Nike Inc. reported healthy growth in the first quarter in Greater China, an area of increased focus for market watchers and investors.
Sales in Greater China grew 12 percent in Q1, with Nike digital sales up 6 percent and stores up 12 percent. In light of the progress, Nike president and CEO John Donahoe described the region as the place where Nike’s “overall vision comes to life best” and said the goal is to replicate this success across other regions.
“Greater China sets the execution standard for us, and our goal is to scale their success across all of our geographies, every sport and every dimension of our business,” Donahoe said. “And that’s how we win over the long term.”
According to Donahoe, Greater China features Nike’s best retail experiences, which combine innovative product with locally relevant storytelling. For example, Nike consumers positively received “seasonal presentations and curated head-to-toe style guides,” Donahoe said, also highlighting Nike’s three-day Sportchella festival and associated partnership with Tmall, which drove more than 2 billion impressions. Nike also saw success in its launch of the China-specific versions of its apps, which offer a more personalized experience.
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Women’s product was another standout in Greater China, with growth in the category outpacing general quarterly growth. Retro running styles like the Vomero were also standout performers in the quarter.
“The work the team has done to serve our women’s consumer in Greater China is proof of what Nike can do when all the pieces are aligned,” Donahoe said.
The CEO added that while the promotional environment is still present in Greater China, full-price sell-through trends are positive and inventory is relatively in line. Nike EVP and CFO Matthew Friend said the company is also improving profitability in China by lowering its supply chain costs. Near-term growth is expected to be challenged from foreign exchange headwinds.
The successes in Greater China are a part a Nike’s broader roadmap for growth in all its regions. For example, Nike has outlined a goal to win over the female consumers in all geographies and is focused on promoting new products via locally-driven storytelling catered to specific geographies.
Prior to the most recent quarter, Nike’s growth in China had generally outpaced other footwear brands, though some are beginning to catch up. In its most recent quarter, Skechers saw a growth of 19 percent in China. Adidas was up 16 percent in the region.
Looking ahead, Nike expects fiscal year 2024 revenues to grow in the mid-single digits, as the company monitors potential foreign exchange headwinds and consumer demand through the holidays and the second half of the year. In Q2, Nike expects revenue growth to be up slightly compared to the prior year and expects markdowns to improve throughout the year.
