Nike's CEO Mark Parker's latest report underscores the first billion-dollar quarter for the Jordan brand.
Nike, the world-renowned athletic wear company, has announced a series of significant changes and reported impressive financial results for its second quarter.
During a call with analysts, outgoing CEO Mark Parker highlighted the strong opportunity in the apparel market, particularly for the growth of the Jordan and Converse brands. He stated that developing these brands would help take pressure off Nike to be everything to everybody.
One of the most notable changes is the decision to sell off the Hurley brand to further sharpen Nike's focus. This transition is set to occur on January 13, the same day that Elliott Hill takes over as the new CEO, replacing John Donahoe. Donahoe, former CEO of eBay, will take on the top spot at Nike, with Mark Parker stepping into an executive chairman role.
The quarter saw a 10% revenue increase for Nike, reaching $10.3 billion. By brand, Nike revenues were $9.8 billion, up 10% due to wholesale and Nike Direct growth, sportswear, running, and the Jordan brand. The Jordan brand recorded its first billion-dollar quarter, a significant milestone for the iconic brand.
Digital sales played a crucial role in Nike's success, growing by 38% in the quarter. The Nike and SNKRS apps are now live in more than 20 countries, contributing to this growth. In North America, digital sales grew 70% during Black Friday, setting a new record for the company.
Net income in the quarter increased by 32% to $1.1 billion, and gross margin was up 20 basis points to 44%, due to higher average selling prices and margin expansion in Nike Direct and Converse. Apparel grew 8% in the quarter, and Converse revenues increased by 13%.
However, Nike has announced its intention to stop selling on Amazon, with Mark Parker mentioning the need for customers to know they're buying authentic Nike product from authorized retailers. Amazon did not fit into Nike's partner mold, suggesting that this decision was based on the company's commitment to maintaining its brand integrity.
North America revenue grew by 5% to $3.98 billion, reflecting the strong performance of the company in its home market. Despite the changes, Mark Parker emphasized that the best time to make change is from a position of strength, and that Nike's brand and business are as strong as they've ever been.
These changes and results mark a new chapter for Nike, as it continues to adapt and grow in the ever-evolving world of athletic wear.
