Digital and wholesaling driving fast growth for Nike

Nike stronged again its strength in branding and growth. The overall revenues of the company rose by 17%, fastest rise in 10 years. The growth was driven especially by the Digital direct channel (25% YoY growth) as well as the recovering Wholesale channel. Wholesaling (still accountgin almost 60% of total revenue) grew by 18,9%.

The strength of Nike brand can be seen in the way the company has been able to drive its revenue from wholesaling to direct channels. Since the start of the pandemic, Nike has been able to increase the share of total revenue coming from the Direct channel from 31% (Q3/2019) to 40,6% (Q4/2022). In the meanwhile the total business has grown by 25%. At the same the Direct revenues have climbed by 63%! Already 62,6% of the Direct revenue is coming from Nike’s digital channels.

During the last 12 months Nike Direct produced $19,9 billion in revenues. That is 90% of the Adidas’ total revenue.

The biggest problem for Nike in the short-term is accumulating inventory. The company has been pushing inventory out with promotions. this impacted the Gross margins that were 3%-points down from Q4 in 2021. The inventories grew Year on Year by a whopping 43,3%, far outpacing the revenue growth. The Inventory/sales ratio is up significantly from the long-term average of 50-60% to 70%.

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