NIKE, Inc. (NYSE:NKE) Q3 2023 Earnings Call Transcript

And our brand strength, I think Matt mentioned this in his remarks, growing. We’re #1 cool and favorite brand. That gap widened in Q3 in Beijing. And it’s an environment where 6,000 monobrand stores are a real advantage. And so we’re going to continue to invest in China for China. We have a great team there. We were delighted that they were able to come — we got to see them in person for the first time this quarter in 3 years, and they are very optimistic and excited about our future. We’re building, as you talk about hyperlocal product and storytelling ability. And that enables us to, for the first time, we have locally driven apps there and our ability to do rapid storytelling there. And our tech stack is increasingly China for China. So there’s really not been a time when we can serve consumers in China in a more agile and personalized way.

And that is helping our competitive position in China. So we’re very focused on it and very — feel very good about our momentum.

Matthew Friend: Yes. And Omar, I just would add on some of the monthly trends that I commented on in my script that in December, we talked about the shift in COVID policy and the impact that, that had both on the amount of doors that were open in retail traffic. And our business in December was down high single digits. We flipped to growth in January, and we saw a rebound in brick-and-mortar traffic and strong retail sales performance. And then in the month of February, we saw our momentum accelerate even further relative to January, and that’s with comping the nine-month comp of Lunar New Year in the prior year. So when we look at our inventory position being down again this year versus — or this quarter, I should say, versus prior year for the second straight quarter, the fundamentals are there for us to continue the momentum that we’ve been talking about for several quarters. And we absolutely expect that China continues to be a growth opportunity for NIKE.

Operator: Your next question call comes from Paul Lejuez, Citigroup.

Paul Lejuez: Thanks, guys. Paul Lejuez. Can you give us an update on your shared apps and the partnerships that you’ve developed with certain retailers? Are they progressing as planned? And what are your thoughts on linking up with any new partners in the future?

John Donahoe: Yes, Paul, as you know, our whole marketplace strategy is to allow consumers to get what they want when they want, how they want it across our own digital, across our own retail and across our wholesale partners, all tied together with our membership program, which is 150 million active members. And this notion of connected membership with our wholesale partners is really beginning to bear fruit. And some of the early examples with, let’s say, DICK’S, you’re seeing examples where we can provide a personalized experience to a shared NIKE and DICK’S member in a way they can’t get elsewhere that benefits us and benefits DICK’S. A simple example might be, I guess, baseball season is about to be upon us. And so we can find a baseball consumer — a DICK’S consumer is a baseball consumer, and we can send an e-mail focused on NIKE’s baseball cleats, along with DICK’S, a bat and a mitt.

And consumers are responding to that very personalized messaging from NIKE and DICK’s. And so clear, early positive benefits for both. I think our Chinese partners and JD and others are feeling the same. So we’ll continue to expand that in a very thoughtful way with our other strategic wholesale partners. And again, I think it gives us a competitive advantage of being able to serve consumers across multiple channels and having the largest and most engaged membership program in the industry.

Operator: Our next question comes from Alex Straton, Morgan Stanley.