In its fiscal 2024 first quarter conference call, Nike , Inc. (NYSE:NKE) reported significant growth, a healthy inventory, and a strong focus on digital transformation. CEO John Donahoe and CFO Matt Friend highlighted the company's growth from $39 billion in fiscal '19 to over $50 billion, outpacing the industry. The company expects healthy profitable growth for the full year, with reported revenue expected to grow mid-single digits and gross margins to expand 140 to 160 basis points.
Key takeaways from the call:
- Nike's revenue grew 2% on a reported and currency-neutral basis in Q1.
- Retail sales across Nike Direct and Wholesale grew mid-single digits compared to the previous year.
- Nike's inventory is healthy, with inventory dollars down 10% and total inventory units down double digits.
- Nike Direct led the growth, with sales up 6%. Nike Digital grew 2%.
- In North America, revenue declined 1%, with wholesale down 8% and Nike Direct up 7%.
- In EMEA, revenue grew 6%, and in Greater China, revenue grew 12%.
- Nike expects healthy profitable growth for the full year, with reported revenue expected to grow mid-single digits and gross margins to expand 140 to 160 basis points.
The company reported growth in full-price sales, with strong performance in products like G.T. Jump, Sabrina 1, Invincible, Vomero, and retro running styles. In the APLA region, Q1 revenue grew 3%, with Nike Direct up 3%, Nike stores up 10%, and Nike Digital declining 3%.
Nike's executives discussed their approach to running innovation and their plans to reignite interest in the category. They also highlighted the success of their mobile app, which saw high single-digit growth in traffic and increased member engagement and buying behavior.
In terms of specific regions, they are seeing strong growth and profitability in China, but foreign exchange headwinds have impacted their reported numbers. However, they believe the fundamentals for long-term growth and profitability in China are strong. The company anticipates increasing margin expansion in the second half of the year due to lower product costs, the impact of ocean freight, and reduced foreign exchange headwinds.
Nike's marketplace strategy includes a focus on digital properties, direct retail, and strategic wholesale partners. The company is investing in regional service centers and pickup points to improve its supply chain and serve consumer demand more efficiently. Nike is also implementing its ERP system to modernize its operations and improve speed across the marketplace.
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