Home » Nike (NKE) Q1 2015 Earnings Results Conference Call Transcript

Nike (NKE) Q1 2015 Earnings Results Conference Call Transcript

First, our relationships with athletes and consumers are unparalleled. By relentlessly focusing on what they want and need, we propel our business forward. We use the insights we gain to deliver the products, services and experience athletes and consumers want. The lens we use to focus these relationships is our category offense, and the power of that approach is most clearly seen during global sports moments like the World Cup.

These events provide us with the opportunity to showcase our most innovative products, as the world’s greatest athletes inspire us with their performance and their passion. They also create remain energy throughout the year, as we leverage these innovations and athlete stories to deliver compelling products and experiences to consumers through their favorite sports.

As I think about the evolving consumer landscape, there are a number of trends that play to Nike’s strengths. The middle class is growing around the world. Interest in sport continues to grow, and consumers are investing more and more in their own health and fitness.

Apparel and footwear styles are becoming increasingly athletic. Because we know the consumer better than anyone else, we’re able to leverage these developments to accelerate our growth. The result – we turn trends into real business momentum.

Second, let’s talk about innovation. At the heart of our ability to achieve long term growth is our unrivaled ability to innovate. Nike delivers impressive innovations because we develop ever-sharper insights from athletes and consumers, and we harness the power of new technologies, designs, and materials.

Our capabilities today are greater than they’ve ever been. Our challenge is to edit and focus those capabilities on the most significant opportunities. And when we do this effectively, we accelerate the pace of innovation, we create competitive separation, and we deliver results, like we did in Q1.

In just the past 90 days, we’ve demonstrated the versatility and potential of our advanced Flyknit technologies, with products in Running, Global Football, Basketball, and most recently, Football in the U.S. The consumer benefits are incredible, and looking ahead, I know the potential for this is significantly increasing the scope and scale of this technology is very, very real.

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We set new levels of performance in apparel with products such as the NIKE Dri-FIT rain jacket, the NIKE Pro collection, and the further extension of our Dri-Fit Knit and collections like NIKE Tech Fleece continue to drive growth and distinction by leveraging technical performance features in the premium sportswear apparel.

We launched the Air Jordan 29, our lightest Jordan ever, bringing a new level of basketball performance to the Jordan brand. And just last week, we expanded the potential of our Zoom Air technology with the launch of the LeBron 12. We have some very ambitious plans for this signature Air technology. I can’t tell you much more now, but I will say that the LeBron 12 is just the beginning of the revolution.

It’s important to understand that NIKE’s innovation agenda goes beyond products. It touches everything that we do. One example is how we’re leveraging the power of digital. The digital world moves fast, and NIKE is at the forefront. We’re employing new ways to engage consumers online as we create communities, services, and ecommerce experiences that fuel our growth strategies around the world.

These strategies are strengthening our relationships with consumers and driving our business, as ecommerce revenues were up over 70% in the first quarter. Going forward, we will innovate at an increasingly rapid pace. We are a growth company, because we are an innovation company. That is why we are committed to sustained investment in this area. We know it fuels the top and bottom line expansion and drives value for our shareholders.

And when I look at our innovation pipeline, I see innovations that will, no doubt, surprise and delight, innovations that are better for athletes, consumers, and the planet. I couldn’t be more excited about what’s coming.

The final competitive advantage I want to highlight is the power of NIKE’s portfolio. It’s a complete offense that encompasses brands, geographies, categories, product types, and channels. When all these components are working together, the portfolio generates amazing growth, and when we double and triple click into the various dimensions of our business, we see even more potential.

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The diversity within our portfolio is a tremendous competitive advantage. It allows us to thrive in a rapidly changing environment, create separation, and ultimately expand the market. Trevor will discuss the NIKE brand’s outstanding Q1 results in more detail, but let me give you three highlights from my point of view:

One, the Nike brand is strongly resonating with consumers around the world. We’re delivering robust growth and profitability in some of our largest geographies, maintaining momentum in North America, accelerating growth in Western Europe, and turning the corner with strong results in China.

Two, our category offense is accelerating growth. Our largest performance businesses – running, basketball, and global football continue to expand. Sportswear grew at a strong double-digit rate, and our women’s and young athletes businesses grew rapidly, in fact, faster than our men’s business.

And three, we’re driving growth across an integrated marketplace. DTC revenues grew over 30% in the quarter, and our wholesale business grew double digits, reflecting strong growth in stores and online.

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