Nike recorded its largest quarter ever thanks to its app ecosystem and expanding membership base, while the consumer insights they provide are fueling a "virtuous cycle" its leveraging across the enterprise.
The apparel and footwear brand and retailer reported revenue surpassing $12.3 billion in its fiscal fourth quarter. Its direct business is nearing 40% of total brand revenue, while digital represents 21% of it.
Strong wholesale shipments and Nike-owned store performance also contributed to revenue growth, as the company anniversaried its pandemic-related store closures. The No. 11 consumer goods company will continue reshaping its wholesale business portfolio, including divesting from undifferentiated retail and investing in its strategic wholesale partners.
Even with retail reopening, digital sales grew 37% versus the prior year. Nike’s owned digital business has more than doubled over the past two years to more than $9 billion, with its suite of apps reflecting more than 40% of this.
In North America, fourth-quarter revenue grew 141%, marking the region’s first $5 billion quarter. Direct sales here grew more than 120% as its owned stores returned to positive sales growth versus pre-pandemic levels. Digital sales in the region grew over 50% and member demand nearly doubled, with the number of buying members increasing about 80%.
It’s also investing in its store fleet, most specifically around its Nike Live format. The company opened nine new Nike Live stores in the last year that offer greater personalized experiences and services for female consumers, a customer base it’s investing in moving forward. This includes sharpening its focus on women’s-only insights, services and product innovation.
Apps & Insights
Nike’s digital growth is led by its SNKRS app, which grew more than 90% in demand and saw a nearly 80% growth in monthly active users. The company uses the app as its intersection of content, community and commerce, said Nike president and CEO John Donohoe, offering new content or product launches on a near-daily basis. For example, an Air Max Day in March featured six different livestream events, providing SNKRS Live its highest viewership to date.
As it increasingly leverages consumer insights throughout product development, it will bring this strategy to its women’s business, which grew 22% vs. the prior year period.
Membership has proven to be a compelling driver of repeat engagement and buying across digital and physical retail, Donahoe said, and the company now has more than 300 million Nike members. Growth in member demand outpaced total digital growth to hit a new record of $3 billion, supported by strong member engagement, average order value and buying frequency.
Buying member growth is also outpacing new member growth, and expanding benefits to members has fueled a virtuous cycle, Donohoe said, that feeds consumer insights to product creation, inventory optimization and more.
“The more you have it, the more you can use it. You can use that consumer insight … personalizing a recommendation or anticipating a need on replenishing a product when you know they are going to need it,” he said. “It also drives efficiency in our operations. We talk about building a digital supply chain. What that’s all about is having the intelligence to [have] the right product in the right place at the right time, so that we can deliver that product in a low-cost, convenient and speedy and in a climate-friendly way.”
Although delayed revenue from the global supply chain disruption in the third quarter was recaptured during the fourth quarter, the company expects supply chain delays and higher logistics costs to persist throughout much of fiscal 2022.