Dive Brief:
- Nike on Tuesday reported Q2 revenue was up 17%, hitting $13.3 billion, according to a company press release. Net income was flat at $1.3 billion.
- The retailer’s direct channel made up $5.4 billion of its sales and grew 16% year over year. Wholesale revenue was also up significantly, increasing by 19% in the quarter.
- All of Nike’s geographic regions saw double-digit growth in the quarter except for Greater China, which fell by 3%. North America was a standout with 30% growth.
Dive Insight:
Nike’s main challenge this year — inventory — is easing after the retailer took aggressive action to clear out old merchandise, according to CEO John Donahoe.
“We believe the inventory peak is behind us,” Donahoe said on a call with analysts. Chief Financial Officer Matt Friend said inventory spend and volumes are down and that the company is “pleased” with the progress it’s made to normalize inventory levels.
“As transit times stabilize, we are optimistic that we will begin to see a more normal and predictable flow of supply in a more capital efficient manner,” Friend said.
The retailer touted its strong wholesale relationships in the quarter as well. Donahoe noted that the retailer had met with new Foot Locker CEO Mary Dillon, in addition to other wholesale partners, to plan out its strategy in those channels. Nike’s relationship with Foot Locker has been in flux as Nike shifted more of its attention to its direct channels and Foot Locker likewise looked to diversify its product assortment.
“There’s a lot of excitement, I would say, with our wholesale partners and what we can accomplish together,” Donahoe said.
As usual, direct-to-consumer growth was an emphasis for the retailer. The company’s digital business continued to soar, growing 25% in the quarter, which Donahoe highlighted is happening amid a slower overall e-commerce market. And the company is continuing to invest in stores. Nike in November opened its first Rise concept in North America, in what the company called its “next stage” of expansion, and a stand-alone Jordan concept in Milan opened last week.
Nike has had a somewhat tumultuous fall. Early in November, the retailer suspended its partnership with basketball star Kyrie Irving and pulled the upcoming “Kyrie 8” shoe release over antisemitism concerns, then officially cut ties with the celebrity about a month later.
Also in November, Nike lost its third diversity chief in two years, as Jarvis Sam departed the position after about six months in the role. The departure comes as Nike is still battling a gender discrimination lawsuit from 2018. A judge recently recommended the case not be considered a class action lawsuit.
