Nike FY 1Q17 Earnings Call Notes

NIKE’s (NKE) CEO Mark Parker on Q1 2017 Results

Manufacturing revolution

“In Q1, we took major leaps toward those long-term goals, especially in the promise of personalized performance. Our connection to the consumer through Nike+ is core to that vision. But equally important is disrupting the business model that supports it or as we like to call it, our Manufacturing Revolution or Man Rev. Through our acceleration of Man Rev, we’re currently seeing the benefit to product cost optimizations. At the same time, we’re building capabilities for increased speed to market.”

Computational design

“Beyond that, one of the most exciting opportunities for Man Rev is within design. We’re continuing to scale our transition from cut and sow where precision is at the stitch level to digital design where precision is at the pixel level. We’re leveraging the power of computational design that uses algorithms to create highly tunable innovations very quickly. This summer in Rio, athletes such as Allyson Felix, Elaine Thompson and Mo Farah claimed gold wearing our latest track spikes. Each were developed using computational design, 3-D printing and Selective Laser Sintering, which allowed us to create and refine prototypes in hours instead of months and aligned with the athlete’s specific training programs and competitive needs.”

Sport and innovation have always been the two most powerful drivers of culture and style

” I’ll just back up and say though that sport in general and innovation have always been and I think always will be two of the most powerful drivers of culture and style. NIKE always – we’ve always started with the athlete. That’s how we create the insight to drive innovative product and then we amplify that across the portfolio, and sportswear is really important means of doing that. We see tremendous growth in all areas, specifically in both dimensions of performance and sportswear.”

The intersection between performance and style is stronger than ever

“That intersection between performance and style I think is stronger than ever. And by the way, innovation is a huge part of creating a new esthetic and lifestyle product does prioritize I think at this stage with the consumer comfort and lightweight and breathability. So performance is really an element of sportswear for NIKE and that’s what helps to separate and distinguish NIKE in the marketplace.”

Inflection in manufacturing revolution is about taking this to scale

“Well, we’re actually starting to take some of this innovation to scale. I think that’s the short answer. For us, this is about getting product to the consumer faster, it’s about lowering our product cost as we talked about, really trying to drive greater labor productivity, less waste in the system, new design capabilities. These are all parts of Man Rev. I think though the difference, the inflection point that you mentioned, is really more about taking it to scale.”

Trevor Edwards

China has become largest market

“Just recently, the China retail market became the world’s largest market eclipse than the United States. And with our impressive growth there, we continue to feel confident about the successful strategies we are executing. We are leading with digital where we’re seeing incredible growth in our business, as we continue to innovate with a focus on mobile. And we are leveraging the best practices from China across our global portfolio.”