Nike reported Thursday that third quarter revenues increased 7% to $9.6 billion, compared to $8.98 billion in the year-ago quarter, according to a company press release. By brand on a currency-neutral basis, Nike revenues were $9.1 billion, up 12%, while Converse revenues were $463 million, down 2%.
Net income for the quarter was $1.1 billion, up from a loss of $921 million in the year-ago quarter. Gross margin increased 130 basis points to 45.1%, driven by higher average selling prices and growth in Nike Direct, among other factors. Increased revenues at the Nike brand were driven by the Sportswear and Jordan categories, as well as "continued double-digit growth across footwear and apparel."
Also this week, a former employee, Ahmer Inam, filed a lawsuit against the athletics retailer in Oregon alleging racial discrimination, according to online records of the filing. A Nike spokesperson said the company couldn't comment on the complaint, "but Nike is committed to creating a culture of empowerment and respect where everyone can succeed and contribute to our success."
The new racial discrimination suit filed against Nike is one in a series that have been filed against the retailer alleging a toxic workplace culture. A class action sex discrimination lawsuit filed by two former female employees in August called national attention to the retailer's practices and caused a mass exodus of executives at the company after internal reviews.
This newest legal action not only raises renewed questions about Nike's workplace culture, but also makes recent marketing efforts, geared toward diversity and inclusion, feel flat. Nike has taken the heat — and praise — for some of its marketing choices, including the Colin Kaepernick campaign it ran last year, but a sex discrimination suit followed by a racial discrimination suit challenge the notion that the company is truly promoting those values.
That being said, up to this point, the sex discrimination suit does not seem to have impacted Nike's sales. In a conference call with executives, CEO Mark Parker said that the women's business is over-indexing the growth in men's and that the new Air Max Dia, a women's-specific design, "is performing extremely well across the globe."
"We see women embracing the sneaker culture more and more every day," he said, according to a Seeking Alpha transcript. "So we're scaling up popular models and creating new models for women specifically and the response, like with the Air Max Dia, for example, one of the newer models has been tremendous. Also, great opportunity in apparel. We've had real strong response to the Nike yoga collection and the tight business."
He also announced the brand would be launching more than 40 new styles of bras "to expand our inclusive sizing" and noted that the plus-size area was another focus for the business, as the company is "seeing strong consumer demand there."
Executives also discussed the company's store concept initiatives of late, including its Nike House of Innovation flagship, in Shanghai and New York, and it's Nike Live concept, which launched in Los Angeles. Thanks to those concepts, growth in New York and LA is over-indexing the broader market, executives said. Both concepts rely heavily on the retailer's app, and Parker noted that consumers using that app spend an average 40% more than those that don't.