Nike’s top-line earnings showing an unremarkable quarter are deceptive, as the shoe and apparel giant is seeing big gains from shifting its business to focus more on online sales and China.
Revenues held steady at $10.4 billion, up 3% from the previous year, but down 1% on a currency neutral basis for the three months ending Feb. 28. A 2% dip in Nike brand revenue was counteracted by 8% growth in the comparatively smaller Converse.
The big shifts came in where Nike sold its products and how.
- The company’s long-term push on direct-to-consumer sales proved prescient, as Nike Direct sales grew 20% (or a currency-neutral 16%) to $4 billion.
- Revenue in Greater China rocketed up 51% to $2.3 billion.
- Net income rose 71% to $1.4 billion, with the company saving money from layoffs over the summer and reduced spending on events and other marketing activities.
With 35% of its retail locations still closed due to the pandemic, Nike has been reaping the rewards of its “Direct Consumer Offense” e-commerce and marketing strategy, which dates back to 2017.
“We continue to see the value of a more direct, digitally-enabled strategy, fueling even greater potential for Nike over the long term,” said CFO Matt Friend.
Nike also continues to cut back on its workforce, announcing a new round of layoffs earlier this week. Last summer, the company let go of 500 workers at its Oregon headquarters.
