On Nike’s fourth-quarter analyst call, John Donahoe, president and CEO, Nike, Inc. talked up progress and untapped opportunities for Nike Brand around global football (soccer), basketball and running categories, but Jordan Brand was by far the star performer for Nike’s fiscal year ended May 31.
Sales on a wholesale-equivalent basis for Jordan Brand jumped 35 percent on a currency-neutral basis (29 percent reported) in the fiscal year to $6.59 billion, nearly doubling the growth rate of Nike Brand’s overall growth.
The gains build on currency-neutral growth of 7 percent for Jordan Brand in FY22 and 28 percent in FY21. On Nike’s Q422 call, Nike officials noted that since FY20, Jordan Women had tripled, international geographies had grown over 60 percent, and apparel had expanded over 50 percent.
On the call, Donahoe said Jordan Brand in FY23 again saw “impressive growth” across men’s, women’s, and kids, footwear and apparel, and in both North America and internationally. Said Donahoe, “In fact, Jordan is well on its way to becoming the second-largest footwear brand in North America.”
Elaborating on Jordan Brand’s success, Donahoe said, “Jordan’s greatest advantage is its authenticity and connection to sport, which drives a special bond with generation upon generation. This brand has built a cultural identity that transcends the game, connecting people with deep emotion, and a sense of self-belief.”
He said its authenticity fuels Jordan’s strong position in streetwear. Donahoe added, “Jordan continues to dictate the conversation by being a premium brand that drives sportswear culture. You’ve seen this come to life through Jordan’s partners across pop culture, from product launches like the women’s Teyana Taylor AJ 1 High to the brand’s meaningful collaboration with the movie, ‘Spider-Man: Across the Spider-Verse.’”
Donahoe added that while Jordan Brand is over-indexing growth in both women’s and kids, it’s also “extending its core strength in men’s” with the launch of the Tatum 1 joining the Luca, Zion, and the Game Shoe. Donahoe said, “With this foundation in place, Jordan has plans to now scale these four franchises even further.”
Indeed, Jordan’s growth in performance footwear is now outpacing retro footwear with the brand also seeing strength in apparel.
Internationally, Jordan’s penetration is about 10 points lower than it is in North America in most geographies. Said Donahoe, “This is the growth opportunity we plan to capture moving ahead. Simply put, we continue to see a tremendous amount of potential for the Jordan brand and its differentiated ability to drive culture, connection, and growth like nothing else.”
Jordan is part of Nike’s basketball category and its success is only furthering Nike’s dominance of the category. Donahoe said, “Today, Nike defines basketball. And as we look at the landscape, we see only expanding competitive separation ahead.”
He said for the first time, all of Nike’s three brands had a star on the All-NBA first team, including Giannis Antetokounmpo supporting Nike Brand, Luka Dončić and Jason Tatum with Jordan and Shai Gilgeous-Alexander promoting Converse.
For the Nike Brand, other highlights in basketball include FY23 marking 20 years of LeBron’s signature shoe with earlier styles being brought back to drive retro sales.
The Nike Sabrina 1, designed for Sabrina Ionescu, the star point guard of the New York Liberty, is “resonating strongly since launch, helping double our WNBA business versus what it was two short years ago,” said Donahoe. The Kobe model will be relaunched in advance of Kobe Day on 8/24.
Donahoe also highlighted Nikola Jokić’s title run with the Denver Nuggets and Nike’s signing of the top pick in the NBA Draft, Victor Wembanyama. Donahoe said, “We’re thrilled to have Victor in the Nike family, and we’re excited for what the future holds in basketball.”
Donahoe also touched on Nike Brand’s progress in soccer (global football) and running.
Nike Brand’s global football sales grew 25 percent in FY23, nearly doubling Nike’s overall growth. Said Donahoe, “With women’s and kids’ businesses growing even faster, key boot franchises like Mercurial and Phantom saw high full-price realization as we continue to win share on the pitch.”
Donahoe said Nike benefits in soccer by investing at the grassroots level as well as with stars such as the recent signing of Norway’s Erling Haaland. At the Women’s World Cup, Nike will partner with more federations than any other brand and bring its “most comprehensive women’s football collection ever,” led by the Phantom Luna cleat. Added Donahoe, “Last but not least, we’ve created our largest ever football-inspired sportswear collection for both fans and athletes, when they’re off pitch. We’re just weeks out from the tournament and we’re focused and aligned to drive energy like no one else as we connect the next generation of fans to the world’s most popular sport.”
On running, Donahoe said Nike saw “roughly” 10 percent growth for its running footwear business in FY23 despite the challenging channel. He said, “Running’s been a competitive battlefield lately with more and more brands joining the market. And today, we’re more aligned in resources to compete and win.”
He said Nike will continue to rely on innovation to build share in running, pointing to recent releases such as Vaporfly 3 in racing and Peg Trail 4 in trail running. Donahoe said, “And following a recent reset, we’re prioritizing the needs of everyday runners through newness and consistency in the key styles they love most.”
For example, he said since its fiscal third quarter launch, the Invincible 3 has doubled its retail sales with the Infinity Run 4, another major update to the franchise, arriving next quarter. Other promising newer innovations cited include the Infinity 4 React X Foam, the Vomero 5 lifestyle offering for runners, and the Motiva walking shoe that sits in the running category. Donahoe said, “Ultimately, when we look at the full running business, while we know there’s a lot of work ahead, we remain confident in our go-forward strategy and firm in our belief that we’re all set to compete with strengths.”
Nike Brand’s total revenues, including both Jordan and other Nike branded products, for FY23 reached $40.1 billion on a wholesale equivalent basis in the year, up 18 percent on a currency-neutral basis and 11 percent on a reported basis.
Among non-Jordan Nike Brand products on a wholesale equivalent basis, men’s was up 17 percent on a currency-neutral basis (10 percent reported) to $20.7 billion. Women’s revenues gained 11 percent on a currency-neutral basis (4 percent reported) to $8.6 million. Nike kids’ sales advanced 10 percent on a currency-neutral basis (3 percent reported) to $5.04 billion.
By channel on a wholesale equivalent basis, wholesale sales climbed 14 percent on a currency-neutral basis (7 percent reported) to $27.4 billion. Nike Direct sales surged 27 percent (21 percent reported) in FY23 to $12.7 billion.
On a reported basis, revenues for the Nike Brand were $48.8 billion, up 10 percent on a reported basis and 16 percent on a currency-neutral basis, driven by double-digit growth across Nike Direct and its wholesale business.
Nike Direct revenues were $21.3 billion, up 14 percent on a reported basis and up 20 percent on a currency-neutral basis, led by Nike Brand digital growth of 24 percent and Nike-owned stores growth of 14 percent. Nike’s digital penetration reached 26 percent of sales in FY23 compared to 10 percent in FY19.
Gross margin in the fiscal year decreased 250 basis points to 43.5 percent, primarily due to higher product input costs and elevated freight and logistics costs, higher markdowns and continued unfavorable changes in net foreign currency exchange rates — partially offset by strategic pricing actions.
SG&A expense increased 11 percent to $16.4 billion, reaching 32.0 percent of sales against 31.7 percent a year ago. The increase was due to wage-related expenses, Nike Direct variable costs and strategic technology enterprise investments, in addition to higher advertising spend. Net income for FY23 was $5.1 billion, or $3.23 a share, down 16 percent.
Photo courtesy Nike
