“Deep consumer connections” and “innovative products” fuel growth for Nike

Global sportwear retailer NIKE, Inc. recently reported its fiscal 2023 financial results for first quarter ended August 31, 2022, recording revenues worth $12.7 billion, up 4% compared to the prior year. NIKE Direct sales were $5.1 billion, up 8% on a reported basis and 14% on a currency-neutral basis. While NIKE Brand Digital sales increased 16% on a reported basis, or 23% on a currency-neutral basis, led by 46% growth in EMEA [Europe, Middle East and Africa]. Commenting on the results John Donahoe, President and CEO, NIKE, Inc said among other things “deep consumer connections” and “innovative products” fuel growth for Nike.

“Our strong start to FY23 highlights the depth and breadth of NIKE’s global portfolio, as we continue to manage through volatility. Our competitive advantages, including the strength of our brand, deep consumer connections and pipeline of innovative product, continue to prove that our strategy is working. We expect our unrelenting focus on better serving the consumer to continue to fuel growth and create value like only NIKE can.”

The brand’s gross margin, however, decreased 220 basis points to 44.3%, primarily driven by elevated freight and logistics costs, lower margins in the NIKE Direct business driven by higher markdowns and unfavourable changes in net foreign currency exchange rates, including hedges, partially offset by strategic pricing actions. The overall decrease in margins was primarily driven by North America, which took measures to liquidate excess inventory through NIKE Direct markdowns and wholesale marketplace actions.

Overall, inventories for NIKE, Inc. were $9.7 billion, up 44% compared to the prior year period, driven by elevated in-transit inventories from ongoing supply chain volatility, partially offset by strong consumer demand during the quarter.

“NIKE’s first quarter results set the foundation for another year of strong growth,” added Matthew Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. “Our focus continues to be the consumer, as we take action to navigate near-term dynamics while expanding long-term structural benefits through our Consumer Direct Acceleration strategy.”