Nike (NKE) Q1 2017 Earnings Call

posted in: Earnings Call, Notes | 0

Nike (NKE) CEO Mark Parker said fashion trends are currently smiling upon them as individuals continue to buy activewear

“The activewear market continues to outpace the overall apparel and footwear market, which itself continues to outpace global GDP growth.”

Nike (NKE) CEO Mark Parker said athletes wearing the company’s gear dominated the Olympics 

“Everywhere you looked in Rio, you could feel NIKE’s support of the athlete. Over 1,500 Olympians from 60 countries won 189 metals wearing our latest innovations. If NIKE were a country, we would have stood atop the medal count leaderboard.”

E-commerce was a massive driver of growth

“On a constant currency basis, DTC revenue for Q1 was up 22% with the Nike.com business leading the way at 49% growth.”

Basketball player Lebron James’ shoes continue to sell well even in Asia

“LeBron continues to build after his incredible dominance in the Playoffs and his very successful visit to China. And the LeBron Soldier 10 is seeing very strong sell-through in the United States and China, our two largest basketball markets.”

The Chinese are hungry for more American basketball players shoes

“And finally, in Greater China, we continue to see great results with revenue growing 21% for the quarter. We are leveraging consumer sports moments such as the Olympics and the athlete visits by LeBron, KD and Russell Westbrook this summer.”

China passed the United States as the largest retail market

“Just recently, the China retail market became the world’s largest market eclipse than the United States.”

Focused on shorter product cycles

“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.”

Automation is delivering tangible savings across the enterprise 

“The tangible results that we’re seeing today are primarily driven by automation and being closer to market. In terms of automation specifically, we’re seeing greater yield in terms of our use of materials. So less waste means lower cost and we’re also improving the throughput in our manufacturing lines; in other words, improving labor productivity. I guess in short I’d say we’re increasingly confident the Manufacturing Revolution now across both footwear and apparel will have a significant impact on both revenue and margin long term. And as you know, as you start to see returns on your investment that starts to build momentum. So we remain bullish on that opportunity.”