Need to Know
- Total revenue for Nike for the quarter ending November 30 was $11.24 billion, a year-over-year increase of 9%.
- Digital revenue grew by 84%, with CEO John Donahoe saying “Digital is now woven into everything we do as a company.”
- The company benefitted from strong sales in China: revenue there rose 24%, while sales in North America, rose 1%.
- More than 90% of Nike stores are now open, though foot traffic has declined due to safety concerns.
Nike has used e-commerce to its advantage this year, with the athletic apparel company posting an 84% spike in digital revenue for the quarter ending November 30—the third consecutive quarter in which the company has seen digital growth of 80% or more.
Nike’s total revenue for Q2 was $11.2 billion, well ahead of the $10.55 billion expected, representing a 9% year-over-year increase. The company has benefitted not only from strong e-commerce but also from substantial sales in China, where revenue for Nike rose 24% over the quarter. By comparison, revenue in North America, Nike’s largest market, rose just 1%.
“I’ve said it before: These are times when strong brands get stronger,” Nike CEO John Donahoe said on Nike’s earnings call. “The structural tailwinds we’re seeing, including permanent shifts towards digital, athletic wear, and health and wellness continue to offer us incredible opportunity.”
Indeed, Nike has benefitted from a lockdown that led many individuals towards increased investments in health and wellness products, as at-home workouts became the norm, and funds that would have otherwise been spent on gym memberships or travel and leisure were redirected elsewhere. In order to capture the fitness-at-home audience, Nike unveiled a digital concept store, Nike Rise, in July. The company has also invested additional infrastructure in SNKRS, its specialty sneaker-focused app; Nike hosted its first-ever live sneaker “drop” on the app earlier this year, for the Air Jordan 4 PSG; the product sold out within two minutes.
“Digital is now woven into everything we do as a company,” Donahoe said. “It’s how we operate and prioritize, from how we engage with members, to how we operate our supply chain, to how we serve consumers in the marketplace.”
While more than 90% of Nike stores are now open, the company said it continues to see reduced foot traffic due to COVID-19; its bottom lines have therefore benefitted from an online sales experience that involves fewer sales and discounts. “Digital is open seven days a week, 24 hours a day,” Donahoe said. “And what’s fascinating to watch is the consistency of the growth across digital. We have increasing evidence that when a consumer wants to get something, if physical retail is closed, they’re coming to us digitally, and our ability to reach consumers digitally in a variety of manners is just getting better and better as this pandemic goes on.”
Nike is forecasting double-digit percentage growth for its fiscal 2021, as well as healthier profit margins, due to fewer markdowns and better inventory management.