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Wednesday, October 2, 2019
Volume 2, Issue No. 18

Nike’s Future Strategy for North American Market

Digital and data-mining, along with tighter bonds with its narrowed cast of strategic and differentiated retail partners, are the keys to the Swoosh’s long-term strategy for North America. Nike, while indicating sustainable profitable growth in the region over the next five years would be in a mid-single digit range, says it will use the next half decade to build  the “platform for the long-term future.” Digital, women’s and core footwear below $100 retail are seen as key growth opportunities, as are new selling prospects on social media platforms such as Instagram.

In Q1 ended Aug. 31, Nike’s North American footwear business grew 4 percent to nearly $2.67 billion as apparel sales increased 2 percent to $1.43 billion. CEO Mark Parker told analysts there was a “little bit of pressure” on apparel supply during the period and the segment’s growth rates will accelerate throughout the remainder of the FY. In all other global geographic regions, period revenue growth jumped by double digits and was paced by a 27 percent increase in Greater China.

With NBA rookie and top draft selection Zion Williamson set to don Air Jordan 34s to start the season, Nike continues to increase engagement with consumers worldwide and sees significant digital sales growth. Since 2016, the company has more than doubled the number of active users across all of its apps. The NIKE app, currently available in 21 countries, is slated to go live in China during the holiday season. Back at home, the same app is being scaled, helping the brand add more than 1 million new members in Q1. During the period, Nike’s digital sales worldwide grew 42 percent on a currency-neutral basis and more than 30 percent in North America.

On the tariff front, Nike confirmed there will negative impacts from tariffs for the remainder of the fiscal year with Q2 being the most significant.

“We’re a big proponent of free and fair trade and that’s because tariffs have always been part of the financial equation at Nike,” Parker told analysts. “So with a little bit of time we have a lot of levers we can work with from sourcing to other levers.”