Nike, alongside other brands like Foot Locker, has begun to roll out their financial reports from the last fiscal quarter and The Swoosh is showing strong signs of recovery since reporting a 43% year over year increase in inventories equating to $9.3 billion in 2022’s Q2 report.
As we’ve seen over the last few years, Nike has made a large push for direct-to-consumer sales, allowing for higher profit margins and their “Consumer Direct Acceleration” strategy proving successful. Direct sales for the brand sit at $5.3 billion dollars, up 22% on a currency-neutral basis compared to Q3 2021. The company’s revenue for Q3 was $12.4 billion, up 14 percent compared to the prior year. Most of the growth came from its Footwear category across its regions. During the FY 23 Q3 conference call, Nike CEO, John Donahue, mentioned that Nike’s performance category outperformed its lifestyle category thanks to double-digit growth in runners like the newly introduced Invincible 3, its Air Jordan Brand, and its strong basketball portfolio, describing Nike Basketball as an “embarrassment of riches.”
Although these numbers saw an increase, net income overall was down 11% compared to the year prior with The Swoosh raking in $1.2 billion. Inventory, which was a problem last year for The Swoosh, is being reduced as it now sits at $8.9 billion compared with Q2’s $9.3 billion. Matthew Friend, Executive Vice President and CFO, said, “We have made tremendous progress on inventory as we position Nike for sustainable and more profitable growth.”
Even with some of these numbers falling slightly, Nike’s growth in the wholesale sector proves promising. As CEO John Donahoe puts it, “Our wholesale channel continues to be an important part of our strategy as we access key consumer segments and achieve distribution scale across the marketplace.” Partnerships with wholesale partners like Dick’s Sporting Goods and their Connected Membership Program were highlighted as opportunities for continued growth while not inhibiting Nike’s Consumer Direct Acceleration strategy. Revenue for wholesale was up 12% on a currency-neutral basis.
Nike’s CDA strategy was described by John Donahue as, “Fueled by compelling product innovation, deep relationships with consumers and a digital advantage that fuels brand momentum, our proven playbook allows us to navigate volatility as we create value and drive long-term growth.” And thus far, it seems to be paying off. While it’s too early for a 2024 financial outlook their strong FY 23 Q3 performance surely puts them in a great position.
Sneakerhead from South Florida who turned his passion into a career. Concerts, music, trying new restaurants, and catching the latest movies are some of the things I enjoy when not writing for Sole Retriever. Email: nick@soleretriever.com
