction. Now, as you recall, we moved proactively in the prior year to liquidate excess inventory and reduce wholesale sell-in for the first half of fiscal '24. And while this dampened our reported revenue growth through Q2, total retail sales in the quarter grew across the marketplace on top of double-digit growth in the prior year. ASPs were up across both footwear and apparel and AURs grew across channels. Average order values among NIKE members increased versus the prior year. Our higher-priced products, in particular, have been resilient with our $100 plus footwear models, driving strong growth in units sold across the marketplace. And overall, we have maintained lower markdown rates than many of our competitors. In the most impactful consumer shopping moments, NIKE's brand strength created even greater separation. We delivered market-leading results in Greater China and Double Eleven. And over the Black Friday and Cyber Week period, NIKE Direct grew approximately 10% across North America, EMEA and APLA. In Q2, NIKE Direct once again led our growth and wholesale shipments |
5,435 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | approximately 10% across North America, EMEA and APLA. In Q2, NIKE Direct once again led our growth and wholesale shipments exceeded our expectations. Having said that, we are seeing indications of more cautious consumer behavior around the world in an uneven macroenvironment. Total retail sales across the marketplace fell short of our expectations with softer demand outside of the key consumer moments. While NIKE's store traffic continued to grow, we saw softness in digital traffic and higher levels of promotional activity across the marketplace. As a result, we are adjusting our channel growth plans for the remainder of the year. Looking to our product portfolio, our top franchises continue to drive strong full-price sales, but we intentionally manage the lifecycle of these models across the marketplace for long-term value. Given the promotional environment and the cautious consumer behavior that we're seeing, we are stepping up our plans to reduce marketplace supply of our key franchises. Our goal is to focus NIKE's brand heat and energy on what is new as we accelerate our product innovation cycle. We have seen encouraging signs from recent consumer activations around some of NIKE's latest innovations and newness and we intend to accelerate our pace through the Paris Olympics and beyond. While this will initially take some time, we are confident in our pipeline and the product journeys, stories and consumer energy to come. Now, as you heard from John, our priority is to drive sustainable and profitable long-term growth while building a faster, more efficient NIKE. Since fiscal '19, our investments in accelerating NIKE's Consumer Direct vision, have created new operating capabilities, added tens of millions of new members to our member base and delivered a return of more than $12 billion of incremental revenue. However, we have also added complexity and inefficiency. In this competitive environment, we need to accelerate our pace of innovation, elevate our marketplace experiences, maximize the impact of our |
5,436 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | environment, we need to accelerate our pace of innovation, elevate our marketplace experiences, maximize the impact of our storytelling and increase our speed and responsiveness, all in service of the consumer. To do this, we are creating investment capacity to fuel NIKE's next phase of innovation, growth and profitability. We are identifying opportunities across the company to deliver up to $2 billion in cumulative cost-savings over the next three years, both up and down our P&L and across our value chain. Some examples include simplifying our product assortment, improving supply-chain efficiency, leveraging our scale to lower the marginal cost of operations, increasing automation and speed from data and technology, streamlining our organizational structure, reducing management layers and enhancing our procurement capabilities. And as we look to drive greater efficiency and productivity, we will reallocate and invest the majority of these savings to deliver the greatest consumer impact on our largest growth opportunities. Ultimately, we believe that building a faster and more efficient NIKE will accelerate future growth and innovation and deliver long-term profitability, creating value for years to come. We will continue sharing updates over the coming quarters. Now let me turn to our NIKE, Inc.'s second quarter results. In Q2, NIKE, Inc. revenue was up 1% on a reported basis and down 1% on a currency-neutral basis following our strong topline growth one year ago. NIKE Direct grew 4% with NIKE stores up 9% and NIKE Digital up 1% while wholesale declined 3%. Gross margins expanded 170 basis points to 44.6% on a reported basis, driven by strategic pricing actions, lower ocean freight rates, improved supply-chain efficiency and modest markdown improvements, partially offset by higher product input costs. This included impact from approximately 60 basis points of unfavorable changes in net foreign currency exchange rates. SG&A grew 1% on a reported basis, favorable to our expectations through disciplined expense |
5,437 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | foreign currency exchange rates. SG&A grew 1% on a reported basis, favorable to our expectations through disciplined expense management and some shifts in timing of spending. Our effective tax rate for the quarter was 17.9% compared to 19.3% for the same period last year. Diluted earnings per share was $1.03, up 21% year-over-year. NIKE inventory dollars are down 14% versus the prior year and down high-single-digits versus the prior quarter. In total, NIKE inventory dollars are down over $1.5 billion from the peak at the end of Q1 in the prior year with days in inventory continuing to improve. Total footwear and apparel inventory units across the marketplace are down double-digits versus the prior year. Now let me turn to our operating segments. In North America, Q2 revenue declined 3% with wholesale down 9% versus the prior year. NIKE Direct grew 3% with NIKE stores up 4% and NIKE Digital up 2%. EBIT grew 2% on a reported basis. This follows extraordinary growth in Q2 of fiscal '23 with North America revenue up 31%, NIKE Direct up 23%, NIKE Digital up 31% and wholesale up 37%. This quarter we saw mid-single-digit retail sales growth with key partners including Dick's Sporting Goods, JD Finish Line and Hibbett. Jordan and Women's led our momentum in the marketplace with Jordan Remix footwear grew double-digits and the AJ 11 Gratitude release delivered the brand's largest shock drop ever. Within Women's, Dunk, Free Metcon and our $100 plus statement leggings delivered strong growth. In addition, Structure 25 and Vomero 17, our latest updates for everyday runners, drove positive response from consumers and running specialty partners. In EMEA, Q2 revenue declined 3% with wholesale down 8%. NIKE Direct was up 7% as NIKE stores grew 8% and NIKE Digital grew 7%. EBIT declined 6% on a reported basis. As a reminder, this also compares to tremendous growth in Q2 of fiscal '23 with EMEA revenue up 33%, NIKE Direct up 44%, NIKE Digital up 62% and wholesale up 28%. Against the backdrop of increased macro headwinds, we saw |
5,438 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | up 33%, NIKE Direct up 44%, NIKE Digital up 62% and wholesale up 28%. Against the backdrop of increased macro headwinds, we saw strong consumer response to newness and premium innovation. Our winterized running products drove positive sell-through along with strong growth from Invincible, Vaporfly and Ultrafly. Mercurial and Phantom and Tiempo grew double-digits. And our retro running styles including V2K, P-6000 and Shocks continue to energize the marketplace. In Greater China, Q2 revenue grew 8% and wholesale grew 19%. NIKE Direct declined 4% with NIKE stores growing 16% and NIKE Digital declining 22%. EBIT grew 1% on a reported basis with multiple points of impact from foreign exchange. On the whole, we are seeing a highly promotional marketplace with increased macro headwinds, especially on Digital. That said, Q2 was another strong quarter in brick-and-mortar with continued improvement in full-price sales and sales in NIKE owned and partner doors growing mid-teens versus the prior year. We also continue to see strong momentum with key strategic partners, including Topsports and Pou Sheng. And NIKE continues to strengthen its lead as Chinese consumers number one cool and favorite brand. Turning to our product portfolio, performance outpaced lifestyle this quarter with innovation and hyper-local storytelling resonating with consumers. We saw strong momentum in basketball, fitness, retro running footwear and winterized apparel. Locally inspired express lane collections including our street dance inspired Dunk and hyper-local Pegasus releases were top choices for consumers. And overall, our inventory remains healthy with units down and improved markdown rates versus the prior year. Looking ahead, we continue to closely monitor the operating environment. However, we remain confident in NIKE's brand strength, our deep consumer connections and our foundation for long-term growth in China. In APLA, Q2 revenue grew 10% and wholesale grew 7%. NIKE Direct grew 15% as NIKE stores grew 17% and NIKE Digital grew 14%. EBIT |
5,439 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | APLA, Q2 revenue grew 10% and wholesale grew 7%. NIKE Direct grew 15% as NIKE stores grew 17% and NIKE Digital grew 14%. EBIT grew 7% on a reported basis. Southeast Asia and India, Korea and Mexico grew double-digits, leading a record quarter for the geography. Our Flipkart and Myntra platforms drove strong growth in India. Korea led record member days sales in the geography. And Mexico accelerated its digital momentum over the Buen Fin shopping holiday. We saw strong momentum across our portfolio led by Jordan & Kids. Jordan brand delivered strong growth in Remix footwear, AJ1 essentials and Signature basketball. In kids, lifestyle and global football grew double-digits with positive momentum from all kids' Fleece, Court Borough and the Mercurial. All told, our team executed with tremendous focus and agility to deliver our Q2 results, while managing through volatility. Last quarter, as I provided guidance, I highlighted a number of risks in our operating environment, including the effects of a stronger US dollar on foreign currency translation, consumer demand over the holiday season and our second half wholesale order books. Looking forward, the impact of these risks is becoming clear. And as a result, we are adjusting our full-year financial outlook. Looking through the balance of the year, we expect Q3 reported revenue to be slightly negative as we again compare to double-digit growth in the prior year and Q4 reported revenue to be up low-single digits with full-year reported revenue now growing approximately 1%. This new outlook reflects increased macro headwinds, particularly in Greater China and EMEA, adjusted digital growth plans based on recent digital traffic softness and higher marketplace promotions, lifecycle management of key product franchises and a stronger US dollar that has negatively impacted second half reported revenue versus 90 days ago. I will also remind you that there are approximately 400 basis points of headwinds from supply disruptions and accelerated liquidation in the prior year. We |
5,440 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | there are approximately 400 basis points of headwinds from supply disruptions and accelerated liquidation in the prior year. We expect increased gross margin expansion in our second half with Q3 margins expanding 160 to 180 basis points and Q4 margins expanding 225 to 250 basis points. We continue to expect full year gross margins to expand 140 to 160 basis points. This reflects benefits from strategic price increases, improved ocean freight rates and supply chain efficiency, partially offset by higher product input costs and approximately 60 basis points of impact from foreign exchange headwinds. We expect full year SG&A growth to improve to low-single digits, excluding restructuring charges as we continue to tightly manage expenses and improve productivity and efficiency. Specifically, we expect SG&A dollars in both Q3 and Q4 to be modestly above our first half run-rate, excluding the charge. We anticipate a restructuring charge of $400 million to $450 million in our second half, primarily related to severance costs, which will be recognized largely in the third quarter. We expect full year SG&A including the restructuring charge to grow mid-single digits. We now expect other income and expense, including net interest income to be $275 million to $325 million for the full year. We continue to expect our full year effective tax rate to be in the high-teens range. Taken altogether, strong gross margin execution and disciplined cost controls are enabling us to offset softer second half revenue and drive earnings growth. Excluding restructuring charges, we expect to deliver on our prior full-year earnings outlook. While we expect the operating environment to remain dynamic, we have been here before and we know that moments like this are when NIKE operates and execute at its best. We will stay on the offense, manage risk, optimize opportunity and leverage our strengths to create even further competitive separation. As we move forward, our focus is building a faster, more efficient NIKE and embracing the |
5,441 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | even further competitive separation. As we move forward, our focus is building a faster, more efficient NIKE and embracing the opportunities in front of us to accelerate sustainable and more profitable growth. So with that, let's open up the call for questions. |
5,442 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: Thank you. [Operator Instructions] Your first question comes from the line of Matthew Boss from JPMorgan. Please go ahead, your line is open.
