Nike’s ecommerce sales grew quickly in the Christmas quarter of its financial year to account for more than a third of sales - helping to offset the impact of brand store closures and supply chain disruption.
Its own direct online sales grew by 20% to $4bn (£2.9bn), while digital sales of the Nike brand - including by third-party retailers - grew by 59%.
Ecommerce growth helped to offset a lower rate on growth in some markets, and third quarter sales at the retail brand grew by 3.6%, to $10.4bn (£7.5bn) in the third quarter to February 28. Sales grew in Greater China (+51%) but fell in the US (-10%) as a result of factors including supply chain challenges. Global container shortages and US port congestion had a knock-on effect on wholesale shipments. European sales were also down (-45%) as 45% of Nike-owned stores in the region were affected by Covid-19 lockdowns. Net income of $1.4bn (£1bn) was 71% up on the same time last year.
Matt Friend, executive vice president and chief financial officer at Nike, a Top250 retailer in RXUK Top500 research, says: “Nike’s brand momentum is as strong as ever and we are driving focused growth against our largest opportunities. We continue to see the value of a more direct, digitally-enabled strategy, fuelling even greater potential for Nike over the long term.”
Nike president and chief executive John Donahoe says: “Nike continues to deeply connect with consumers all over the world driven by our strong competitive advantages. Our strategy is working, as we accelerate innovation and create the seamless, premium marketplace of the future. I’ve never been more confident in our leadership and teams to operate with agility in a dynamic marketplace.”
Commenting, Emily Salter, retail analyst at data and analytics company GlobalData, says: “A key component of Nike’s sales growth is its greater focus on direct-to-consumer (DTC) channels, with a 20% increase in Nike Direct revenue in Q3, making up 38.5% of its total sales. This is a smart strategic move that will benefit the brand in the long term as it gives it greater control over its brand image and connection to consumers.
?The brand’s strong digital proposition is essential to this DTC growth, with its highly competitive online offer featuring a slick website and free home delivery for Nike members. Nike is also smart to use digital channels to forge greater engagement with its shoppers, through its Trained podcast and array of fitness apps that will have surged in popularity during lockdowns.”
Kurt Trauth, SVP of customer experience and analytics at Stratifyd, says: “Nike’s strong Q3 performance continues to reflect the success of its digital-first direct selling strategy. In the athletic apparel industry, Nike is currently a leader in digital customer experience, offering free shipping as well as an industry-leading return window of 60 days. However, as Nike looks to grow through more inclusive apparel beyond the traditional athlete, there needs to be additional innovation to provide a competitive experience.
“Other competitors are already using AI-based recommendations engines to ensure customers select the right size when ordering, which has been crucial during the pandemic as consumers avoid in-store shopping, and provides deeper differentiation beyond just free shipping. Companies that innovate on true personalised digital experiences will emerge as the future leaders in the apparel industry.”