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3 Must-Read Quotes From Nike, Inc.'s Earnings Call

By Daniel Sparks - Sep 27, 2018 at 11:11AM

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Nike management discusses its controversial marketing campaign, strong growth in China, and more.

Nike's ( NKE 0.14% ) fiscal first-quarter results are out -- and they featured some solid numbers, including double-digit revenue and earnings-per-share growth, gross margin expansion, and strong growth in North America. While Nike's first-quarter earnings press release provided lots of useful information, investors can glean more insights from the company's earnings call.

During Nike's first-quarter earnings call, management provided a look at the impact of the company's recent controversial marketing campaign, the consumer environment for Nike products in China, and some of the drivers for the company's return to growth in North America.

Here's what management said during Nike's quarterly conference call about these three important topics.

Nike Air Jordan XXXIII shoe

Nike Air Jordan XXXIII. Image source: Nike.

Management is "very proud" of its new marketing campaign

Nike's recently launched 30th anniversary "Just Do It" campaign sparked a polarizing response on social media, prompting both a significant backlash and avid defense of the company's decision to feature quarterback Colin Kaepernick, known for sparking the trend of NFL players kneeling in protest.

While debate about the controversial Nike campaign continues, there is one thing investors can be certain about: The campaign is driving record engagement. Further, Nike CEO Mark Parker said the company feels "very good" and is "very proud" of the campaign.

Parker explained:

We know it's resonated actually quite strongly with consumers. Obviously, here in North America, but also around the world. It's really transcended the North America market to touch people around the world. ... We've seen record engagement with the brand as part of the campaign.

China remains a hot market

One market Nike is particularly optimistic about is China. On the heels of 17 consecutive quarters of double-digit sales growth in the market, Parker said Nike boasts "really strong underlying fundamentals" in China.

Parker continued:

Our fundamentals in China are actually quite strong and sound. We're not seeing any pushback from consumers. On the contrary, our relationship and connection to consumers is as strong as it could possibly be. We feel confident in our ability to continue to grow.

In Q1, Greater China revenue increased 20% year over year on a constant currency basis. 

Strong performance in North America

One key development during Nike's first quarter was its continued momentum in North America. After returning to growth in North America during Nike's fiscal fourth quarter, with 3% year-over-year revenue growth in the market, growth accelerated further in Q1. North America revenue rose 6% year over year.

"In North America, we have returned to strong, sustainable growth," Nike CFO Andy Campion explained in the company's first-quarter earnings call. This growth was "led by accelerating growth across both footwear and apparel, driven by new innovation platforms, as well as strong owned and partner digital growth," Campion said.

Nike was particularly pleased with its digital channel in North America, Campion said. "We had extremely strong double-digit growth in digital and acceleration in that regard."

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