• Loading stock data...
Friday, December 13, 2024

Sneaker Demand Fuels Nike Earnings

  • Among the basketball shoes flying off the shelves at Nike in the company’s fiscal second quarter are limited-edition Jordans, plus LeBron James and Kyrie Irving’s signature sneakers.
  • China led all international markets in overall sales growth at 23%, amid continuing political tensions in Hong Kong, according to NIKE CEO Mark Parker.
lebron lakers
Photo Credit: Jayne Kamin-Oncea-USA TODAY Sports

Nike saw significant growth in the second quarter of its fiscal 2020 year, as sales grew by double-digits in each of its core markets. 

Demand for limited-edition Jordan sneakers propelled the popular shoe line to its first billion-dollar quarter, according to the company. In recent months, Nike has steadily rolled out multiple variations of the original Air Jordan 1 in different colors which fans have gravitated to, it said.

“Our deliberate strategy is to add new styles and colors to the Air Jordan 1, which allows us to bring one of the world’s most popular sneakers to more people while offering consumers more choice,” said Nike CEO Matt Parker, on an earnings call with analysts.

Other shoes flying off the shelves at Nike include new versions of its Air Max line – the Air Max 270, 720, and the 200 – which all debuted in the last year. New basketball shoes for Nike athletes Kyrie Irving and LeBron James, featuring a new cushioning system, also sold well on Nike’s digital channels and in China, Parker added.

The NBA faced severe backlash from China earlier this year following comments made by Houston Rockets General Manager Daryl Morey on social media in October about political unrest in Hong Kong. Chinese broadcast companies reacted by refusing to air NBA games, hurting the league’s reputation.

Nike did not comment specifically on NBA merchandise. But the company did say it is proactively managing inventory in Hong Kong-based stores after recent declines in retail traffic. However, sales in China grew 23% in the period ending November 30, including 44% specifically on Nike’s digital marketplaces. 

“While we are, of course, very mindful of the geopolitical dynamics in Greater China, the Nike brand continues to deeply resonate with consumers, and our growth continues to be strong and sustainable,” said Andy Campion, Nike’s chief financial officer. 

READ MORE: China Fallout? Injuries? What’s Behind NBA’s ‘Shocking’ Drop in TV Numbers?

Arguably the most significant catalyst for Nike’s recent success is its digital direct-to-consumer business, which incoming CEO John Donahoe will look to take to the next level next year. Donahoe was formerly the CEO of Ebay, and currently sits on Nike’s board. He will officially take over day-to-day operations at Nike on January 13. 

Both the Nike and SNKRS apps drove digital sales at the Oregon-based company, which grew 38% in the second quarter. On Black Friday alone, digital sales grew 70% year-over-year in North America and as much as 50% in European markets. 

“Nike’s not only deeply committed to using our digital advantage to make the consumer experience better, we’re also using data science to inform how much product we supply and where,” Parker told analysts, acknowledging Nike’s acquisition of predictive analytics company Celect in August.

“We’re leveraging data that includes past and present consumer interest in products and purchasing signals to better predict demand,” he added.

Internationally, Nike disclosed a 10% growth in revenue in its Europe, Middle East, and Africa segment, growing to $2.5 billion across those regions combined – as it continues to penetrate Adidas’ home turf. The German company reported a combined $1.7 billion in sales for its European business when it last reported earnings in November. Adidas does not publicly disclose sales in the Middle East and Africa on its financial statements.

READ MORE: Adidas European Sales To Be Supercharged by UEFA Euro 2020

Next year also provides a critical opportunity for Nike to grow abroad with major sporting tentpole events like the UEFA European Championships and the Olympics in Tokyo just months away. The company said it would release new products dedicated to maximizing revenue in the latter half of 2020 over the next quarter. 

Nike reported a 13% growth in total revenue to $10.3 billion on a currency-neutral basis in its fiscal second quarter. Net Income also increased by 32% to $1.1 billion.

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

Dec 9, 2023; Las Vegas, Nevada, USA; Los Angeles Lakers forward LeBron James (23) hoists the NBA Cup and celebrates with teammates after winning the NBA In-Season Tournament Championship game against the Indiana Pacers at T-Mobile Arena.

NBA Cup Year 2: Tweaks, Schedule Concerns, and Growing Pains

While Vegas has been the event’s location for the last two years, that could change because the NBA may add an expansion team in Sin City.

New Sixers Arena Clears Key Philadelphia City Council Vote

The team still needs one more vote to move ahead.

NBA Cup Schedule May Benefit Losing Teams, League Exec Defends Format

An NBA executive told FOS all stakeholders agreed on the format.

Featured Today

Nov 2, 2024; Denver, Colorado, USA; Detailed view of a Wilson NBA basketball held by a referee during the second half between the Utah Jazz against the Denver Nuggets at Ball Arena

‘Obvious Weak Point’: Refs Remain an NBA Gambling Concern

A season after Jontay Porter, the biggest risk may not be players.
Nov 2, 2024; Ann Arbor, Michigan, USA; Michigan Wolverines cheerleader runs with a flag before the game against the Oregon Ducks at Michigan Stadium.
opinion
December 7, 2024

College Football’s Billionaire Backer Era Begins

Is this the new normal in CFB recruiting?
LA Galaxy forward Dejan Joveljic (9) celebrates with midfielder Riqui Puig (10) after scoring a goal against Seattle Sounders FC in the second half in the 2024 MLS Cup Western Conference Final match at Dignity Health Sports Park
December 6, 2024

With or Without Messi, Major League Soccer Is Barreling Into the Future

After the Cup final, the league looks to accelerate its growth.
Dec 18, 2022; Lusail, Qatar; FIFA president Gianni Infantino claps during the awards ceremony after the 2022 World Cup final between Argentina and France at Lusail Stadium.
December 2, 2024

FIFA Wants More Matches. Resistance Is Growing Inside the Global Soccer World

Resentment and frustration over expanded schedules is nearing a breaking point.
FIFA

Saudis Awarded 2034 World Cup in Uncontested Vote

Saudi Arabia was the only option after Australia decided not to bid.
May 20, 2024

Top Sports Business Jobs This Week (May 2024)

Each week, our staff combs through the thousands of job listings from…
The stands at the Solheim Cup
September 13, 2024

LPGA Apologizes for Solheim Cup Fan Bus Debacle That Left Stands Half-Empty

The USA-Europe women’s team golf event teed off Friday morning.
Sponsored

How UBS Crafts Impactful Partnerships Across Sports, Arts, and Culture

As UBS continues to expand its impressive array of sports and entertainment partnerships, the company solidifies its position as a leader in wealth management.
October 3, 2022

Real Madrid President Renews Call for Super League

Real Madrid’s president believes that soccer is losing ground.
August 10, 2022

PGA Tour Touts Projected Earnings to Keep Players

The PGA Tour is asking its players to consider their potential futures.
August 10, 2022

Bayern Munich to Make Growth Push in U.S. Market

Bayern Munich is looking to expand its reach in the U.S.
Nintendo-logo
August 3, 2022

Nintendo Profits Underwhelm, Switch Sales Decline

Nintendo failed to meet expectations in the company’s latest earnings report.