Nike reported on Monday that its revenues for the third quarter ending on February 28 totaled $10.9 billion, up 5 percent on a year-over-year basis, enabling the sportswear titan to beat analysts’ expectations of sales of $10.59 billion. Sales for the three-month period were driven in large part by sales in North America (up 9 percent in Q3) and double-digit growth (up 19 percent year-over-year) for its digital business, and thanks to more full-price sell-throughs, Beaverton, Oregon-based Nike generated a gross margin of 46.6 percent, up from 45.6 percent for the same quarter last year. And finally, the company noted that sales within its wholesale network were down by 1 percent in Q3, as it continues to prioritize its own retail operations.
In a corresponding earnings call on Monday, NIKE, Inc. president and CEO, John Donahoe stated that Nike’s success in Q3 “amid the dynamic macroeconomic environment,” gives the company confidence in its long-term outlook. CFO Matt Friend stated that Nike “continue[d] to expect revenue for the full year to grow mid-single digits versus the prior year,” but noted that “specifically for Q4 in North America, we expect a decline in revenue due to year-over-year comparisons. And in Greater China, we expect to see another quarter of sequential improvement while we closely monitor the operational impact related to recent COVID lockdowns.”
Addressing Nike’s enduring emphasis on building out its own retail strategy that is less reliant on wholesale, Donahoe stated that Nike will, in fact, “continue to build strategic partnerships with our wholesale partners,” with Friend noting that Nike is working to “create the marketplace of the future, both through digital, our owned stores and our partners,” which will require Nike “to also invest with our partners in their consumer experiences so that the consumer has a premium consistent experience as they move across the marketplace and can find the NIKE product when and where they want it.”
In terms of Nike’s e-commerce sales, which were up by 22 percent a currency-neutral basis in Q3, Donahoe stated that as “consumers continue to shift toward digital to find the products they love,” the digital experience Nike is offering up “particularly through [its] app ecosystem” – continues to build “deep consumer connections and capture digital market share.” In particular, he pointed to the NIKE mobile app, which “was up more than 50 percent in the quarter and overtook Nike.com on mobile for our highest share of digital demand.” At the same time, “SNKRS continues to gain momentum, particularly as its strong consumer engagement leads to improved conversion.”
And at the same time, Donahue contends that “growing participation in new digital platforms” is underway for Nike, including efforts in the metaverse, which Donahoe says “lets us create innovative ways to connect with consumers, letting them unlock virtual experiences, products and rewards as we expand access points to NIKE across the digital ecosystem.” Among those efforts is NIKELAND, which the Swoosh launched on the Roblox metaverse platform in mid-November.
Since its launch on Roblox, which marks one of the biggest moves by Nike to date when it comes to the metaverse, Donahoe revealed that “a total of 6.7 million players from 224 countries have visited NIKELAND,” with the company “planning to continue driving energy there with virtual products like LeBron 19 styles special to Roblox.”
In addition, Donahoe asserted that Nike announced NIKE Virtual Studios this quarter, following its acquisition of RTFKT. “With NIKE Virtual Studios, our vision is to take our best-in-class experiences in digital and build Web 3 products and experiences to scale this community so that NIKE and our members can create, share and benefit together,” he stated. In Q3, Donahoe says that RTFKT released the first official NIKE-branded NFT, which marks “our first step into the world of digital product creation.” Nike management is “pleased by the positive momentum and energy we’re already seeing in the space, and we’re excited about the future as we continue to extend our digital leadership in the industry,” per Donahoe. “In the end, NIKE is doing what we always do. We are staying on the offense.”