Nike boosts revenue as it prioritizes speed, digital

Dive Brief:

Nike’s revenue grew in the second fiscal quarter of 2018, as the company focused on innovation and consumer demand, according to a company press release.
Part of Nike’s technology strategy has been focusing on digital to bring products more quickly to consumers, Mark Parker, chairman, president and CEO of Nike, said in an earnings call.
Earnings per share, however, fell 8% compared to the same period last year, due in part to increased administrative expenses and higher product costs.

Dive Insight:

Speed and performance are important to Nike, and not just in its athletic products. The company has been exploring ways to hasten its supply chain, and now moves products from factory to consumer in fractions of the time as compared to years past. Nike recently set a goal to reduce its lead times from 60 days to ten days. And in Berlin, Nike has begun offering same-day delivery to consumers.

A large part of reducing the lead times means incorporating digital into many parts of the supply chain. Many customers around the world are now buying products on nike.com and directly through Nike’s smartphone apps. The company has also built a digital studio in Shanghai that monitors real-time data.

“It’s how we get to know and reward members with what they want, and that includes investments in personalization,” Parker said on the earnings call.

Personalization may seem elusive in an environment that’s largely digital and shifting to automation. But interaction with consumers helps to build brand loyalty — a concept that Nike has certainly captured.

“We’re seeing great results early on from those experiences that are better serving consumers and giving them more of what they want, leveraging digital and in a more personally-oriented service environment,” Parker said.

Nike launched a Consumer Direct Offensive last summer, focused on personalization and getting closer to the consumer.

“What we’re most focused on was tightening supply and lining it up with demand to create a pull market, and we feel great about the progress we’ve made there,” said Andy Campion, Nike’s chief financial officer.

Despite a falling EPS, Nike will likely benefit from its pivot to digital in the long run. “Innovation, speed and digital will … drive expanding profitability and returns on invested capital,” Campion said.