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Nike plans to expand pilot program with Amazon

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According to Market Intelligence, December 2022

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Nike plans to expand pilot program with Amazon

Nike Inc. CEO, Chairman and President Mark Parker said the athletic footwear and apparel company will be extending its pilot on Amazon.com Inc. after seeing positive sales results on the limited number of products the company has offered on the e-commerce giant's platform.

Parker said the opportunity to share data that provides insights into Nike's customers is the driving force behind Nike and Amazon's relationship. Nike said in June that it would begin selling a limited selection of its products on Amazon after holding out on the e-commerce platform.

"We're bullish on where this can go from here," Parker said Dec. 21 during a second-quarter conference call. "The important part is that we advanced the brand through better presentation, and then the sharing of data, so we can better serve the consumers. I think that's really what we're driving forward behind the Amazon relationship and frankly, any digital platforms relationship that we have."

Elliott Hill, president of sales and geographies at Nike, said the company is maintaining its full-year guidance. Back in September, the company said it was expecting its full-year gross margin to shed as much as 50 basis points to 100 basis points while sales are expected to grow in the mid-single-digit range. Nike's fiscal year ends May 31, 2018.

For the third fiscal quarter ending Feb. 28, Nike expects revenue growth to remain "at or slightly below" the 5% growth reported for the fiscal second quarter, Hill said.

Hill said to expect gross margin contraction of 125 to 175 basis points in the third fiscal quarter, amid a promotional environment for the U.S. retail market. That should be followed by "significant sequential improvement in gross margin" in the fiscal fourth quarter, he said.

Hill also told analysts that North American revenue should experience less contraction in the second half of the fiscal year. North American revenue shrank 5% in the fiscal second quarter to $3.49 billion from $3.65 billion in the same period last year.

"While the marketplace continues to evolve and remains promotional in the short term, we see momentum and market building beneath the surface of our aggregated results," he said. "We see the early stages of stabilization."