The Sunday (Sept. 24) outing of Taylor Swift to watch Kansas City Chiefs’ standout Travis Kelce on the football field wasn’t just a topic of constant conversation on the internet. It’s even made its way to Nike’s latest earnings call Thursday (Sept. 28).
During the call an analyst asked, “What’s the bigger tailwind to the business right now? Is it the Travis Kelce jerseys or the Colorado football merchandise?”
Although the Nike team didn’t offer a direct response, it’s worth noting that according to sports apparel and fan merchandise retailer Fanatics, Travis Kelce’s jersey ranked among the top five in NFL jersey sales Sunday. A spokesperson for Fanatics informed The Associated Press via email that Kelce surged nearly 400% in sales across the Fanatics network of websites, including NFLShop.com.
Sales surged on the very day Taylor Swift was seen attending the Chiefs’ game against the Bears, sitting in one of Arrowhead’s glass-enclosed suites alongside Kelce’s mother, Donna.
While these numbers were not reflected in this quarter’s earnings, and despite missing revenue, Nike’s confidence in the Chinese consumer regardless of macroeconomic outlook led its stock to soar.
The retailer’s stock jumped by over 9%, continuing its upward momentum during the company’s earnings call. Executives emphasized the robust consumer demand and alleviated concerns regarding any potential slowdown in the greater China region.
“Sport is back in China, you can just feel it,” said Nike President and CEO John Donahoe during the company’s Q1 earnings call on Thursday. “That gives us great confidence about the future and the Chinese consumer in our segment regardless of the macroeconomic outlook there.”
Nike achieved double-digit growth in both Q1 and Q2 and was particularly pleased to witness high single-digit to low double-digit retail sales growth and effective inventory management in collaboration with key partners such as Dick’s Sporting Goods.
Additionally, partnerships with JD, Zalando, Sports Direct, and other major players have contributed to market presence and market share growth in greater China.
In May, PYMNTS reported that consumer spending in China was gradually rebounding from the impact of COVID-19.
“We’re seeing the incremental rebound from the Chinese consumer,” KraneShares Chief Investment Officer Brendan Ahern told CNBC in a report published Saturday (May 27).
Nonetheless, Ahern advised that the recovery was not an instantaneous process, likening it to a gradual transition rather than a sudden switch.
The report references data from the National Bureau of Statistics of China, which indicates that retail sales have been steadily increasing since November of the previous year.
Ahern conveyed to CNBC his anticipation of continuous improvement in quarterly earnings for Chinese companies. This trend might already be in motion, as companies like Baidu and Tencent surpassed expectations in their fiscal first quarters.
“We’re actually hearing that for many of the companies … in the management calls, they’re speaking to how Q2 already is outpacing Q1, which outpaced Q4 of last year,” Ahern said.
Read more: China Enjoys ‘Incremental Rebound’ in Consumer Spending
Nike recorded first-quarter revenues of $12.9 billion, marking a 2% increase compared to the previous year when analyzed both on reported and currency-neutral bases.
Nike Direct revenues reached $5.4 billion during the first quarter, a 6% growth compared to the prior year on both reported and currency-neutral bases. This growth was consistent across all geographical regions, highlighting the company’s global appeal.
Furthermore, Nike Brand Digital sales demonstrated resilience, with a 2% increase when viewed on a reported and currency-neutral basis.
In the wholesale sector, revenues reached $7 billion, remaining flat compared to the prior year on a reported basis but showing a 1% increase on a currency-neutral basis.
However, the company’s gross margin dipped by 10 basis points to 44.2% during the first quarter.
Despite the margin decrease, Nike managed to deliver a strong earnings performance. Diluted earnings per share for the first quarter stood at $0.94, reflecting a modest 1% increase, reinforcing the company’s financial stability and growth trajectory.