How Nike Earned $10.7 Billion in Revenue for Q1, FY2020
New car, caviar, four star daydream. These are things Nike and their investors can comfortably afford, after posting $10.7 billion in revenue for the first quarter of financial year 2020. Sneaker Freaker looked at Nike's reports and boiled it down to some key factors:
The Chinese Choice
Mark Parker has previously said, 'Nike is a brand of China, for China', and the brand has achieved double-digit growth in the Greater China region every quarter for over five years now. This quarter, revenue grew by 27 per cent. In no small part this was due to serving a new generation of young, digitally-native consumers by supporting grassroots sport in the region. Basketball fever has afflicted the nation for years, and Chinese fans have been rewarded with hosting the FIBA World Cup and receiving exclusive drops.
Nike recognised the shift from physical to digital brand experiences, particularly shopping for the product itself. As such, the investment in mobile and app-based experiences resulted in 42 per cent growth. This is evident with the expansion of the SNEAKERS app into 22 countries, the latest being China. The digital implementation has also been integrated in-store, with Nike Fit, a VR- and AI-based method to measure foot size. Also, Nike App at Retail is helping bricks-and-mortar customers enhance their physical shopping experience with improved product access and assistance.
Unrivalled Sneaker Tech
Nike have always built on their retro offerings, but this quarter saw a rollout of a new innovation: Joyride. Reception has been very positive, and the adaptive bead system is scaling up into more sportswear applications. Air still remains one of the Swoosh's key technologies: 2018's Air Max 270 received React midsoles, bolstering the largest gains in Nike's footwear revenue. And it's not just new-age product housing the latest tech: Parker hinted at an upcoming Air Jordan 1 that will reportedly use the literally accessible Flyease closure system.
Big Basketball Brand
It was another big quarter for Nike's basketball division. The Zion Williamson sneaker rumour mill was laid to rest, following the unsurprising news he signed with Jordan Brand. He'll be wearing the recently-unveiled Air Jordan 34 on court during his first year playing in the NBA. Meanwhile, Giannis Antetokounmpo's debut signature sneaker, the Zoom Freak 1, had the distinction of being the largest initial launch in Nike Basketball history. LeBron James and Kyrie Irving will launch their next signature sneakers ahead of the next NBA season, too.
Air Jordan 1s (Probably) Aren't Stopping Anytime Soon
More of an observation on Nike's part, but the Swoosh has acknowledged the Air Jordan 1's impact on sneaker culture of late – and the company's bottom line. Retro lines are seeing segmentation too, such as the Air Force 1 fractioning off into variants like N.354 and Sage, to cater towards specific sneakerhead markets. It was a successful move, as growth in women's and kid's Air Force 1 lines was faster than the men's lines for the quarter.