Matthew Boss: Great. Thanks. So two part question. John, could you maybe elaborate on the structural changes that you cited that maybe in the pivot to the front foot on innovation? Just the structural changes that you see supporting that. And what that means for the product pipeline as we think to next year? And then Matt, maybe footing that portion of the press release relative to the commentary around the second half. Just how best to foot this? And could you help break down the change in your second quarter revenue -- your second half revenue outlook between retail and wholesale?
Matthew Friend: Sure.
John Donahoe: You want to go first, Matt. All right. |
5,443 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: Yeah, let me go ahead and start, Matt, talking a bit about the environment that we're operating in right now and what's changed and what we're seeing. We obviously delivered a strong quarter and delivered revenue in line with the guidance we gave 90 days ago and are incredibly pleased with the disciplined execution and management of the marketplace, including our inventory being down 14% and NIKE plus partner inventory being down double-digits versus the prior year. But what we saw in the quarter was a bifurcation of performance. And specifically what I mean is that we saw incredibly strong performance for the NIKE brand over the largest consumer moments if you book in from back-to-school in the prior quarter through Black Friday and Cyber Monday this quarter. But in the periods in between, we saw softer performance in the marketplace. And as a result of that, total retail sales in the quarter were below the expectations that we set for ourselves 90 days ago. As a result of that, and specifically considering the promotional activity we see in the marketplace and some of the softness in digital, we've lowered our guidance for the balance of this year and provided a little bit of sharpness for you on Q3 and Q4, in particular. Q3 really is reflective of the comparisons to the prior year, much like we anniversaried this quarter. But overall, we've taken a more prudent approach to our planning for the balance of the year given the increased macro headwinds we're seeing in China and EMEA, in particular, and the way that we've adjusted our digital growth downward based on the traffic softness that we've seen and the higher marketplace promotions. And so, you know, connected to what John will talk about in a second, our focus is on newness and innovation, particularly because in an environment like this where the consumer is cautious and we're seeing higher levels of promotional activity, it's newness and innovation which really creates brand distinction in this environment. And we're even seeing it in |
5,444 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | activity, it's newness and innovation which really creates brand distinction in this environment. And we're even seeing it in the context of recent releases and recent product introductions that we've had over the last 60 to 90 days. |
5,445 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: And Matt, the first part of your question regarding the structural changes. You know, as you know, six months ago, we realigned our entire organization under Heidi O'Neill and Craig Williams as our co-Presidents. And it is making a huge difference in our focus and ability to execute. And as you know, we're single mindedly focused on aligning our entire team to drive what NIKE does best, innovative product combined with distinctive storytelling, combined with unique marketplace experiences. And as Matt just said, we have a real focus, Heidi, Craig and teams, a real focus on newness and driving our next product innovation cycle, which will elevate our entire portfolio, right. This is what NIKE does best. And we're doing it with consistency and scale where we want to break through. That's our focus. And so you're seeing some, you know, I'll maybe pick one example where you're seeing some early results. Look at what's happening in basketball right now, right? We are bringing fresh, innovative product at scale. So the past six months, we've launched Sabrina 1, LeBron 21, Tatum 1, Luka 2, the Ja 1. You saw Ja come back two nights ago, the Ja 1 on Christmas Day. And so that's creating huge momentum in basketball with great innovation. And in the next three months, we add to that GT Cut which is one of our most innovative shoes to date, the Book 1 which we think has great appeal on and off the court. And, of course, Kobe, which we think has huge potential on an ongoing basis. And so this is driving momentum both on the court through performance, like Nike does, innovation and performance and off the court. And that translates into lifestyle. You may have seen LeBron was wearing the Lunar Roam walking into his game the other night and Lunar Roam sold on in sneakers the day we launched it, two days ago. And so what you're seeing is when we focus our guns on driving performance innovation, translating that into lifestyle, we can cut through, drive, scale and consistency like no one else can. So as we look |
5,446 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | translating that into lifestyle, we can cut through, drive, scale and consistency like no one else can. So as we look ahead, we're excited about 10th anniversary of Air Max Day. That's coming up in March. The Air Max DN is our best Air Max product in years. You'll see us really get behind it. That will be, I think, both a successful shoe, but more importantly, can help lift the Air Max portfolio. With running, we'll be focusing on calendar '24 will be the year of Pegasus for us with the Peg 41 and the Peg Family Refresh. And then we're getting excited and gearing up for the Olympics, right, in Paris this summer. That's when NIKE shines its best. You'll see us really using Air as a source of innovation, both in performance and in lifestyle. And so our -- you called it a pivot, I just think it's an acceleration -- an alignment and an acceleration of speed and focus is distinct and we feel it. |
5,447 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: Your next question comes from the line of Michael Binetti from Evercore ISI. Please go ahead. Your line is open.
Michael Binetti: Hey guys, thanks for taking our questions here and thanks for all the detail today, particularly around some of the longer term thinking in the business. Some of the longer-term commentary is pretty helpful. I'm just wondering if we can help true up the margin story for the next few years. I guess, would you -- is the $2 billion in cost savings, we said the majority will be reinvested. If I try to think back to the longer-term target of getting the business to the high teens margins, this should go a long way. Do you -- is your feeling that the net amount of these efficiencies takes us to that multi-year target? And then considering, Matt, the commentary on the second half revenues here, a lot of it sounds like it's macro in China. You know, maybe kind of help thinking about as we look past '24, do you have visibility yet to say, hey, we've got the controllables to help us offset some of the macro pressures that we see to make '25 an algorithm revenue year? |
5,448 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: Sure, Michael. Well, let me start on the margins. You know, I think that this quarter was really a strong proof point with strong gross margin expansion and operating margin expansion. And the team's execution in gross margin, in particular, was really strong. You know, when we look at the drivers of it, it's a combination of recovery of the transitory headwinds which we've been talking about for a couple of years now, but also structural drivers like price increases which we've been able to sustain in this environment and supply chain efficiencies, specifically meaning that we're improving our cost per unit as we deliver product into the marketplace. And so the underlying drivers that were behind our long-term margin goals are still there and this quarter is a great proof point as we're on that trajectory. The way to connect it to the safe to invest plan is to think a little bit about the opportunities for us to be -- to drive more profitable growth as we look forward. And I've been talking for a couple of quarters now about lowering our marginal cost of growth. And when I look back on some of the long-term targets that we've given like SG&A as a percentage of revenue being below pre-pandemic levels, we've largely done it. But when we look at our resources today, we see greater opportunity for efficiency and effectiveness and reinvesting some of those resources for higher return opportunities like John mentioned. And so that's really what we're focused on. I will remind you what I said on the call, which is that it's -- this isn't just SG&A. The $2 billion save to invest plan is up and down the P&L and its across our value chain. And so we will see benefits in SG&A, but we really are looking at the business holistically. And our focus as we look forward is to drive more profitable growth over the next several years. We remain confident in the long-term margin goals that we've been talking about. And so as we approach '25, we know that we're due to provide an update on those long-term goals, but |
5,449 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | we've been talking about. And so as we approach '25, we know that we're due to provide an update on those long-term goals, but we still remain confident on the endpoint. As it relates to the revenue, just hit it quickly. Yes, we are largely seeing adjustments based on increased macro headwinds in China and in Europe. You know, the element that we can control in this is the commentary I made around managing our franchises. We have incredibly strong franchises. In fact, we build dimensions to franchises. It's what we do to drive growth in our business. And we continue to see those largest franchises driving year-over-year growth and selling at levels of full price realization that's above the goals that we've set for the business. But we know in an environment like this, when the consumer is under pressure and the promotional activity is higher, that it's newness and it's innovation which causes the consumer to act. And John just referenced a number of products and product launches in the last 45 to 60 days where we're seeing an incredible amount of consumer energy in response to newness and new stories. And we've seen either full sell-outs or incredibly high levels of full price selling. And I won't rename all the products, but what it demonstrates is what we already know, which is that in this type of an environment, what we control is accelerating our pace of innovation and newness in order to give the consumer something to want to continue to invest in this category. And we think that we can do it like nobody else. And so what you're hearing from us is a controllable effort to accelerate that pace, managing some of the larger franchises and really accelerating as we go forward. That'll start with many of the items we've been talking about in our portfolio through the balance of this year. And then the acceleration you're going to see and feel, especially as we focus our brand heat on this newness, will carry us into '25. We know it's going to take time because you got to scale this newness and the innovation |
5,450 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | this newness, will carry us into '25. We know it's going to take time because you got to scale this newness and the innovation and that's what we're focused on doing. So our guidance for the second half from a controllable perspective is also reflecting on the proactive actions we're taking to manage our product portfolio as we look forward. |
