NIKE(US:NKE)2023-09-29 01:13Financial Data and Key Metrics Changes - NIKE, Inc. revenue grew 2% on a reported and currency-neutral basis in Q1 2024, with NIKE Direct growing 6% and NIKE stores growing 12% [29][30] - Gross margin declined 10 basis points to 44.2% on a reported basis, primarily due to higher product costs and unfavorable changes in foreign currency exchange rates [29][30] - SG&A expenses grew 5% on a reported basis, mainly due to increased demand creation expenses around the World Cup [30] Business Line Data and Key Metrics Changes - In North America, Q1 revenue declined 1%, with wholesale down 8%, while NIKE Direct was up 7% [31] - In EMEA, Q1 revenue grew 6%, with NIKE Direct also up 6%, and NIKE stores growing 17% [33] - In Greater China, Q1 revenue grew 12%, with NIKE Direct growing 10% and NIKE stores up 12% [34] - In APLA, Q1 revenue grew 3%, with NIKE Direct up 3% and NIKE stores up 10% [35] Market Data and Key Metrics Changes - Retail sales across NIKE Direct and Wholesale grew mid-single digits versus the prior year [21] - Member engagement within NIKE Direct increased double digits compared to the prior year, with rising average order values [22] - In Greater China, the women's business outpaced overall growth in the quarter, driven by strong community engagement [16] Company Strategy and Development Direction - NIKE aims to elevate the marketplace through premium physical and digital retail experiences, focusing on direct consumer connections [22][25] - The company is committed to innovation in product offerings, particularly in running, basketball, and lifestyle segments, with a strong pipeline leading into the Paris Olympics [27][36] - NIKE is focused on improving profitability through operational efficiencies and strategic pricing, with expectations for gross margin expansion [28][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the health and shape of the marketplace, with expectations for mid-single-digit revenue growth for the full year [36][37] - The company is closely monitoring the operating environment, including foreign currency exchange rates and consumer demand over the holiday season [37] - Management highlighted strong consumer demand and resilience, particularly in the context of the expanding definition of sport and athleisure trends [66] Other Important Information - NIKE's effective tax rate for the quarter was 12%, compared to 19.7% for the same period last year, primarily due to a one-time benefit from U.S. foreign tax credit regulations [31] - The company is focused on scaling a diverse product portfolio for long-term growth, not just for one quarter or season [27] Q&A Session Summary Question: Can you expand on the innovation pipeline for fall of '24? - Management highlighted the impact of in-person collaboration on the product pipeline, with strong innovations in basketball and running categories expected to drive growth [42][43] Question: What is the bigger tailwind for North America right now? - Management noted momentum from both NFL merchandise and college football merchandise as significant tailwinds [45] Question: Can you provide insights on the shaping of wholesale? - Management indicated that NIKE Direct would continue to lead growth, with a focus on maintaining a healthy marketplace [46][48] Question: What are the underlying demand trends as the first quarter progressed? - Management observed mid-single-digit retail sales growth, with strong performance in key wholesale partners and NIKE Direct [59][62] Question: How do you feel about the long-term opportunity for margin? - Management remains confident in achieving long-term profitability goals, emphasizing structural drivers and efficiency improvements [68][70]