Nike Accelerating Consumer-Led Transformation

Nike Accelerating Consumer-Led Transformation

Nike Inc. hosted its 2017 Investor Day today, which provided an overview on how the company is accelerating its next phase of long-term, sustainable and profitable growth. Fueled by the Consumer Direct Offense, the company stated during the investor meeting that it expects to drive high-single-digit revenue growth, expanding margins and mid-teens earnings per share growth on average over the next five years.

“The consumer today expects a premium experience, with innovative product and services delivered faster and more personally,” said Mark Parker, chairman, president and CEO of Nike Inc. “Fueled by a transformation of our business, we are attacking growth opportunities through innovation, speed and digital to accelerate long-term, sustainable and profitable growth.”

Consumer Direct Offense
The company expanded on its new Consumer Direct Offense, which aims to serve the athlete faster and more personally, at scale, led by digital. With focused growth through key categories, this new offense will connect the Nike Brand and products with consumers in new and more powerful ways across 12 key cities and 10 key countries.

Triple Double Strategy

The company noted that it is investing in its Triple Double Strategy to drive growth through three core areas of the business. These three core areas include:

  • 2X Innovation: To double the cadence and impact of innovation, the company will lead with more distinct platforms and scale innovation faster, will edit-to-amplify to give consumers better choices and will create new aesthetics spanning both sport and style.
  • 2X Speed: To double speed to market by reducing the average product creation timeline by over 50 percent through investments in end-to-end digital capabilities to serve consumers faster.
  • 2X Direct: To double direct connections with consumers and shape the future of retail led by and all new owned and partnered Nike Consumer Experiences.

New Membership Launch
The company announced its new NikePlus membership program that will provide member-only access to the products members love, matched to their individual preferences and buying patterns. This unique access to Nike’s greatest innovations and hottest styles is about three key services that serve consumers on their terms: first access to the latest products, exclusive access to personalized services and experiences, and reserved product for members only.

Long-term Financial Objectives
Addressing Nike’s new Consumer Direct Offense and Triple Double strategy, Andy Campion, executive vice president and CFO, stated, “We have implemented new consumer focused strategies several times in our company’s history, and in each instance, we have ignited Nike’s next horizon of long-term growth.”

With this, the company unveiled five measures of success that reflect the operational drivers of Nike’s long-term financial model and will guide its investment approach over the next five years. These five measures are:

1. New innovation platforms are expected to drive over 50 percent of revenue growth.

2. Revenue generated from digital platforms, both owned and partnered, is anticipated to increase from nearly 15 percent in fiscal year 2018 to more than 30 percent.

3. Speed-to-market is anticipated to double as Nike reduces the overall product creation timeline by over 50 percent.

4. Leveraging the Triple Double Strategy is expected to drive higher, more consistent full-price sell-through in season.

5. Ensure consumers in our 12 key cities and 10 key countries rate Nike as their No. 1 favorite brand.

The company stated during the investor meeting that, by geography, it expects to grow North America in the mid-single-digit range, Europe, Middle East & Africa (EMEA) in the mid- to high-single-digit range, Greater China in the low- to mid-teen range, and Asia Pacific & Latin America (APLA) in the high single-digit to low-double-digit range, in each case on average over the next five years. The company expects to reinvest three to four percent of Nike, Inc. revenue over the next five years through capital expenditures and expects the target range for Return on Invested Capital to average in the low 30 percent range. Finally, the company expects to continue to increase shareholder returns by maintaining a 25 to 35 percent dividend payout ratio coupled with share repurchases.

Additional Presenters And Replay
Additional presenters from Nike Inc.’s senior management included: Trevor Edwards, president, Nike Brand; Michael Spillane, president, Product & Categories; Eric Sprunk, chief operating officer; Heidi O’Neill, president, Nike Direct; Adam Sussman, chief digital officer; Elliott Hill, president, Geographies & Integrated Marketplace; Tom Clarke, president, Innovation; Jayme Martin, VP & GM, Global Categories; and Andy Campion, EVP & chief financial officer.