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)

And that brings me to the third competitive advantage I’d like to talk about, and that’s our ability to make meaningful connections with consumers. And that really is key, as those connections ensure we continue to be the brand of choice for consumers. We connect with consumers in a number of ways through digital…, which allows us to listen to the athlete and build communities and services that help expand the experience of sport… through key events, which brings consumers together to experience their favorite sport with others as passionate as they are. And through our retail stores, where we can interact directly with our consumers as they decide which products are best for them.

A great example of these consumer connections is taking place in a market I recently visited and that’s Russia. I feel great about the work our team is doing there. The energy for the NIKE brand is incredible and that stems from the meaningful connections we’re making with consumers. And we’re helping to increase activity levels and bring greater access to sport.

Let me share a few examples from Running, a category where we’re bringing tremendous energy and seeing participation levels rapidly increase in Russia. We had “Run Moscow” and other NIKE “We Run” events, which bring out thousands of runners and the “Summer of Running” digital campaign created connections that last long after the last runner crosses the finish line. These are just a few examples that show how NIKE is making meaningful connections with those consumers and it is really no coincidence that we see our revenues and futures growing at double-digit pace in Russia, quickly gaining share and growing the market. These are the kind of connections that excite us, our consumers and ultimately serve as building blocks to grow our business.

And that brings me to the final point I want to make today, and that’s how we use these three competitive advantages — our ability to innovate, the power of our portfolio and our ability to connect with consumer to build our business. We do that by focusing on the greatest opportunities for growth.

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Looking ahead, there are both risks and opportunities for NIKE. However, we’re confident we have the strength across our brands, businesses and balance sheet, as well as a deep, experienced team to manage the risks and seize the opportunities.

So thanks everybody and now I’m happy to welcome Trevor Edwards, our new NIKE Brand President. As you know, Trevor is new to this call, but he is certainly not new to NIKE. Trevor brings two decades of NIKE experience to the role, as well as a relentless focus on the consumer and a deep knowledge of the category offense.

And with that, I’ll turn it over to Trevor to take you through the results of the NIKE Brand. Thank you.

Trevor Edwards – President, NIKE Brand

Thank you, Mark. As I start my new role and after more than 20 years with NIKE, it’s exciting to see so much opportunity in front of us. And we are focused on realizing that opportunity. At NIKE, we always start with the consumer and as we’ve shared before our category offense brings us closer to the consumers. It focuses our teams and underscores our competitive advantages: Our pipeline of innovative products to make athletes better, our ability to create deep and meaningful connections with consumers and our capability to elevate and transform the marketplace creating more space and more opportunity for our brand to grow.

This is the complete offense we often talk about. It’s the foundation of our growth strategy and allows us to continue to drive growth in both developed and developing markets. It’s a strategy that only NIKE can execute at such a global scale and it’s the basis for the strong financial performance we share today.

So on a constant dollar basis, NIKE brand revenue was up 7% for the quarter with growth across most of our key categories and geographies, except Greater China. NIKE Brand DTC revenue increased 18% for the quarter with comp growth up 9% and online sales up 12%. And in addition, our Global Futures grew 10%.

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Our strategies are working and our portfolio of businesses delivered during the quarter across product types, geographies and categories. Now let’s focus on three of our key geographies.

Our business in North America continues to be a tremendous source of growth for the NIKE Brand. North America provides a great benchmark for what is possible around the world. We continue to deliver innovative products, we deepen our consumer connections, we elevate our distribution strategies in the market and in our largest and most penetrated market, we continue to see further opportunities to grow.

For the quarter, revenues grew 9% to $3 billion and we grew in all key categories, except Golf. Our two biggest categories Basketball and Running led the growth, continuing their double-digit rate and it was very profitable. We continue to grow in North America, because of our focus on leveraging an integrated, yet differentiated marketplace as we consistently work to provide unique consumer experiences across wholesale, DTC and online. We are able to expand both the market and our share. This integrated approach ensures we continue to maintain a strong pull market and drive profitability.

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