Dive Brief:
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Nike on Thursday said fourth quarter revenue rose 5% to $8.7 billion, or 7% on a currency-neutral basis, while fiscal 2017 revenues rose 6% to $34.4 billion, or 8% on a currency-neutral basis, according to a company press release. The report bested the The FactSet earnings estimate cited by Marketwatch for revenue of $8.6 billion, sending shares up Thursday.
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Nike Brand revenue in the quarter rose 7% to $8.1 billion, driven by double-digit growth in Western Europe, Greater China and emerging markets, and strong growth in sportswear and running categories, the company said. Converse revenues rose 10% to $554 million, primarily driven by the market transition in Italy and direct-to-consumer growth.
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In a conference call with analysts Thursday, CEO Mark Parker confirmed the company is piloting a direct sales program through Amazon with a limited product assortment, according to a transcript from Seeking Alpha.
Dive Insight:
Speaking to analysts Thursday evening, Parker said Nike is forging a strategy focusing "on speed and deeper connections with consumers."
That includes the company's previously announced "Consumer Direct Offense,” which aims to boost innovation and product development and forge deeper connections to consumers in the world’s major cities, including, in addition to New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul and Milan. Those cities will be slotted by the company into four newly-formed geographies: North America; Europe, the Middle East and Africa, Greater China, and Asia Pacific and Latin America.
Inventory continues to plague Nike, rising 4% to $5.1 billion in the fiscal year as a 3% percent decrease in Nike brand wholesale unit inventories was more than offset by increases in average product cost per unit and growth in the direct-to-consumer businesses, the company said. Things are improving in North America, however. There, "we’ve made great progress in the supply chain managing inventory this year and today it’s clear we are well on the right path," Nike Brand President Trevor Edwards told analysts. "At the same time, we still see a dynamic and promotional landscape. This is why we are aggressively executing our Consumer Direct Offense is so important."
The cities identified for special treatment under the new strategy are expected to account for some 80% of Nike’s projected growth through 2020. As with the move closer to urban culture and style, that broader regional market revamp bears close similarity to a previous move by Nike competitor Adidas to organize marketing efforts around four global regions. Among the latest efforts in that plan is Nike's recent unveiling of new East Coast headquarters in New York City.
In the U.S., Nike is trying out sales through Amazon, which executives suggested will allow the company to control its sales and its brand. "As we do with all of our partners, we’re looking for ways to improve the Nike consumer experience on Amazon by elevating the way the brand is presented and increasing the quality of product storytelling," Parker said. "We’re in the early stages but we really look forward to evaluating the results of the pilot."