As retailers lap the start of the pandemic last year, many earnings results are reporting high sales increases. Nike is no exception, with 96% revenue growth over last year and 21% over 2019, leading to $12.3 billion in revenue for Q4.
Full-year revenues surged well past last year and the year before, rising 19% to $44.5 billion, a nearly 14% increase over 2019 revenue, according to a company press release. The sports giant is now expecting 2022 revenue to hit over $50 billion, Chief Financial Officer Matt Friend said on a call with analysts.
As with previous years, Nike is honing in on digital and DTC. The company is expecting to reach 50% digital — through its own channels and its partners — by 2025 (from 35% now). DTC is currently nearly 40% of the business, and will be 60% by 2025, Friend said.
Nike on Thursday hit several big numbers across multiple parts of the business: North American revenue grew over 140% and had its first $5 billion quarter; the Jordan brand hit close to $5 billion for the year on the back of 31% growth; the women's business grew 22% over the year; and Nike has now amassed over 300 million members.
The way forward is much the same as it's always been of late: Relying on digital as the "leading channel for growth," growing DTC, and focusing on growth opportunities for the women's business, apparel, the Jordan brand and international.
"Our goal isn't merely to take market share. Our goal is also to grow the entire market," CEO John Donahoe said on the call.
That includes through the retailer's recent campaign encouraging customers to try out new sports, which Nike targeted specifically at the emerging Gen Z demographic through channels like TikTok and Snapchat. Donahoe also stressed that its first shoe with Zion Williamson, the Zion 1, is the first "Gen Z signature shoe."
Nike is doubling down on its DTC and digital-led strategy, citing Nike Direct growth of 120% in Q4, alongside Nike Digital growth of 50%. Digital has more than doubled over the past two years and now sits at over $9 billion, according to Donahoe.
"The brand's increasing focus on direct-to-consumer (DTC) has proved fruitful, as FY NIKE Direct sales increased by 32.2% to make up 38.7% of total NIKE brand revenue," Emily Salter, senior retail analyst at GlobalData, wrote in an emailed client note. "This strategy is highly beneficial as it gives NIKE a greater ability to build its relationship with consumers and shape its brand image."
Increased membership and member demand is helping drive that growth. The company's SNKRS app grew by more than 90% in demand and nearly 80% in monthly active users in the quarter, and the retailer is continuing to make a bid for more members through its Nike Live stores, which feature an app-driven in-store experience.
The concept is also helping the retailer pursue its other growth areas, with Nike Live stores drawing in nearly 50% women's sales — 15 points higher than other stores, according to Friend. More Nike Live stores is only one investment in the women's business, with the investment of "far more resources" to come, Donahoe said. The Jordan women's business also nearly tripled in Q4.
Of course, the flip side of Nike's direct-to-consumer strategy is its move out of wholesale, which will continue. The company expects wholesale revenue to be flat year over year. Far from being over, Credit Suisse's Michael Binetti sees the culling of brand partners accelerating.
"We think Nike is increasing the magnitude of its prior plan to exit undifferentiated wholesalers — particularly in the US — with plans to exit even larger accounts in FY22 and FY23," Binetti said in emailed comments.