5,451 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: Your next question comes from the line of Gabriella Carbone from Deutsche Bank. Please go ahead. Your line is open. Gabriella, your [Technical Difficulty]
Gabriella Carbone: Hi. Thank you so much for taking my question. Sorry about that. I want to dig in a little bit more on the running category, particularly, you know, how is your approach to this category maybe changed over the past year? And then I know you mentioned trail running. Are there any other products with this category? You mentioned scaling moving ahead, but then you've been seeing good customer responses that you're excited about. |
5,452 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Yeah, Gabriella, we've made running a key priority. We talked about three areas we're really getting behind where we see huge growth opportunity that being Women's, Jordan and running. And as you said, in running, we tend to break it into three categories. You know -- and for us, it starts with road racing. That's the pinnacle, that's the peak. And as you know, in the past three to six months, we are dominating it through the Alphafly 3, which debuted in Chicago marathon. Kelvin Kiptum, as I mentioned in my remarks, set a world record. It's dominating the podiums for both men and women. And that'll actually be launching available to the public in Q3. And as we see people going into racing into the -- to the Olympics, both marathon and otherwise, our performance running for racing is unmatched. And then as trail, as you mentioned, that's the fastest growing segment, grew 20% for us. And we do what we do. It's innovations driving it. So, the Ultrafly trail, which is the first trail shoe with a carbon fiber plate, that's again very NIKE, very classic NIKE innovation, performance innovation, along with Peg Trail and Zegama, trail is growing fast partly because trail running is growing. But increasingly, trail shoes are becoming lifestyle shoes. They're being worn on the streets, particularly in EMEA and in Europe, but also around the world. So, we'll continue to invest in great product there as well as, as I said in my remarks, at our ground game. And then in the road running or every day running category, this is the area where we have the most work. And so we have good product. We had some nice wins in the quarter, the Structure 25 and the Vomero 17, which were our latest updates for everyday runners, they had positive response from consumers and specialty runners, but we're very focused on building out our ground game with everyday runners. And that means getting into the RSGs, back into the RSGs and being present where runners are, whether it's -- not just at the marathons where the elite runners |
5,453 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | RSGs, back into the RSGs and being present where runners are, whether it's -- not just at the marathons where the elite runners are, but the everyday races in the key cities around the world and the running communities. And you'll see us, we are steadily investing in that and building our presence there. And as we look forward in terms of driving scale in everyday running, as I mentioned earlier, we're focused on Pegasus. That's our largest franchise, one of the largest franchises in running history period. And we're very excited about Peg 41 and updates across the Peg family which are coming in calendar '24. So, a lot of focus. And we'll report, you know, in road every day running. It's going to be quarter by quarter. Steady progress, steady progress, steady progress toward our goal. |
5,454 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: I'd just add too that we're excited about the product portfolio we have below $100. And that product offering that's coming to market in the coming quarters will also enable us to get back on our front foot at an important price point in both -- across in -- multiple markets across the world.
Operator: Your next question comes from the line of Lorraine Hutchinson from Bank of America. Please go ahead, your line is open.
Lorraine Hutchinson: Thank you. Good afternoon. I wanted to focus on the China margins for a minute and was just curious outside of the FX hit that you're facing, do you see an opportunity to drive margins in China back toward pre-COVID levels or has something changed that makes that market less profitable? |
5,455 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Well, Lorraine, let me first just step back and look at how we see China for a minute and then we'll talk about margin because if you don't have a great business, it's hard to have great margins. And, you know, the fact is we feel very good about our position in China and our ability to compete. And that has not changed from 90 days ago. In China, sport is back. The China consumer is back out on the street with a real focus on active and healthy lifestyles. You see the government encouraging sport and healthy lifestyles and Gen Z is the most active generation ever. So that's a tailwind for our industry. And so even in the face of macro uncertainty, our brand is continuing to resonate. And we're doing what NIKE does so well, which is taking global products, global innovations, global brand, global athletes and powerfully combining them and connecting them to local culture and local sport and local consumer moments. And a wonderful example last quarter is that Eliud Kipchoge, the world's best marathoner, did a tour through China right before the China -- the Shanghai marathon. As you know, we sponsored the Shanghai marathon. And sure enough, we dominated shoe counts in the top hundred. We swept the women's podium. And that's bringing energy and running and the lifestyle of running. And it's growing the market. I mean, I think we're in a great percent. We, yes, there's some macro headwinds, but we feel very good about our position and our ability to compete. |
5,456 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: Yeah. And on the profitability side, what I'd say, Lorraine, is that this quarter, if we exclude the impact of FX, our EBIT grew faster than revenue in greater China. And so I think it's a great proof point that we can start to expand margins and move back towards where we were prior to the pandemic. I did mention that the marketplace is highly promotional and we're seeing that especially on digital. And so in the near term, the promotional nature of the marketplace is holding us back. But what I would tell you is that our inventory units are down versus the prior year. Our full price realization is continuing to improve in our stores and our partner stores. And, you know, as we look at the environment that we're in right now, we're not going to race to the bottom on digital. We're going to focus on prioritizing brand health and brand strength. And right now, the digital marketplace, in particular, is a -- is at the highest of promotional activity. And so an element of us revising our guidance for the balance of this year is an acknowledgement that we don't want to chase that. That's not who NIKE is. We're going to focus on innovation and newness and building a strong business in the marketplace on things like the basketball products that John referenced. We're super excited about bringing Kobe to market in greater China. The Jordan business continues to have tremendous resonance there and that's how we're going to grow and continue to compete in that market.
Operator: Your next question comes from the line of John Kernan from TD Cowen. Please go ahead, your line is open. |
5,457 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: Your next question comes from the line of John Kernan from TD Cowen. Please go ahead, your line is open.
John Kernan: Excellent. Happy holidays and thanks for taking my question. Matt, how should we think about operating overhead and demand creation going forward as we think about the overall SG&A piece of the business? There's obviously some restructuring and some cost savings, but is this a time you need to reinvest given the changes in the competitive environment and the need to reinvigorate the product cycle and the marketing. Curious how we should think about the SG&A algorithm going forward.
Matthew Friend: Yeah, I mean, John, when we think about the safe to invest plan and the value it will create and the capacity it will create for us to be able to invest, invest at the biggest growth opportunities we see. We don't envision that as being people. We envision that as being consumer facing investment, bringing product innovation to market and having maximum impact with the consumer. And so our goal here is to see a reallocation of resources through this program, so that more of our dollars are going towards consumer facing activities that can have the kind of impact that you referenced. And we believe when we look at the size of the market and our position against some of the categories that John referenced and/or the way the consumer is continuing to encourage us to bring them new and interesting things from a Jordan perspective, we see opportunity to continue to grow our business and that's where our focus is. So I think we're going to -- we're focused on driving more profitable growth. That should mean that there's some leverage in SG&A, but you should also expect to see us reinvesting some of the resources that we're taking out of the business back in things that are consumer facing that have an impact on sport and that continue to enable us to maximize the impact of the stories that we want to tell. |
5,458 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: That's exactly why we're doing it, because we want to double down on our investments to capitalize on growth.
Operator: Your next question comes from the line of Ike Boruchow from Wells Fargo. Please go ahead, your line is open.
Ike Boruchow: Hey, good afternoon. Thanks for taking the question. Matt, maybe for you just on the North American market, can you just comment more broadly or specifically on the current state of the inventory situation, maybe both yours and just competitively of what you're seeing out there in holiday? And then just timeline on when you think that the inventory dynamics and at least North America might be more cleaned up or more healthy for the brand to start to, you know, see better price realization and growth? Thanks. |
5,459 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Matthew Friend: Sure. Well, so in the quarter, we did see growth in retail sales in North America versus the prior year. Remember, it wasn't a lot of growth because we were comping some very significant growth rates in the prior year. The actions that we've taken on inventory are significant. And our inventory units are down strong double-digits in North America. That's the biggest market where we've seen the biggest movement in our inventory. When we look at the level of inventory in our partners relative to their current level of retail sales, we feel good about the weeks of supply that we have there. And what I would tell you in the large majority of our partners, we also are seeing the highest mix of current season inventory that we've seen in many, many seasons. And so we feel great that our partners are positioned to put our newest and our -- and most relevant product in front of the consumer. We are watching the marketplace closely because my comments around the big consumer moments and the in between periods applied to North America as well. And so we are watching cautious consumer behavior there. But at this point, we feel great about our inventory. And that's why we're so focused on newness and innovation, because that's what's going to pull us through a promotional marketplace like we have. And so there's definitely a lot of inventory in the market across brands, but we feel great about where we are. And newness and innovation is what will enable us to earn open to buy in our partners and will enable us to re-accelerate the top line.
