Nike's Consumer Direct Acceleration strategy helps sales rise 14% in Q3
Third quarter revenues at Nike reached £10.1 billion ($12.4 billion), up 14% compared to the prior year, showcasing "continued proof of the success" of its Consumer Direct Acceleration strategy.
Revenues for the Nike Brand were £9.61 billion ($11.8 billion), up 14% on a reported basis and up 19% on a currency-neutral basis, with double-digit growth in North America, EMEA and APLA. Greater China grew 1% on a currency-neutral basis despite a challenging December following the shift in the country’s COVID-19 policies. However, on a reported basis, revenues for Greater China declined 8%.
Revenues for Converse were £498.5 million ($612 million), up 8% on a reported basis and up 12% on a currency-neutral basis, led by double-digit growth across all channels in North America, partially offset by sales decline across Asia.
Nike Direct sales were £4.3 billion ($5.3 billion), up 17% on a reported basis, whilst Nike Brand Digital sales increased 20% on a reported basis. Wholesale revenues also grew by 12% on a reported basis.
Selling and administrative expenses in the quarter increased 15% to £3.3 billion ($4 billion), with demand creation expense reaching £733 million ($900 million), rising by 8%, primarily due to advertising and marketing.
Net income for Nike Inc dropped to £980 million ($1.2 billion), a drop of 11% compared to prior year.
John Donahoe, President and CEO, Nike, Inc., commented: “Nike's strong results in the third quarter offer continued proof of the success of our Consumer Direct Acceleration strategy. Fuelled by compelling product innovation, deep relationships with consumers and a digital advantage that fuels brand momentum, our proven playbook allows us to navigate volatility as we create value and drive long-term growth.”
With this Consumer Direct Acceleration strategy, first announced in 2020, Nike is ramping up its investments in e-commerce and technology and simplifying its wholesale channels, shifting focus primarily on DTC sales. The company says this will "better address opportunities" across its men’s, women’s and kids’ businesses.
Matthew Friend, Executive Vice President and Chief Financial Officer, concluded, “Nike's brand distinction and strong execution continue to create separation in the marketplace. We have made tremendous progress on inventory as we position Nike for sustainable and more profitable growth.”
The financial report comes only days after Foot Locker announced a "revitalised" wholesale partnership with Nike. CEO Mary Dillon spoke about the relationship with Nike, emphasising a focus on what she called “sneaker culture.”
In comparison, Adidas recently reported that currency-neutral revenues in Q4 declined 1% as a result of the termination of its partnership with Kayne West. Q4 also saw an operating loss of £645.2 million (€724 million), with a net loss from continuing operations of €482 million.
