The sportswear maker credited the ‘through the roof’ spike in the three months to August to sales from its NikeID customisation service, women’s merchandise and running apparel. Nike gave special credit to its Training Club app for women, which has been downloaded 17 million times, for driving demand for its apparel.
It said the “tremendous growth online” reaffirmed the channel’s status as a “top priority” for “growth and profitability”. Teams across the business are “squarely focused” on using the data gleaned from the services to inform future investments, which the company added will cover updates to the Nike Training Club concept, online stores and digital style guides.
Trevor Edwards, president of Nike Brands, told analysts on a conference call yesterday evening (26 September), that its online platforms would not cannibalise its wholesale or retailer partnerships. Updates are focused on creating an integrated marketplace rather than forcing customers to choose which channel they use, he added.
“Direct-to-consumer plays a role that’s been a complementary part of the marketplace. So we’re able to actually bring more dimension to the market by serving unique segments. And that allows the market to be more segmented and more differentiated”, added Edwards.
“The other piece that we’ve talked about is the idea of us being a better retailer ourselves, so we can be a better wholesale partner. And that is actually working, so we’re able to transfer a lot of the learnings that we have done in our own stores, working with our retail partners around the world to accelerate their businesses too. To put it simply, Q1 was a great quarter, and we’re just getting started.”
The ecommerce performance helped Nike’s total revenue sprint past analysts’ expectations for the quarter. Revenue rocketed 15 per cent year-on-year to $7.15bn (£4.4bn) an increase that laid to rest concerns that increased marketing around the World Cup would dampen profits. Profit increased 23 per cent in the period.
While marketing spend, dubbed “creation expense”, was $897m (£549m) for the quarter, up 23 per cent on the same period last year, the World Cup campaign helped drive double digital revenue growth for its football boots, shirts and merchandise ranges. Nike also reported double digit growth for its running and womenswear range.
The business also cited gains in key markets for driving demand. Western Europe posted a 25 per cent jump thanks to “critical” partnerships with JD Sports, Foot Locker, and Intersport, who Nike said have differentiated the brand with consumers. Revenue in North America and China rose 12 per cent and 20 per cent respectively.
Separately, Converse sales rose 16 per cent to $575 (£352m) million.
Mark Parker, president and chief executive of Nike, said: “It’s important to understand that Nike’s innovation agenda goes beyond products. It touches everything that we do.
One example is how we’re leveraging the power of digital. The digital world moves fast, and Nike is at the forefront. We’re employing new ways to engage consumers online as we create communities, services, and ecommerce experiences that fuel our growth strategies around the world.
“Going forward, we will innovate at an increasingly rapid pace. We are a growth company, because we are an innovation company. That is why we are committed to sustained investment in this area. We know it fuels top and bottom line expansion and drives value for our shareholders.