Operator: Our last question comes from the line of Paul Lejuez from Citi. Please go ahead, your line is open. |
5,460 | NKE | 2 | 2,024 | 2023-12-21 17:00:00 | NIKE, Inc. | 291,981 | Operator: Our last question comes from the line of Paul Lejuez from Citi. Please go ahead, your line is open.
Paul Lejuez: Hey, thanks guys. I'm curious if you could talk about and quantify the cumulative freight drag that you've seen over the past two years and the timing of how you will recapture that freight drag in F'24 versus F'25 just based on your recent freight contracts? And what are the offsets as we think about potential puts and takes on the gross margin line '24, '25? Thanks.
Matthew Friend: Well, sure. We've been talking about 200 basis points of impact from ocean freight cumulatively over the past two years. And we started to see those transitory benefits begin to recapture here in the second quarter. Some of our upside in the quarter versus our guidance was it came a little bit earlier than we had anticipated. Our rates for this year locked. And so we expect to continue to see up -- to see that the recovery of that in Q3 and Q4. One of the other transitory impacts that we're watching closely was markdowns. And right now, we're only planning for a very modest amount of markdown recovery relative to the markdowns that we incurred in the prior year. And that's just given where the marketplace is. We've decided to take a more prudent approach to our margin guidance for the balance of the year given some of the uncertainties that are out there. So, you know, when we look to the balance of this year, we're encouraged by the second half expansion being higher than the first half expansion. And one of the other things that we're starting to get visibility into when we look at our margins in the fourth quarter is product costs -- product input costs are starting to flip to a tailwind. And so when we think about the long-term margin goals that we have, the teams are executing well and we continue to be encouraged with what we're seeing through this year.
Operator: Thank you, everyone. This concludes today's conference call. Thank you for your participation and you may now disconnect. |
5,461 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Operator: Good afternoon, everyone. Welcome to NIKE, Inc.'s Fiscal 2024 First Quarter Conference Call. For those who want to reference today's press release, you'll find it at investors.nike.com. Leading today's call is Paul Trussell, VP of Investor Relations and Strategic Finance. Now I would like to turn the call over to Mr. Paul Trussell. Please go ahead.
Paul Trussell: Thank you, operator. Hello, everyone, and thank you for joining us today to discuss NIKE, Inc.'s fiscal 2024 first quarter results. Joining us on today's call will be NIKE, Inc. President and CEO, John Donahoe; and our CFO, Matt Friend. Before we begin, let me remind you that participants on this call will make forward-looking statements based on current expectations, and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in NIKE's reports filed with the SEC. In addition, participants may discuss non-GAAP financial measures and nonpublic financial and statistical information. Please refer to NIKE's earnings press release or NIKE's website, investors.nike.com, for comparable GAAP measures and quantitative reconciliations. All growth comparisons on the call today are presented on a year-over-year basis and are currency neutral unless otherwise noted. We will start with prepared remarks and then open up for questions. We would like to allow as many of you to participate as possible in our allotted time, so we would appreciate you limiting your initial question to one. Thanks for your cooperation. I'll now turn the call over to NIKE, Inc. President and CEO, John Donahoe. |
5,462 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Thank you, Paul, and hello to everyone on today's call. NIKE's foundational competitive advantages are the envy of the industry. As the global athletic market leader, our scale and portfolio allow us to create an impact that only NIKE can. Consumers all over the world recognize NIKE as the number 1 champion for athletes and sport as we fuel inspiration and push the limit of human potential with the industry's most innovative products. Over the past few years, we've navigated through an unprecedented external environment. We've worked through many challenges, societal, geopolitical, global health, supply chain and more. And during this time, NIKE has grown larger and stronger. In fiscal '19, NIKE's revenues were $39 billion. Today, we're over $50 billion. And what's more, our growth has outpaced the overall industry during this period. Let me offer a few examples of how we've redefined the game over the past two years. The consumer told us they wanted lifestyle product, and we delivered, growing Air Force 1, AJ1 and Dunk to be the three largest footwear franchises in industry history. We continue to set the bar in key global sports like basketball and global football. Jordan is now one of the leading brands in North America with potential for so much more. We've accelerated digital capabilities that fuel engagement with our brands and deepen direct consumer connections around the world. The list could go on and on. But we have a saying here at NIKE. There is no finish line. We never settle. We always measure ourselves against our full potential. NIKE has always been synonymous with sport. We're at our best when we deliver breakthrough ideas by lining up innovative product with distinctive storytelling delivered through differentiated marketplace experiences. And when we do it well, we expand and grow the market. Today, as I've just mentioned, we're succeeding in many areas of our business, but we expect more of ourselves and others. For example, over the past few years, we launched new product |
5,463 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | of our business, but we expect more of ourselves and others. For example, over the past few years, we launched new product innovations in running, but we need to drive more meaningful consumer connections among everyday runners and scale these innovations more effectively across the marketplace. Our storytelling has driven energy in many areas, but we have opportunity to cut through with more sharpness and clarity around the performance benefits and distinction of our products. And we built a best-in-class marketplace with unrivaled scale and reach. But we have opportunity to deliver more compelling assortments, particularly when it comes to serving our women consumers. So across our company, we are focused and mobilized to address areas where we need to raise our game while continuing to drive competitive separation across the board. We're aligned. We're confident, and we kick in to a new gear. One recent example, a couple of weeks ago, we had over 300 leaders from across the globe gathered here in Beaverton to immerse ourselves in our fall '24 lineup. Now our teams have been back together in person over the past 15 months, and our innovation pipeline is strong, and it was on full display. The excitement and alignment of our leadership team was clear as we continue to obsess the product and storytelling we'll be bringing to life for consumers at the Paris Olympics and into the fall. Simply put, our teams are on the offense as we compete to win in all segments. And so today, I'd like to offer three examples where NIKE showed our best this quarter, where we brought together product, storytelling and marketplace to connect with consumers and drive results. Let's start with this summer's World Cup. At NIKE, as I've said before, it always starts with great product. And in football, that's led by Phantom Luna and Mercurial, our most innovative football boots as well as our array of national team kits designed for elite female players and last but not least, our style-driven collections that stood out so well this |
5,464 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | team kits designed for elite female players and last but not least, our style-driven collections that stood out so well this summer. We brought our culture of innovation to life through our storytelling as we dominated the conversation with a leading share of social voice. In particular, we were incredibly effective in reaching Gen Z women through our lens of sports, style and culture. On TikTok, our priority channel for Gen Z, our engaged audience, meaning those who actively interacted with our content, was up 172%, a huge statement of NIKE's ability to connect with authenticity to this important demographic. And we also extended the tournament's energy through our stores. I was in Australia this summer and got to experience our Dream Arena, the immersive retail destination we created for the World Cup by transforming our Sydney flagship store, just the latest example of how we can amplify global sport moments at retail. The experiences inside Dream Arena included the best of NIKE, Jersey customization, local co-creator workshops, NIKE trainer-led workouts, exclusive product launches and more. The response to Dream Arena surpassed our expectations with some great learnings we plan to use at scale moving forward. And all this led to results. In both footwear and apparel, we beat our sell-through plans with strong double-digit growth across men's, women's and kids in Global Football. In EMEA, all our key boot franchises, Mercurial, Phantom, Tiempo and Phantom Luna saw double-digit growth in Q1, leading adult Global Football to grow double digits in the geo. And in APLA, football also grew double digits with strong growth in kid-sized kits as we continue to inspire the next generation of fans to fall in love with the sport. And whether it was from this summer's World Cup and the Euros last summer or the WNBA and our investment in coaching, we are committed to growing the game for women's sports. Next, let's touch on basketball, another area where you can see our end-to-end offense driving accelerated competitive |
5,465 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | sports. Next, let's touch on basketball, another area where you can see our end-to-end offense driving accelerated competitive advantage. In basketball, we have an unprecedented portfolio of product. Earlier this month, we announced our latest signature shoe, Devin Booker's Nike Book 1. It's a shoe built for comfort and performance with clean on and off court style. The Nike Book 1 will hit retail in December with consumer energy already building. And the Sabrina 1 continued its very strong sell-through this quarter, with both women's and men's interests high. And just a few hours ago, we launched the LeBron XXI. The XXI built on the success of the XX by keeping its low profile design and adding premium lightweight materials designed to connect with younger generations. And Q1 also saw the official introduction of the Kobe Brand. We commemorated Kobe Day on August 24, with rereleases to very strong demand. In fact, demand's so strong that we only fulfilled a fraction of it. And along with Vanessa Bryant, we also selected six schools to be honored as Mamba programs for the upcoming college basketball season, with both their men's and women's teams having the opportunity to wear Kobe Brand player exclusive footwear. We see huge potential with the Kobe Brand both on and off the court as we continue to honor his legacy. And this quarter, we also brought the energy of basketball directly to the consumer. We hosted tournaments in cities like L.A. and Chicago, culminating with the Nike World Basketball Festival in New York. These events created an electric atmosphere, especially during the NBA off-season like only NIKE can. And in a quarter where Jordan footwear grew double digits, the Jordan Brand demonstrated its power by bringing Zion, Luka and Jayson Tatum to Paris for Quai 54, which is one of the world's biggest streetwear and street ball tournaments that doubled as a showcase of the culture and growing community of basketball. Now moments like these don't just grow competitive separation for NIKE and Jordan. They |
