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Nike’s Fiscal 3Q16 Results Show Earnings Momentum

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Part 5
Nike’s Fiscal 3Q16 Results Show Earnings Momentum PART 5 OF 6

Nike’s E-Commerce Business Could See More Acceleration Ahead

Growing e-commerce sales

Nike (NKE) saw about $1.2 billion in e-commerce sales in fiscal 2015. The company grew its e-commerce sales by 56% in 3Q16, reporting both higher traffic and conversion rates. The 72-10 colorway of the Air Jordan 11 was Nike’s most successful launch ever, breaking all traffic and conversion rate records on nike.com.1

More importantly for Nike, digital sales (XLY) growth has shown increasing traction over the course of the year, from 46% in fiscal 1Q16 and 49% in fiscal 2Q16. Nike’s digital business also appears to be in a great position to accelerate over the remainder of 2016, with a couple of major international events scheduled over the summer, including UEFA Euro 2016 and the Olympics in Rio.

Nike’s E-Commerce Business Could See More Acceleration Ahead

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Enhanced NIKE+ experience

On March 16, 2016, Nike announced new features for its existing NIKE+ app. These features will be available from June 2016 onward. They should continue to spur higher traffic and conversion at nike.com.

The enhanced app provides greater customization and personalization options for both products and services. It allows for a customized feed, on-demand coaching, a personal store with personalized product recommendations, and personalized training programs adapted to suit athletes’ needs. The app also generates reserved invitations that guarantee access to the most sought-after sneaker models.

Women’s opportunity

Digital campaigns such as Better for It and Margot vs Lily are also likely to keep sales momentum strong for the remainder of the year. The company has reported 80 million views to date for these campaigns.2 Episode links to products worn by characters are spurring higher online sales.

Besides, these two campaigns serve a dual purpose: Not only do they spur a higher amount of web purchases, they’re also instrumental in growing Nike’s women’s business, which posted its ninth straight quarter of double-digit sales growth in fiscal 3Q16.

Major sports gear companies including Under Armour (UA), VF Corporation (VFC), and Adidas (ADDYY) continue to invest in enhancing their digital capabilities and fitness communities as a way of garnering athlete data and driving higher sales. They’re also developing device-agnostic apps to widen their brand reach and to benefit from higher sports participation and interest in fitness activities around the world.

  1. Based on comments by Trevor Edwards, president of the NIKE Brand
  2. Based on comments by Trevor Edwards, president of the NIKE Brand
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