Nike to test Jordan-only stores in North America
Nike continues to invest in its direct-to-consumer business.
The athletic footwear and apparel giant, which reported better-than-expected third-quarter revenue and sales despite supply chain problems in China, will test a Jordan-only store concept in North America, starting in fiscal 2023. The format will leverage “a popular consumer experience that has been wildly successful in Greater China, the Philippines and Korea,” Nike CFO Matthew Friend said on the company’s earnings call.
“Our approach is to first pilot these new concepts, iterate and perfect, and then move to scale,” Friend told analysts.
The company will also continue to invest in its Nike stores to grow the Jordan and women’s business, both being areas where it sees opportunity.
“Just to repeat, we believe in the North America marketplace in particular,” Friend said on the call. “There's a real need around women's, around Jordan and around some higher-end apparel where our mono-brand stores, particularly Nike Live concept, the 5,000- to 6,000-sq.-ft. concept can really play a role in neighborhoods around North America. So we think that leads to a healthier marketplace that leads to even accelerated growth.”
Nike has increasingly shifted its business away from wholesalers and to selling more goods directly to consumers via its own physical stores and website. The company has moved to end wholesale accounts with some retailers, such as Urban Outfitters and DSW. In other instances, it has reduced the amount of products made available to existing vendors, including Foot Locker.
Nike reported net income of $1.4 billion, or $0.87 per share, for the quarter ended Feb. 28, compared with $1.45 billion, or $0.90 a share, in the year-ago period. Analysts had expected earnings per share of $0.71.
Sales rose 5% to $10.87, topping estimates for $10.59 billion. Nike direct sales were $4.6 billion, up 15% on a reported basis and up 17% on a currency-neutral basis.
Nike’s wholesale revenue fell 1% on a reported basis and increased 1% on a currency-neutral basis. Revenue at Nike-owned store sales increased 14% year over year, with the company citing “the steady normalization of traffic in owned physical retail.” Nike brand digital sales rose 22%.
"Nike’s strong results this quarter show that our consumer-direct acceleration strategy is working, as we invest to achieve our growth opportunities," said John Donahoe, president and CEO, Nike. "Fueled by deep consumer connections, compelling product innovation and an expanding digital advantage, we have the right playbook to navigate volatility and create value through our relentless drive to serve the future of sport.
Sales in North America rose 9%. Sales in Greater China, Nike’s third-largest market behind its Europe, Middle East and Africa segment, fell 5% from last year.
“Our third-quarter results demonstrate Nike’s ability to navigate through volatility, while continuing to serve consumers directly and digitally, at scale,” stated Friend. “Marketplace demand continues to significantly exceed available inventory supply, with a healthy pull market across our geographies.