Nike CEO highlights direct-to-consumer strategy the day after the company's big Foot Locker announcement
- Nike on Tuesday reported quarterly sales and earnings above Wall Street expectations.
- The report came a day after Foot Locker announced a "revitalized" wholesale partnership with Nike.
Foot Locker announced a "revitalized" partnership with Nike to much fanfare on Monday. On Tuesday, Nike CEO John Donahoe moved to turn the attention of investors back to Nike's direct-to-consumer approach.
"Nike's strong results in the third quarter offer continued proof of the success of our Consumer Direct Acceleration strategy," Donahoe said, in the lead sentence of an earnings press release.
In 2020, Nike announced Consumer Direct Acceleration, a business plan focused on direct, digital sales.
In recent months, speculation built that Nike would tweak the direct-to-consumer focus, but Donahoe's statement signals the company isn't changing course.
Nike handily topped analyst forecasts for the quarter, reporting $12.4 billion in sales and $0.79 in earnings-per-share, both above expectations of $11.48 billion and $0.56.
In the earnings release, Donahoe said the company's strong quarter, which ended February 28, resulted from "product innovation, deep relationships with consumers and a digital advantage."
On Monday, Foot Locker CEO Mary Dillon noted the sneaker chain had renewed its relationship with Nike. That followed a December earnings report in which Nike's wholesale business grew faster than its direct business.
But there have been recent signs that Nike's focus on DTC is working, including increased foot traffic at Nike stores.
In the quarter that ended February 28, direct and digital sales increased 22% and 24% respectively, not including currency charges, faster than the 18% increase in wholesale revenue.
Although Nike topped analyst expectations for sales and earnings, it came up short on gross margin, reporting 43.3%, below the 43.7% expected by analysts, according to FactSet.
Nike will host a call with stock analysts at 5 p.m. ET.
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