Nike is about to go live in L.A.
The sportswear giant, which has been overflowing with initiatives as it tries to innovate its way in the future, is about to take a new look to retail.
Mark Parker, chairman, president and chief executive officer, said the company is opening a new concept in Los Angeles called Nike Live.
“It’s a small-format, data-driven store, with its assortment influenced by what consumers are buying from surrounding zip codes,” Parker told analysts as he hyped the company’s fourth-quarter results, which saw top- and bottom-line gains. “We see great potential in this approach and you’ll see a lot more of it across our key cities.”
Nike Inc.’s been working to keep tabs on its best customers, relaunching the NikePlus membership program in November, giving the brand a better view on what sports its customers play, what products they prefer and so on.
In addition, the brand’s been focusing on its best wholesale partners and is working on scaling its Nike Consumer Experiences, for instance training some Foot Locker associates to be Nike experts and building its business there.
Parker’s game plan for Nike has three main components: innovation, the direct-to-consumer business and speed, and the ceo said progress was being made.
“We returned to healthy sustainable growth in North America,” Parker said. “Sportswear, a $10 billion business for Nike, had another quarter of double-digit growth. We saw solid momentum in key performance categories and digital. Nike digital was up 41 percent for the quarter.”
Nike’s fourth-quarter net profits rose 13 percent to $1.14 billion on a 13 percent rise in revenues, to $9.79 billion.
For the fiscal year ended May 31, income dropped 54 percent to $1.93 billion, reflecting the heavy impact of tax-code changes on the business, as revenues rose 6 percent to $36.4 billion.
In 2015, Parker set an ambitious plan for the company to hit revenues of $50 billion by 2020 — a goal that is still well off. At the company’s growth rate, revenues would be approaching $41 billion in two years.
In the meantime, Nike is planning to give a little something extra back to shareholders through a new four-year, $15 billion stock repurchase program that will start when it wraps up its current $12 billion in buybacks. Share repurchases are common and help earnings look better on a per share basis and concentrate ownership with remaining investors, but the expenditures do nothing to build the business.
As would generally be expected, Wall Street approved of the buyback. Shares were trading ahead around 9 percent in after hours activity.
Credit Suisse analyst Michael Binetti noted that the “new $15 billion buyback authorization adds EPS flexibility while Nike reinvests to keep driving market share.”
Nike, which was rated as the most value apparel brand by Brand Finance this spring, has plenty of brand and financial might, but is going through a time of transition. And while it seeks to reinvent its business, it has seen a number of executives leave under a cloud of inappropriate behavior, most prominently, Nike brand president Trevor Edwards.