Focus on digital helps drive Nike’s quarterly performance growth
NikeInc focuses on promoting the development of the group’s business in speed, innovation and digitalization, the so-called TripleDouble strategy, which will help Nike achieve strong growth in its third quarter performance.
Nike Inc, headquartered in Beaverton, Oregon, USA, saw revenue grow by 7% to US$9.6 billion in the three months ended February 28, 2019, compared with A year ago, it was a high of $898 billion, an increase of 11% on a currency-neutral basis.
NikeBrand revenue reached US$9.12 billion, an increase of 8% compared with the same period in 2018 and a growth of 12% on a currency-neutral basis, driven by wholesale business and NikeDirect (product categories Driven by performance growth including Sportswear and Jordan, the footwear and ready-to-wear segments continue to maintain double-digit growth.
But although Nike’s largest market, North America, its sales increased by 7% to US$3.81 billion, it was still lower than expected and lower than the 8.5% growth rate in the previous quarter. .
Nike also achieved 6% revenue growth in Europe, the Middle East and Africa; 19% in Greater China, achieving double-digit growth for the 19th consecutive quarter; in Asia-Pacific and Latin America accounted for 3%.
Meanwhile, for Converse, revenue fell 4% to $463 million, down 2% on a currency-neutral basis, Asia and Digital Both businesses achieved double-digit growth, which just offset the decline in business in the United States and Europe.
Gross profit margin increased 130 basis points to 45.1% due to higher average selling prices, favorable changes in foreign exchange rates and the growth of Nike Direct, partially offset by higher product costs.
Compared with a loss of $921 million a year ago, the company returned to profitability this quarter, with net income reaching $1.1 billion.
Mark Parker, Group President, Chairman and Chief Executive Officer, pointed out that we have the ability to accelerate the momentum of business development to rapidly expand the scale of innovation and expand new products globally. Digital consumption experience.
Digitalization drives Nike to make full profits
Parker talks with analysts said in a conference call that digital tools assist product development teams in driving the company’s overall operational efficiency.
He explained: We have fully digitized the color palette of more than 6,000 footwear materials within the company, allowing our design teams to build a collaborative environment. basis and be able to cater to market trends faster. Reducing physical proofing can minimize the impact on the environment and really plays an important role.
Overall, advanced digital tools are reducing lead times, creating faster design cycles, and minimizing environmental impact by reducing physical samples.
The company also conducts comprehensive digital labeling and tracking of Nike products from production to retail. Our RFID (Radio Frequency Identification) initiative is an important step in increasing product visibility and integrating our diverse ecosystem of physical and digital experiences, distribution centers and contract factories.
This will help consumers obtain products in a more convenient way, and enable Nike to cater to global supply and demand more accurately, ultimately intensifying overall operational optimization and moving towards higher quality growth. .
We see the company’s early wins hinged on our investment in digital transformation, which is bringing success to every aspect of our TripleDouble strategy (2XInnovation, 2XDigital, 2XSpeed) to achieve considerable output. What’s exciting is that the more we invest in stronger digital capabilities, the more growth opportunities we find. Today’s consumers will reward retailers responsively for purchasing agility.
Parker added: The companies that adjust the direction of digitalization and large-scale operations the fastest are the companies that grow the fastest. To this end, Nike is focusing on the value chain from factory partners to major cities, where we can take advantage of the most important opportunities within the company itself.
At the factory level, this means that raw materials can be organized and allocated more quickly to meet the demand for popular products. We did this in anticipation of athlete LeBron’s move to a new team last summer, and shortened jersey delivery times by nearly half.
This process is an important and key component of Nike’s promotion of 2XSpeed initiative, and plans to “create a global-based platform in 12 major cities and 10 major countries around the world” “A wide range of localization business” that can quickly adjust items according to the needs of local consumers.
Another important 2XSpeed enabler is ExpressLane, which supports major cities with hyper-local products and faster fulfillment lead times to drive Higher full price sales.
In fact, in the third quarter, ExpressLane was responsible for more than half of the Nike Lunar New Year series products in Greater China.
In the North American market, the top ten NikeApp applications are all from ExpressLane; Parker said that in Europe, the Middle East and Africa (EMEA), it contributed more than 20% business. ExpressLane is just one of the ways we are driving value chain flexibility to meet consumer demandone. We also invest in responsible manufacturing and the ability to provide faster delivery in major cities.
Nike also stated that the group’s strong supply and demand management system fully reflects the “healthy inventory” situation in all regions, with inventory growing by only 1% at the end of this quarter.
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