5,466 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | and growing community of basketball. Now moments like these don't just grow competitive separation for NIKE and Jordan. They also are how we grow the game and we grow the broader market. Finally, I'll walk through the geography where our overall vision comes to life best, Greater China. In Q1, Greater China grew double digits for the second straight quarter, and we're taking share in the market. It's in Greater China that we offer the consumer NIKE's most premium and elevated retail. The team gets the most out of our innovative product through world-class and locally relevant storytelling and strong marketplace execution. A great example is our women's business, which outpaced overall growth in the quarter. The work the team has done to serve our women's consumer in Greater China is proof of what NIKE can do when all the pieces are aligned. A highlight in Q1 in Greater China was our 3-day sport festival, Sportchella, where we welcomed thousands of women to connect with our three brands through movement and mindfulness. The team amplified the impact of the festival by partnering with Tmall to create the first Nike Super Brand Week, which drove more than 2 billion impressions. And this partnership seamlessly integrated the events with a digital shopping journey that generated very strong consumer response and engagement. Our Greater China team also brings our brands to life through our best retail experiences fueled by strong and meaningful storytelling. These breakthrough retail experiences highlight our innovations and marketing in a clear package for the consumer. For example, in Q1, our seasonal presentations and curated head-to-toe style guides had very favorable consumer response. And once again, this combination of innovation, storytelling and marketplace execution led to results. We took share in women's in Greater China this quarter, with strong growth across a wide range of products, from footwear with the Motiva and Free Metcon to apparel with our statement bras and leggings. All in all, across our |
5,467 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | products, from footwear with the Motiva and Free Metcon to apparel with our statement bras and leggings. All in all, across our entire portfolio, the Greater China team has orchestrated a fully connected marketplace. They continue to transform digital commerce, launching China-specific versions of our apps, which are faster for consumers and more personalized, including a new Jordan destination to the Nike App in Q1; and their expanding connected partnership, which after just a few quarters is now live in 350 doors across 102 cities and is driving substantially higher member demand versus last quarter. Simply put, Greater China sets the execution standard for us, and our goal is to scale their success across all of our geographies, every sport and every dimension of our business. And that's how we win over the long term. In the end, as I've said, we're focused in moving with great confidence against the opportunities we see. Our teams feel energized, united by our shared passion and urgency for competing at the highest level. We set high expectations for ourselves at Nike. That's what winners do. And now more than ever, we're ready to bring our very best and demonstrate what NIKE is capable of. And with that, I'll turn the call over to Matt. |
5,468 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Matt Friend: Thanks, John, and hello to everyone on the call. NIKE's first quarter results demonstrated the impact of staying on the offense when we drove a quicker return to a healthy marketplace in fiscal '23 and leading with operational discipline as we begin the new fiscal year. We delivered Q1 results in line with our guidance. Retail sales across NIKE Direct and Wholesale continue to grow on top of extraordinary sales this past year. Both Nike inventory and our total marketplace inventory are healthy. Working capital efficiency is improving with a normalized supply chain. Gross margins are expanding on an operational basis, excluding the effects of foreign exchange and transitory headwinds are abating. In short, we are building on a strong foundation for sustainable and more profitable long-term growth. Before reviewing our financial results, let me first speak to what we are seeing from our consumer in the marketplace and where we are driving focus and attention to unlock even greater potential ahead. In Q1, retail sales across NIKE Direct and Wholesale grew mid-single digits versus the prior year. Our top franchises are driving strong full price sales and our newest product offerings across Nike, Jordan and Converse are generating positive consumer reception. Looking at inventory. We continue to feel very good about our position. NIKE inventory dollars are down 10% versus the prior year. Our total inventory units across the marketplace, including NIKE and our wholesale partners, are down double digits versus the prior year. Partner-owned inventory units are in line with the previous year, with levels planned to remain lean through our second quarter, a meaningful accomplishment after higher levels of wholesale sell-in during fiscal '23. On the whole, we are very comfortable with the level of inventory in the marketplace in relation to the retail sales that we're seeing as we begin increasing levels of wholesale sell-in in our second half. And overall, we're confident in the health and shape of our |
5,469 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | we begin increasing levels of wholesale sell-in in our second half. And overall, we're confident in the health and shape of our marketplace. NIKE Direct continues to lead our growth, up 6% versus the prior year. As we deliver on our strategy to elevate the marketplace through premium physical and digital retail experiences, we continue to see that consumers want to connect directly and personally with our brands. And in fact, member engagement within our direct business is up double digits versus the prior year, with increasing average order values. Our stores delivered in an especially strong quarter, with traffic up double digits from last year and members driving an increasing share of our business as consumers shifted from our digital to physical channels. This is similar to what we are seeing across the industry. And after seeing this trend build in early July or in early June, our team was nimble in transitioning inventory to capture higher full price sales across our entire store fleet. NIKE Digital grew 2% with nonlinear comparisons to the prior year, including liquidation actions and a higher number of product launches on the SNKRS app in fiscal '23. Looking through all that. What stands out are the underlying consumer trends we see in our digital business. This includes sustained momentum on the NIKE mobile app with growth in traffic and increasing member buying frequency. We continue to see a growing structural advantage as more consumers start their shopping journeys with us on mobile. Meanwhile, within wholesale, we see largely positive results from our most important strategic partners. Specifically, we were pleased to see high single-digit to low double-digit retail sales growth and strong inventory management with many of our key partners, including DICK's Sporting Goods and city specialty partners in North America, JD, Zalando and Sports Direct in EMEA and Topsports and Pou Sheng in Greater China. We continue the reset of our business with Foot Locker, planning for near-term sales declines as |
5,470 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Pou Sheng in Greater China. We continue the reset of our business with Foot Locker, planning for near-term sales declines as they invest in consumer-right concepts for the future. Ultimately, we have a segmented portfolio of strong partners across price points and channels with no single partner representing more than a mid-single digit of NIKE's total business. And looking across the entire marketplace, we are confident in our brand momentum as we accelerate direct consumer connections, elevate our brands and create capacity for long-term growth. Looking ahead, our priorities start with our product pipeline. And over the coming seasons, we will build on the market share gains that we have accelerated in recent years, by scaling newness and innovation across our portfolio, while carefully managing the health of our most iconic product franchises. This year, for example, we will build on the consumer momentum around running and modern comfort with performance and lifestyle franchises such as Infinity, Motiva, Invincible, Vomero 5, V2K and the Air Max 1. We will refresh our basketball portfolio across Nike and Jordan through innovation and style and grow the Kobe brand. We will ignite the next chapters of Pegasus, the Jordan Game shoe and Tech Fleece while continuing to grow powerhouses like Dunk and Metcon. And as we look towards the second half of this fiscal year and beyond from the tenth anniversary of Air Max Day to the Paris Olympic Games, we will introduce our next wave of Nike Air innovation. This will bring our most comprehensive evolution of the Air platform in years, one that we expect to catalyze both our brand and business. We will deliver pinnacle performance innovation to athletes while also scaling into new lifestyle franchises over the next several years. Ultimately, we are focused on scaling a deep, diverse and distinct product portfolio, not just for one quarter or one season, but for years to come. Last, we are turning the corner in driving more profitable growth while also recovering on |
5,471 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | one season, but for years to come. Last, we are turning the corner in driving more profitable growth while also recovering on transitory cost headwinds. This includes structural improvements in profitability in areas such as supply chain, with reduced digital switch shipments and improved digital fulfillment costs enabled by investments in our regional service centers, and a new transportation management system. In addition, NIKE Brand ASPs are up across footwear and apparel across all geographies as we focus on the price value of our products. And in Greater China, consecutive quarters of double-digit growth, healthy inventory and sequential improvement in full price sales will enable us to begin rebuilding towards higher profitability in the geography. Finally, we are focused on improving our marginal cost of growth with more modest increases in operating overhead this fiscal year, following two consecutive years of double-digit growth. We are doing this by unlocking speed and productivity as we transform our operating model to build a faster and more efficient Nike. Now let me turn to our NIKE, Inc. first quarter results. In Q1, NIKE, Inc. revenue grew 2% on a reported and currency-neutral basis. NIKE Direct grew 6%, with NIKE stores growing 12% and NIKE Digital up 2%. Wholesale grew 1%, reflecting our proactive decisions to restrain inventory supply and prioritize marketplace health, particularly in North America. Gross margin declined 10 basis points to 44.2% on a reported basis, primarily driven by higher product costs, and approximately 90 basis points of unfavorable changes in net foreign currency exchange rates, almost completely offset by strategic pricing actions. SG&A grew 5% on a reported basis, primarily due to increased demand creation expenses around World Cup and more moderate increases in operating overhead benefiting from shifts in timing of technology investments for the remainder of the year. Our effective tax rate for the quarter was 12% compared to 19.7% for the same period last year. |
5,472 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | for the remainder of the year. Our effective tax rate for the quarter was 12% compared to 19.7% for the same period last year. primarily due to a onetime benefit provided by the recent delay of the effective date of U.S. foreign tax credit regulations. Diluted earnings per share was $0.94. Now let me turn to our operating segments. In North America, Q1 revenue declined 1%, with wholesale down 8%, in line with our expectations following our restrained sell-in of marketplace supply. NIKE Direct was up 7% as NIKE stores grew 11% and NIKE Digital grew 4%. EBIT grew 4% on a reported basis, primarily due to strong gross margin expansion. In a competitive environment, our retail sales momentum grew throughout the quarter across NIKE Direct and wholesale. NIKE's back-to-school performance outpaced the broader industry with strong sales from our top franchises and clear consumer excitement around newness. Infinity 4 drove strong full price sales as we partnered with key running specialty accounts to host community activations. Our newest generation of Tech Fleece amplified by strong investment from key marketplace partners drove retail sales up double digits from last year across NIKE Direct and wholesale. Zenvy, Go and Universa fueled double-digit growth in statement leggings with Dunk and Free Metcon driving strong sell-through. And the Jordan brand continued its momentum with double-digit growth, led by Jordan Women's and kids as well as performance basketball. In EMEA, Q1 revenue grew 6%, with NIKE Direct also up 6%. NIKE stores grew 17% and NIKE Digital declined 2%. EBIT declined 5% on a reported basis. Global Football and fitness grew double digits and women's outpaced our total growth in the geography this quarter. New innovation and styles are resonating with Phantom Luna driving strong sell-through, Metcon up double digits and Motiva, our new walking shoe, off to a great start in creating a new performance category for NIKE. Pegasus, Invincible and Vomero also delivered strong results in the quarter. In |
