Nike continued its shift from direct-to-consumer (D2C) to wholesale channels over the past three months.
During the quarter ended May 31, the footwear, apparel and equipment company’s Nike Direct revenues were down 8% on a reported basis, to $5.1 billion, while its wholesale revenues were up 5%, reaching $7.1 billion, according to Thursday (June 27) earnings release.
Within Nike Direct, revenues at Nike Brand Digital were down 10% and those at Nike-owned stores were down 2%, according to the release.
Nike President and CEO John Donahoe said Thursday during the company’s quarterly earnings call that a healthy marketplace includes a channel mix that is driven by demand.
“We said we want to be where the consumer is, whether that’s digital or own door or wholesale, and so we’re embracing a more balanced approach to growing the whole marketplace,” Donahoe said.
He added that, over time, the company’s channel mix will be driven by the consumer and settle “in a consumer-friendly way.”
This shift happened during a quarter in which the company’s revenues were down 2%, according to the earnings release.
Looking ahead to the next 12 months, Nike Executive Vice President and Chief Financial Officer Matthew Friend said during the call that the company expects to see lower Nike Digital growth due to lower traffic caused by fewer product launches, planned declines of certain classic footwear franchises as the company works to balance supply and demand, and reduced promotional activity.
In terms of consumer trends, Donahoe said that the footwear and apparel business has been given a tailwind by a global embrace of healthy lifestyles and a broadening definition of “sport.”
“Where sport happens — it’s one of the derivatives of the post-COVID environment — you don’t have to go to the gym or the field. You’re working out in your backyard or taking a walk,” Donahoe said. “So, sport is happening in many more places.”
In addition, Nike is seeing a blurring of the line between sport and leisure, he added.
“People want to have great style while they’re doing sport, and they want to have sport-inspired style when they’re not doing sport,” Donahoe said.
Together, he said, the trends are giving the industry tailwinds and tremendous opportunities.