NIKE(NKE) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - NIKE, Inc. reported a revenue growth of 17% on a reported basis and 27% on a currency-neutral basis for Q2 2023 [7][33] - Gross margin declined by 300 basis points to 42.9%, primarily due to higher markdowns and increased costs [34] - Diluted earnings per share for Q2 was $0.85 [35] Business Line Data and Key Metrics Changes - NIKE Direct grew by 25%, with NIKE Digital up 34% and NIKE stores up 11% [33] - Wholesale revenue grew by 30%, driven by strong demand for seasonal products [33] - In North America, revenue grew 31% on a currency-neutral basis, with NIKE Direct growing 23% and wholesale revenue growing 37% [36] Market Data and Key Metrics Changes - North America saw over 30% currency-neutral growth, while EMEA grew 33% and APLA grew 34% [9][39][42] - Greater China reported a 6% growth on a currency-neutral basis, despite challenges [40] - Membership was a key driver for digital growth, with a 34% increase in digital business [18] Company Strategy and Development Direction - The company is focused on product innovation and deepening consumer connections to drive growth [11][28] - NIKE's strategy includes a Consumer Direct Acceleration approach, enhancing direct connections with consumers [16][17] - The company is committed to investing in Greater China for long-term growth, focusing on local relevance [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate current headwinds, citing structural tailwinds such as digital growth and cultural shifts towards health and wellness [11] - The company anticipates continued strong consumer demand and is optimistic about future growth despite macroeconomic uncertainties [44][80] - Management highlighted the importance of maintaining a healthy inventory and positioning for sustainable growth [32][70] Other Important Information - The company achieved record-breaking performance during key shopping events like Black Friday and Cyber Week [25][39] - NIKE's membership base has grown to approximately 160 million active members, driving significant engagement and repeat purchases [18][19] Q&A Session All Questions and Answers Question: Insights on North America growth and clearance efforts - Management noted strong growth in North America, with ASPs up and a focus on apparel liquidation [49][50] Question: Future inventory levels and normalization - Management expressed confidence in inventory progress, with a focus on reducing excess inventory and improving supply flow [52][54] Question: Brand heat and market share gains - Management emphasized leveraging competitive advantages and strong product innovation to sustain momentum [56][57] Question: Next phase of membership journey - Management discussed the importance of connected membership and enhancing consumer engagement across channels [62][63] Question: Path forward in China - Management highlighted strong consumer connections and confidence in future growth despite short-term uncertainties [68][70]