5,473 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | creating a new performance category for NIKE. Pegasus, Invincible and Vomero also delivered strong results in the quarter. In addition, statement leggings in shorts grew double digits with integrated brand and retail experiences. And as we deepen our focus on serving all segments of the running community, trail running footwear grew double digits with new product innovation and brand activations. In Greater China, Q1 revenue grew 12%. NIKE Direct grew 10%, with NIKE stores up 12% and NIKE Digital up 6%. EBIT declined 3% on a reported basis. Throughout the quarter, we saw incredible energy around the return of sport, with thousands of young runners joining in our back-to-school kids race, players across cities taking part in our Jordan Flight basketball tournament and historical highs in social engagement with our neighborhood accounts as consumers joined in hyper local community experiences to celebrate our newest Kobe release. Retail sales across NIKE Direct and Wholesale grew double digits with another quarter of strong sell-through. In a highly promotional marketplace, we outperformed industry trends with improvement in full price sales. Our performance dimensions led growth with consumer excitement around G.T. Jump, Sabrina 1 and Invincible. And in lifestyle, Vomero and other retro running styles are gaining momentum as we prepare to scale over the coming seasons. In APLA, Q1 revenue grew 3%. NIKE Direct was up 3% with NIKE stores up 10% and NIKE Digital declining 3%. EBIT declined 17% on a reported basis. Japan, Southeast Asia, India and Mexico led our growth this quarter as we accelerate our momentum in international markets. In particular, store traffic in Japan is returning to pre-COVID levels. Sales through our new Myntra partnership in India are already exceeding plan, and Mexico's digital business delivered double-digit growth. Kids led our growth in the geography, up double digits with strong growth from Mercurial, Court Borough and Fleece. We also saw market share gains in women's lifestyle with |
5,474 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | digits with strong growth from Mercurial, Court Borough and Fleece. We also saw market share gains in women's lifestyle with positive consumer response to Air Max Koko, V2K and Gamma Force. In addition, Jordan continues its global growth with Luca and Tatum fueling strong momentum in Performance Basketball, and our new streetwear footwear franchise is resonating with consumers. Now let me turn to our financial outlook. As we look forward, we are confident in NIKE's new product innovation pipeline, brand strength, deep consumer connections and the health and shape of our marketplace. Our Q1 results reaffirm our expectation for healthy profitable growth this fiscal year. For the full year, we continue to expect reported revenue to grow mid-single digits. At the same time, we are closely monitoring the operating environment, including foreign currency exchange rates, consumer demand over the holiday season and our second half wholesale order book. As a reminder, this growth outlook includes approximately 4 points of headwinds from accelerated liquidation and higher wholesale sell-in during the prior year as we sold roughly five seasons of supply within four financial quarters. Therefore, quarterly comparisons across marketplace channels and in the aggregate, will be nonlinear. We continue to expect gross margins to expand 140 to 160 basis points on a reported basis, which includes 50 basis points of negative impact from foreign exchange headwinds. We are cautiously planning for modest markdown improvements for the balance of the year given the promotional environment. We continue to expect SG&A to slightly outpace revenue growth. more specifically at the high end of mid-single digits. We continue to expect other income and expense, including net interest income to be $225 million to $275 million for the year and we continue to expect our effective tax rate to be in the high teens range. Now let me provide some additional color on our second quarter. We expect second quarter reported revenue growth to be up slightly |
5,475 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | let me provide some additional color on our second quarter. We expect second quarter reported revenue growth to be up slightly versus the prior year, as we faced our most challenging comparisons from fiscal '23. We expect second quarter gross margins to expand approximately 100 basis points versus the prior year, reflecting benefits from strategic pricing, improved markdowns and lower ocean freight rates partially offset by higher product input costs. We continue to expect a negative impact from 50 basis points of foreign exchange headwinds. We expect second quarter SG&A to grow mid- to high single digits. We expect our second quarter effective tax rate to be in the high teens range. For NIKE, being on the offense means competing to win now and over the long term. We are confident in our strategy, our leadership position and our ability to create even greater opportunity ahead. With that, let's open up the call for questions. |
5,476 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Operator: [Operator Instructions] We'll take our first question from Bob Drbul, Guggenheim Partners.
Robert Drbul: Hi. Good afternoon. Thanks for taking the question. I guess the first question really is, when you talk about the innovation pipeline for fall of '24. Can you just expand a little bit more in terms of the focus or the categories or really sort of what you see driving the business that you laid out at the most recent meeting? And I have a follow-up. |
5,477 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Great, Bob. Well, as I said in my remarks, we cannot underestimate the - understate, really, that the impact of having our teams back together in person over the past 15 months, and we absolutely see that kicking into gear with our product pipeline. And so this past quarter, you heard a couple of great examples of performance innovation around Phantom Luna, our World Cup kits, the Infinity 4, which had one of our latest foam platforms, React X foam, highest energy return and lowest carbon footprint, that will sustain for many quarters and years And over the next six to nine months into the Paris Olympics and default, there are several areas we're very excited about. Matt and I both talked about basketball, I don't think we've ever had a stronger portfolio of basketball shoes, whether it's the Sabrina 1, the LeBron 21, Book 1. Jordan has Tatum, Luka, Zion and a great Game Shoe coming. And then, of course, we have Kobe. So we see real growth, growing our basketball business and growing the game and market of basketball on and off the court. In running, we feel good about the Invincible 3 and Infinity 4, Vomero 5, OPeg 41, we feel very good about coming into Paris as well as the Motiva, which we think have real legs. And then Air. Air is an are putting a huge amount of focus, and we're very excited about the innovations coming in Air, both performance and lifestyle. And so we have the tenth anniversary of Air Max Day in the spring as we move into the Paris Olympics. Air will be an important opportunity both in performance and in lifestyle. So we see several opportunities to build real scalable innovation and growth.
Robert Drbul: Got it. Thanks,. And I just have a question. In North America, I guess, in the current quarter, what's the bigger tailwind to the business right now? Is it the Travis Kelce jerseys or the Colorado football merchandise?
John Donahoe: Oregon Ducks jersey.
Matt Friend: We love the NFL and we continue to see a lot of momentum with Coach Prime, so both.
Robert Drbul: Thank you. |
5,478 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Matt Friend: We love the NFL and we continue to see a lot of momentum with Coach Prime, so both.
Robert Drbul: Thank you.
Operator: Up next is Adrienne Yih, Barclays.
Adrienne Yih: Great. Thank you very much. I guess my question is going to be on kind of the shaping of wholesale. Matt, if you can help us out with the - I guess, do we expect direct to be similar to the current quarter and then the balance of that, the kind of up slightly for the current quarter guidance to the balance of that come out of North America wholesale? And then my other question is on the China market. John, you talked about kind of strength and regaining market share. But at the same time, you talked a little bit about continuing to be promotional. It's great to see that you're regaining full price. How much demand creation are you doing there? What does the promotional environment look like exiting the quarter? And any comment on exit trends? How should we think about kind of the trends over the next couple of quarters relative to your long-term algorithm? Thank you very much. |
5,479 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Matt Friend: All right. Well, John, why don't I start on marketplace. So Adrienne, when we look at our performance this quarter, I'd be remiss to not just reiterate what I said on the call, which is we saw very strong retail sales in the marketplace up mid-single digits. And in particular, we're very pleased with the performance across a range of our most important wholesale partners, delivering growth high single digit to low double digit. What I said last quarter in terms of the way that I was thinking about channel growth for this year, I said that NIKE Direct would lead our growth. And it did this quarter, and we do expect NIKE Direct to continue to lead our growth throughout the remainder of this fiscal year. The period that we're heading into in Q2 and Q3 is really the higher levels of sell-in that we did last year as we proactively focused on returning our marketplace to a more healthy level. As an example, you might recall our Q2 wholesale revenue last year was up 30% versus the prior year. And so as we face those comparisons, we do expect that NIKE Direct will be the best indication of the growth that we're driving in the marketplace, while we comp those nonlinear comparisons in the prior year. But we feel very good about the health and the shape of our overall marketplace, including in North America. And we're continuing to focus on driving growth across dimensions, across channels, up and down price points and are very focused on building a product pipeline to enable us to do that over the coming years. |
5,480 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: And Adrienne, in China, it's interesting. I've been to China twice now in the past four months. And I think, Matt, you were there in August. And I - we feel good about the market there and our position. Frankly, a couple of things stand out. One sport is back in China. You can just feel it. And that gives us great confidence about the future and the Chinese consumer in our segment regardless of the macroeconomic outlook there. And you saw we had double-digit - strong double-digit growth in Q1 and Q2, and we're helping to really drive momentum in Sport there. I talked about Sportchella. I think Matt mentioned the back-to-school kids race. Giannis, it is a tour there this summer that got a huge response outdoor basketball. So we're doing what we do best, which is driving energy and excitement around sport, which then translates into our brand connection and our consumer connection being as strong as it's been in a long time. And as I said, it's perhaps the best example currently where we bring this great innovation with distinctive storytelling with distinctive marketplace reaction. And so even in a promotional period, our full price sell-through and our innovations are connecting well and doing well. And so we got inventory in shape much sooner than the market in China. And so we're playing on the offense. We're playing on our front foot. And we feel good about the opportunities in China in the coming quarters and into the medium to long term. |
5,481 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Matt Friend: Yes. And I would just say that I think that the retail sales growth that we referenced in our two biggest wholesale partners is a great indication of the health of our inventory and our ability, especially in this first quarter to flow a complete assortment and season into our retail stores in the marketplace. And that's NIKE at best. Our most premium elevated retail experiences, high levels of seasonal assortments where we can tell stories and really bring the breadth and the dimension to consumers. And we saw that momentum building throughout the quarter. So we feel really good about the decision we made to move fast. And even though the marketplace is promotional, we're on our front feet in terms of the way we're able to present our brand and our stories and our products to consumers in that market right now.
