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Nike results: Strong brands in a complex world
The main news from global sportswear brand Nike’s Q3 earnings is that even amid ongoing supply chain issues, the company is not only able to enjoy strong demand but has been able to maintain profit margins on the back of its brand building activity.
Financially, it’s a decent picture: revenues are up 5% year-on-year, while profits remain flat. Supply chain issues are ongoing but manufacturing facilities, which are mostly in Asia, are returning to pre-pandemic volumes.
“Consumer demand for all three of our brands, NIKE, Jordan and Converse, remains incredibly strong”, chief financial officer Matt Friend told investors on Monday.
“Our growth in the third quarter would have been even higher if we had greater quantities of available inventory to meet marketplace demand.”
So what’s driving it? Friend suggests that right now, demand for men’s running shoes, classic footwear – especially the Air Jordan 1s – and fleeces are all much sought after.
Digital membership performing
Digital revenues in Q3 grew to account for over a quarter (26%) of total Nike brand revenue thanks to ongoing digital efforts that have seen app downloads increase.
Membership has been significant for the company, as member purchase frequency and basket sizes continue to grow.
This is all part of a broader push toward selling more through Nike owned channels.
Demand creation expense came to $854 million, up 20%, mostly because of normalisation of spend against brand campaigns and continued investments in digital marketing to support heightened digital demand.