Home » Nike Inc. (NYSE:NKE) Reports Fiscal 2014 First Quarter Results Earnings Call (Transcript)

Nike Inc. (NYSE:NKE) Reports Fiscal 2014 First Quarter Results Earnings Call (Transcript)

So how are we able to succeed in a challenging global economy? By focusing on the fundamentals — the competitive advantages that help us win and expand our leadership position. Today I want to highlight three — our ability to innovate, the power of the NIKE Inc. portfolio and our ability to continue to make meaningful connections with consumers.

So let’s take a look at the first one — our ability to innovate. It’s what fuels our growth and it always starts with the athlete. How can we make the athletes faster, stronger, better and help them push themselves to new levels of performance.

In Q1, we launched a whole array of products that deliver on that promise, including the Nike Free Flyknit, the next-generation of Flyknit products in our running category. This shoe demonstrates how we take Flyknit and combining it with other footwear platforms, like Free in this case, to continue to innovate and serve the athletes. As you’ve heard me say before, Flyknit is high-performance visually iconic, and manufactured in ways that reduce labor and waste. We’ve seen a strong response from runners to the Free Flyknit and we look to continue to drive innovation using this revolutionary upper technology both in the running category and beyond. The potential for Flyknit is tremendous and it’s safe to say, it’s going to be a big year for Flyknit.

We launched the Hypervenom football boot, which features revolutionary design changes to improve the fit, touch and traction of the boot. This allows the player to have better ball control and improved agility on the pitch. And as Trevor will detail, the Hypervenom has resonated with consumers making it the most successful boot launch in NIKE history.

We also extended our offering of Dri-FIT Knit, incorporating different knit patterns to improve breathability while maintaining a seamless construction and comfortable fit. This product is one of many that have helped accelerate our premium apparel growth. And we brought a new level of sophistication and performance to fleece with the NIKE Tech Pack, a new line of premium apparel that delivers better fit, breathability and comfort by leveraging construction methods originally developed for technical performance product. The Tech Pack is quickly becoming the go-to product for consumers, and will be a big driver of growth for our sportswear category going forward.

ALSO READ:   Constellation Brands' (STZ) CEO Robert Sands on Q2 2015 Results - Earnings Call Transcript

This is only a small sample of our new products. We’re accelerating our innovation agenda and it’s paying off. And there is a lot more to come, including some real breakthroughs and game changers, over the balance of this year and into the future.

The second competitive advantage I want to highlight is the power of our NIKE Inc. portfolio. We’ve built the company with a focused group of high energy consumer-relevant brands that create opportunity in the world of sport and youth culture. We leverage these brands across geographies and categories, further dimensionalizing the business. And we create innovative products to serve the consumer in their chosen sports all over the world. The breadth and depth of the NIKE Inc. portfolio is unmatched in our industry. And that means we’re able to manage risk and deliver growth even when there is variability in the results of any of the individual components.

We’re able to leverage the strength in some areas of the business while investing in others, all with a focus on delivering sustainable, profitable growth at the NIKE, Inc. level. And our Q1 results reflect just that. We delivered a great quarter, which Trevor and Don will discuss in more detail. However I’d like to highlight two specific areas of our portfolio and that’s Converse and China.

Let me start with Converse. Converse delivered tremendous growth in the quarter with revenue up 18% and EBIT up 36%, contributing incremental growth to NIKE, Inc. on top of the strong performance of the NIKE Brand. Converse is a brand that has been bringing energy and style to consumers for many years and the opportunities ahead are even greater. We continue to diversify the Converse portfolio, expand the brand’s reach with new market conversions, grow the DTC business and unlock growth in apparel. I see tremendous long-term growth potential for the Converse brand.

ALSO READ:   Amazon.com's (AMZN) Management on Q2 2014 Results - Earnings Call Transcript

Now let me turn to China. The NIKE Brand remains on top as the leading sport brand in China, as we continue to make progress on repositioning this market for long-term sustainable growth. I have to say, I’m truly excited about the progress we’re making in this key market and the opportunity it represents. We’re laying a strong foundation and mastering the fundamentals that will enable the next wave of growth in this very dynamic market.

I’m seeing a whole new level of engagement with our wholesale partners as we work together to increase store productivity by creating a pull market fueled by amazing product and elevated retail presentation. We’re increasing the power of our category offense by focusing our assortment with a greater level of precision on the sports and the products that mean the most for the Chinese consumer. And in those stores that have been retrofitted to the new product assortment, we’re seeing performance that significantly outpaces the rest of the fleet.

The knowledge we’ve have gained from these early results can be leveraged and scaled to drive significant improvement across the entire market. And together with our partners, we have a shared vision. We both know the companies that will win in China are those that build their brand, capabilities, and connections with consumers.

Pages: First | ← Previous | 1 |2 | 3 | ... | Next → | Last | Single Page View

Leave a Comment

Scroll to Top