Operator: Next, we'll take a question from Alex Straton, Morgan Stanley.
Alex Straton: Perfect. Thanks so much. I just wanted to focus on kind of the running innovation that you guys highlighted a number of times on the call across areas. I think you had said you launched some running in the last few years, but perhaps it didn't connect as much as you wanted or you wanted to scale it more effectively. So could you just touch on maybe what changed in NIKE's approach in the last few years? And then what you plan to do differently to kind of reignite that? Thanks a lot. |
5,482 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Yes, Alex. As I said, we - we're at best when we align innovative product with distinctive storytelling through a differentiator marketplace. And in running, we have three different categories and running. In racing, we take our performance innovation, which sets the bar in the industry with the Alphafly, the Vaporfly and NEXT%. We have compelling breakthrough storytelling, whether it's breaking to or we reached that elite runner and we reached them through a differentiated marketplace. And so we're doing well there. In trail running, which is the fastest-growing segment, the Peg trail is doing very well. We feel really good about our innovation pipeline and we're increasingly leaning in to the trail running community and to marketplace connection with that trail runner. And then the area that we talked about road running or what we call road running or everyday running, we're very clear we're prioritizing the everyday runner who wants newness and consistency and we're focusing, therefore, on some key models and ensuring that we get in the path of runners. So in terms of innovation, as I mentioned in my remarks, we've had some very good innovation in the last couple of years. The Invincible took some of the performance benefits from our road racing shoes, particularly ZoomX and brought them into an everyday running shoe along with some great cushioning. So good innovation. Similarly, the Infinity 4 brought the React X foam platform, which has got some real characteristics of low-carbon footprint, better high energy, but we're not yet combining those innovations with getting in the path of the everyday runner with a really strong ground game. And so that's what we're focused on. And that starts with distribution, making sure we're breaking through everyday runners shops. So whether that's our own direct channels, wholesale channels, running specialty doors play a really important role. You may have noted we launched the React 4 in partnership with running specialty doors. So that's a step in the |
5,483 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | important role. You may have noted we launched the React 4 in partnership with running specialty doors. So that's a step in the right direction, and we're really working to break through in these channels. And then we're working hard to better connect with runners in their community where they are, where it's driving connections through Nike Run Club and our mobile apps being present in marathons and races and just being where runners are. And so in this case, we know what we need to do. We are focused on it, and we are moving with urgency to deliver. |
5,484 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Matt Friend: There's also a meaningful opportunity as running influences, lifestyle and sneakers. And as we've had tremendous success from a Classics perspective over the last couple of years, we have a rich heritage of products in our pipeline related to running for decades. And so one of the things that we're also doing is accelerating our opportunity in running lifestyle with some of our best franchises and capturing on that trend and also the consumer shift to modern comfort. And we feel like that one, two punch, as John mentioned, innovation, performance and lifestyle is really going to position us well to take greater to greater - take a greater attack at the running marketplace holistically.
Operator: And next up is Matthew Boss, JPMorgan.
Matthew Boss: Great. Thanks. So John, maybe could you speak to underlying demand trends as the first quarter progressed? Or any early fall trends that you're seeing in both North America and China. And then multiyear, I'm curious what you see as the next leg of the Consumer Direct Acceleration strategy or just any initiatives that you see to drive further market share gains as we look forward.
John Donahoe: Actually, Matt, why don't you take the first part of that and close in on demand, and I'll take the second. |
5,485 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Actually, Matt, why don't you take the first part of that and close in on demand, and I'll take the second.
Matt Friend: Sure. Well, Matt, as I referenced, we saw mid-single-digit retail sales growth this quarter. And this quarter, we have a unique dynamic because we saw a difference in what we're reporting or what we're communicating from a retail sales perspective versus where NIKE's reported revenue is, and that's because of the restriction of sell-in that we put into place the last couple of quarters of last year. We do expect that to continue as we go into the second quarter. And so we are planning for retail sales growth to be in line with what we delivered this quarter from a mid-single-digit perspective. When we look at the big consumer moments this quarter, 618 seems like so long ago at this point in time, but 618 in Greater China, we were the number 1 sports brand on Tmall and saw impressive double-digit growth over that time horizon. And within back-to-school, we outperformed the industry. And when you look at our performance over the quarter, we saw momentum building throughout the quarter, heading into back-to-school. And so we were encouraged by what we were seeing from a consumer perspective. I mentioned that we saw high single digit to low double-digit growth in our most important partners and strong growth in NIKE Direct this quarter given what we're anniversarying in the prior year. So we continue to see consumer demand for our brands and for our products to be very, very strong. Sport is growing and the consumer is proving to be resilient. There are some dynamics in terms of shifting that's happening from channels. We saw it in our partners a couple of years ago. And this quarter, we are seeing consumers spending more time in brick-and-mortar locations. But 90% of their shopping journeys are starting with digital. And so we continue to believe that our digital and physical strategy of serving consumers at the right strategy to serve demand as we look forward. |
5,486 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: And Matt, if we just extend out as you asked a little bit longer term, we step back, we still see the same fundamentals, which are some structural tailwinds in our industry, right? The definition of sport is expanding. And so with the movement towards health and wellness and fitness and new big areas of movement like dance, one of my favorite. We've had a lot of interaction with breakdancing in the last three months here on campus seeing some of the elite breakdancers who will compete in the Paris Olympics come in. But dance, throughout Asia and other places is a huge market. So we just see an expanding definition of sport where movement has become sport and we're at center of that. The movement towards athleisure, right, there doesn't need to be a trade-off between what you wear on the pitch and at work between comfort and performance and style. Athleisure combines all of those, and we are very well positioned to continue to drive that trend. And then the digital connection of consumers means that sport, whether they're watching it or commerce is always one click away. And our leading portfolio of digital assets gives us a huge advantage there. So those are some structural tailwinds. And then we just do - we're in a great industry with those tailwinds. We've got to do what we do so well, innovation plus great storytelling plus great marketplace, we believe will drive real strong growth, and we see great growth in women's. Jordan, we think, has extraordinary growth. Running, we think we have great growth. Continuing to expand the market in basketball, global football. And as Matt mentioned, this driving performance and then into lifestyle is something that makes our industry, our business and our future quite attractive.
Operator: Jay Sole from UBS has the next question. |
5,487 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Operator: Jay Sole from UBS has the next question.
Jay Sole: Great. Thank you so much. Matt, you talked about you're seeing underlying structural gains and profitability and margins. Can you just talk about how you're feeling about the long-term opportunity for margin in the context of the long-term guidance you gave a couple of years ago for NIKE's ability to get to a high teens EBIT margin over time? Thank you. |
5,488 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Matt Friend: Sure, Jay. Well, we remain confident in our ability to drive our long-term financial goals. And we still believe those long-term goals of profitability are achievable. But the timing is difficult to predict. But the reason why I emphasized what I emphasized this quarter is that I feel - I really feel strongly that fiscal year '24 is a turning point for us and a proof point for NIKE to drive more profitable growth. The structural things that I referenced, the structural drivers, I should say that I referenced, it starts with creating value for the consumer and our products. And we continue to see benefits in our gross margin through strategic pricing and managing the price value of our products with ASPs across the NIKE brand across all geos up this quarter. One of the opportunities we continue to see, and we saw some benefit of it this quarter is lowering our supply chain costs. We've increased the size of our supply chain in the last few years to be able to address the growth that we've seen in our business, both overall and in digital. And now our teams are very focused on driving greater efficiency in the way that we serve consumer demand across channels. And I mentioned a couple of examples like reducing digital split shipments so that a consumer doesn't get two boxes for the same order, the way that we're lowering our outbound fulfillment costs through the investment in regional service centers that are closer to where consumer demand is. And so those are just a couple of examples that we continue to see. And then, of course, we do expect that while the ultimate landing spot of digital and direct isn't as clear, we do believe we're going to be a more direct at a more digital company and a more profitable company. And there's a channel mix and channel profitability opportunity that comes with that as well. So we continue to believe these goals are achievable. And based on our gross margin plans for this year, our performance in the first quarter, we believe we're turning the corner on starting |
5,489 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | on our gross margin plans for this year, our performance in the first quarter, we believe we're turning the corner on starting to climb to greater profitability as a company and as a brand. |
5,490 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Operator: The next question comes from Piral Dadhania, RBC.
Piral Dadhania: Hi. Evening. Thank you for taking my question. Most have been answered. So maybe I could just ask a follow-up, a clarification. Matt, I think you said that in Q1, your partners registered a high single-digit to low double-digit sales growth in the period. I just wanted to understand whether that was their sell-out number or whether that was your sell-in number. Any clarification there would be very helpful.
Matt Friend: Sure. That was a sellout number. That was the sales to consumer number.
Operator: We'll take our next question from Jonathan Komp, Baird.
Jonathan Komp: Yes, hi. Good afternoon. Matt, if I could ask a follow-up, just as you think about the second quarter, given some of the unusual comparisons, would you be willing to share any shaping guidance across some of the segments? And then bigger picture, if you could just comment on sort of the shape of the recovery of the sales and the profitability that you're seeing in China? And any thoughts as we look to the balance of the year? Thank you. |
5,491 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Matt Friend: Sure. Well, as it relates to the second quarter, what I said was that we expect our growth to be up slightly versus the prior year. I did answer Matt's question just and I'll connect the two together, but we are expecting retail sales to sell out to the consumer to be in line with the mid-single digit that we delivered this quarter across the full marketplace. And the second quarter is really the last season that we've managed the sell-in to a more restricted level so that we could ensure that the marketplace was set right as we look towards the remainder of this year. As far as the comparisons go, Q2, and I think I referenced the wholesale number earlier, but we're comping about 27% currency-neutral growth in Q2, but what we're much more focused on is the quality and the health of the growth that we're delivering in the quarter. And so as you see our gross margins expanding in the second quarter on an operational basis, excluding the impact of FX, we're up 150 basis points and are really encouraged as we think about what we delivered in the first quarter, the improvements we're guiding to and believe we can deliver in the second quarter and then the way that will accelerate through the balance of the year. So as we get into the second half of this year and we think about our gross margins, we're going to start to see even more impact from ocean freight because those are rolling in midway through this quarter. We're expecting to see lower product costs in the second half and our FX headwinds are going to abate a little bit as we get into the back half of this year. And so some of those elements will drive increasing margin expansion as we carry through the balance of the year. I think the last part of your question was on China and profitability. What I would just say is that we know from a long history of managing this business that when you have a healthy marketplace and you're driving full price sales and you are driving productivity in your retail formats, you're -- you've created the |
5,492 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | and you're driving full price sales and you are driving productivity in your retail formats, you're -- you've created the environment that's ripe to drive profitability improvement. And as we look at the momentum that we're seeing in Greater China, another quarter of double-digit growth, we're increasingly confident that we're going to begin to rebuild towards higher profitability in that marketplace. That's on the product and marketplace side. And then also I referenced an example where we're lowering our supply chain costs in Greater China. And so we feel we feel quite good with that as well. Our reported numbers in China are going to be challenging for the next couple of quarters because of foreign exchange headwinds. And so we'll continue to try to highlight the opportunities and what we're driving from a profitability perspective, but that's one of the reasons why our EBIT was down this quarter in Greater China as foreign exchange headwinds as a result of the strength of the U.S. dollar, definitely has created a bit of pressure in the short term. But that's - we're focused on what we can control and continuing to drive a healthy, profitable business in that market and believe the fundamentals for long-term growth and profitability are strong for NIKE. |
5,493 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Operator: We'll go next to Aneesha Sherman, Bernstein.
Aneesha Sherman: Thank you. So as a result of your direct-to-consumer strategy, you've shifted, I guess, more than 20 points of sales mix from Wholesale to NIKE Digital over the last seven or so years. You're seeing shoppers returning to stores this year. You did make some adjustments to adding physical distribution points. Do you feel like you are in enough physical retail doors today to appeal to a rebalancing of shopping habits? And then a quick follow-up on overheads. You talked about lowering some of the specific costs of direct split shipments and fulfillment costs. Can you give us more color on the investment cycle are on the investment cycle to support the direct business as well as centralized investments like ERP and kind of where you are this fiscal year and next fiscal year? Thank you. |
5,494 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | John Donahoe: Matt, I'll take the first part, maybe take the second. So Aneesha, again, our entire marketplace strategy is driven by giving consumers what they want, when they want it, how they want it. That starts with our digital properties, our own direct retail, which Matt will talk about in the second part of the answer, but wholesale plays a really important role for us to get the breadth and depth of access to consumers and consumers access to our products. And so as you know, we've really sharpened our wholesale focus over the last few years to focus on fewer multi-brand partners that where we're investing in elevated retail experiences and connected digital membership at scale. And so that's DSG, JD, Zalando, our partners in China. We've got a great launch with Pro Direct, Hibbett will come online with connected membership in October. And so we think there's a lot of growth opportunity with those strategic wholesale partners. We're also putting increased attention on our neighborhood partners who are authenticators. They help authenticate both sport and lifestyle and drive energy and local connections. And then as we said, where we see gaps, whether it's in a price point or a gap in a product segment will selectively add wholesale partners in different geographies and in different segments. And this will be a dynamic thing. I mean we're led by the consumer. We have the blessing of the strongest direct connections in the industry. And with direct connected membership, we can be indifferent about which channel And Matt, you're going to talk a little bit about, I guess, the margins are direct, but the Nike Rise our direct monobrand doors Nike Rise and our well collected doors are doing quite well, and we feel like we're getting our concept right now that we have seasonal right assortments coming into them. We feel very good about our ability to augment where their gaps as well with our own mono-brand doors, also a House of Flight on Jordan. So we feel good about being on the front foot with our |
5,495 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | as well with our own mono-brand doors, also a House of Flight on Jordan. So we feel good about being on the front foot with our marketplace. I think the most wide and connected marketplace offense in the industry. |
5,496 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Matt Friend: Yes. And I think I would just add maybe one point and then I'll hit the last part. When I think about the momentum that we've seen over the last several years from a digital perspective. You're right, we have shifted our channel mix, and that's been a consumer-led and a consumer-driven shift based on the consumers' desire to want to connect with NIKE, both through our digital apps and through our stores What we saw this quarter wasn't unexpected for us. And when we look underneath the momentum that we saw in our NIKE mobile app, we saw a strong growth, high single-digit growth in traffic. We saw member activity continue to increase both in terms of engagement and buying behavior and a higher basket size, a higher AOV. And so we continue to be focused on creating the best personalized experience for our members from a digital perspective. And we believe that that's going to continue to fuel growth in our digital business over the long term. I do think this year, the comparisons are going to not be linear as we go quarter-to-quarter channel to channel, given what transpired last year. But what we're seeing from a consumer perspective doesn't shift our dimensionality in terms of needing to do something different in order to serve consumer demand. As John said, we've got the biggest, deepest breadth of distribution of anyone and have the right partners to be able to serve the marketplace. As it relates to overhead, the numbers that I referenced actually impact our gross margins, our lower digital fulfillment cost that sits in our gross margins. And it's something that we've been focused on for some time. We started investing a couple of years ago in regional service centers in North America and in Europe and in pickup points closer to the consumer in Europe, all with the intention of building a supply chain that enables us to serve demand closer to consumers. It's more sustainable because we don't have to put product on airplanes, and leveraging our store footprint through O2O capabilities. And so we've |
5,497 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | because we don't have to put product on airplanes, and leveraging our store footprint through O2O capabilities. And so we've been investing for a few years in developing and scaling those capabilities to be able to serve consumer demand. And as I look forward from here, our investments will be aligned with the way that we grow the business. In other words, we've invested to - and now we're learning to operationalize and take advantage of these capabilities. We are implementing our ERP in North America. We went live with our retail business in the first quarter, and everything has gone well. And we're focused on bringing the second part of our North America business, the wholesale side of our North America business online and our new ERP later this year. So that is our largest investment in transformation of our supply chain and enabling us to operate like a retailer. And I couldn't be more excited about the opportunity that it presents for us to really modernize the way we work and to serve consumers at speed across the marketplace. |
5,498 | NKE | 1 | 2,024 | 2023-09-28 17:00:00 | NIKE, Inc. | 291,981 | Operator: And everyone, that does conclude our question-and-answer session. It also concludes our conference for today. We would like to thank you all for your participation. You may now disconnect. |
5,499 | NKE | 3 | 2,025 | 2025-03-20 17:00:00 | NIKE, Inc. | 291,981 | Operator: Good afternoon, everyone. Welcome to NIKE, Inc. Fiscal 2025 Third Quarter Conference Call. For those who want to reference today's press release, you'll find it at investors.NIKE.com. Leading today's call is Paul Trussell, Vice President of Corporate Finance and Treasurer. Now I'd like to turn the call over to Paul Trussell.
Paul Trussell: Thank you, operator. Hello, everyone, and thank you for joining us today to discuss NIKE Inc's Fiscal 2025 Third Quarter Results. Joining us on today's call will be NIKE Inc. President and CEO, Elliott Hill; and our CFO, Matt Friend. Before we begin, let me remind you that participants on this call will make forward-looking statements based on current expectations, and those statements are subject to certain risk and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in NIKE’s reports filed with the SEC. In addition, participants may discuss non-GAAP financial measures and non-public financial and statistical information. Please refer to NIKE’s earnings press release or NIKE’s website, investors.NIKE.com, for comparable GAAP measures and quantitative reconciliations. All growth comparisons on the call today are presented on a year-over-year basis and are currency neutral, unless otherwise noted. We will start with prepared remarks and then open up for questions. We would like to allow as many of you to ask questions as possible in our allotted time, so we would appreciate you limiting your initial question to one. Thanks for your cooperation on this. I'll now turn the call over to NIKE Inc. President and CEO, Elliott Hill. |
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