NIKE (NKE) 21 Dec 222023 Q2 Earnings call transcript

Good afternoon, everyone. Welcome to NIKE, Inc.'s Fiscal 2023 Second Quarter Conference Call.

For those who want to reference today's press release, you'll find it at investors.nike.com. Leading today's call is Paul Trussell, Vice President of Investor Relations and Strategic Finance.

Before I turn the call over to Mr. and you based on those materially. on subject certain remind make call statements me cause to statements could forward-looking current risks let that to this participants will are actual Trussell, results that differ uncertainties expectations, and risks in reports the are filed detailed uncertainties and with These NIKE's SEC.

measures discuss website, measures refer participants and earnings NIKE's In investors.nike.com, to and comparable release financial reconciliations. may press addition, NIKE's and non-public non-GAAP financial or for GAAP Please quantitative statistical information.

turn over call to Paul Mr. go Please like Trussell. I'd Now the to ahead.

to you Thank NIKE, you, and quarter everyone, XXXX operator. results. fiscal Hello, for thank joining us today Inc.'s second discuss

Joining our us President and Chief Inc. Financial NIKE, Officer, call on will Matt be Donahoe; and CEO, John Friend. today's

questions. many in allow their would We Following time. take like of as possible to prepared as ask our questions allotted remarks, we your you to will

limiting and appreciate cooperation call question So President Inc. on you Donahoe. I'll one. your over now this. we your turn the CEO, Thanks NIKE, for initial would John to to

Thank of the you, quarter our meaningful strategy. revenue And a In at on of we QX more basis. with today's success we out. in results, reported the QX and our a growth everyone We currency-neutral Today, delivered competition. call. have on on separation our and continued this XX% we're strong a looking consumers basis the on hello delivered quarter's our between profitability expectations relationships XX% and Paul, consumer revenue, to to inventory. Thanks creating environment, and current demand stands us and

by America, our quarter than industry-leading and across led We exchange. APLA a Clearly, geographies. both basis across X% digital And basis, China foreign was two continues once our to North growth not again growth a due currency EMEA XX% our X% top in on double-digit was reported performance. direct broad-based had unprecedented of around which and nearly on QX years disruptions, channels Our our minus geographies. grew growth but the to more only after be consumers The business, brands, to our currency-neutral globe. saw partners and prioritized constant of Greater brand translated by strong our mind,

executing In ago days in clear We we believe excess XX areas results, spoke to are we're actions action we America take working. China. North about healthy in our addition call, marketplace Later the as will the as the to us levels is return we're and Matt in peak taking to share progress to decisive in inventory. the behind inventory on inventory a our more in inventory

our goals that remain the So well. give results confidence toward overall, QX us we as our path we a long-term deliver year, will on and

Our the foreign shifts toward our exchange cultural current but move expanding headwinds, comfort are toward definition as the consumers transitory, inventory Like the challenges structural. of tailwinds and sport, health and digital and such are wellness. and

our relentless of how and to consumer importantly, include we've competitive match to strength leveraged speak our competition. which results stay deep and innovation More pipeline, connections relative ahead brands build advantages a

about franchises. know most but greatest with our we to innovations, win because on to only our newness We this about And at As all culture an part our starts to important you constant NIKE, to our of say innovation. innovation, product I'd quarter, heard it before, it's improve not bring individual platforms. our pursuit me product like continuously also popular with ability highlight of

soon, see. continue with and on a by worn sportswear innovation low-top. we insight some to the Jordan existing portfolio. consumer to not the with appeal strong exciting Driven and to and instance, just its NIKE debuts about What's combines off. Basketball to brand Coming this debut to more top which LeBron's performance the And this roster ever. court bringing demands football today, our World be we in excitement scorer. product last as consumers added shoe getting And first the we of unique over of Zoom several that highlighted With design signature portfolio boot XX strong is quarter, we that another LeBron from For won consumer more signature to Mercurial XX airbag got any to ability weeks, boot, Cup response. Mbappé earlier the and commercial style and in launched LeBron create we've LeBron new its expand have franchises; who greater led our himself, the the other the we're innovation Mercurial, Golden the unparalleled as by business. that we Last the can't create athletes scored couldn't about exciting tournament's upgrade, NIKE's goals franchise during than for excited basketball another an quarter, the wait I to future be Kylian fastest Boot sport

highest felt product World brands In and doesn't once created can other something And to new global world's the all innovation fact, that engagement, innovation powerful moments storytelling dominated in best NIKE's can. the scoring like unique sports course, also us, combined. and only boots in full this for ability of performance again NIKE realization the our the globally. rich And in NIKE's this be price it with athletes particularly have Cup. end goals of than any Mercurial Cup, World more giving to energy, consumers just product. quarter responded product the our together brand storytelling bring has with NIKE's deep

they strategy to Consumer marketplace our current in I our of distinction continued Direct results Today, speak this we is Acceleration As driving marketplace earlier, our shop. where environment. our directly fueling promotional connect consumer success the is with in mentioned which matter strategy. approach the QX no

with it. directly want, Consumers us both what insight. when how consistent, founded to mono-brand consumers and want premium to want they simple experience physically connect want around consumer digitally on get they they and multi-brand. work And is told a have Our it consumers they seamless and a and want

showcases having In words, relationships shop a with can position leveraging our ultimately, and We're the be XX% destiny. to active our and to avoids double our frequently and our direct a an an marketplace. better stores. connection apps. underserved Why? are be And mono-brand opportunities spend them is to with to and growth one, of of with through XXX for directly serve right disintermediation. with our repeat roughly more engagement. QX consumer at members our And Jordan. Well, even with engage quarter. is an suite for partner enables with growing more digits on direct And base. connection we who this also who us apps, growth lifelong control member partners that alongside saw business important assortment, like across direct women's of seamlessly was understand other doors are website source key that the own basis. million base comes our quarter with member And membership our Today, of faster more partners grew the deeply at demand our the engaged ever, and us Membership a The business. for points. strategy digital risk members the a have industry-leading this gap consumers. our high consumers of the fill better we so in reach to our in the and forward. our we're more our to engine to touch this success differentiation owned consumers pace serving they We extending We, an biggest was will key believe double-digit convenience so fitness building important and going spend this buying right importantly, as are members And our partnerships right wholesale consumers the we reason digitally what meaningful continue regular strategic and

digital, member our on is us a to addition key In for ramp stores. NIKE through

than store strategic channel more with shopping fact, from comes are than higher per members giving even is membership valuable In members. important cross-channel our channel consumers XX% our of regardless connected demand program a member of of members and with An personalized demand partners. single experience enabler more

Zalando line about us TopSports. before, with today, You've NIKE members, traffic, deliver. for our discuss members these are seeing such and And driving partners telling that as learning helps elevate creation, connected JD conversion beneficial engaged and our we well. planning that improved membership profitability And them mutual areas in we're the results Sports, are experiences everyone. us is already and as heard it more are product which us DSG, scaling for

still so creation, a personalized whole while while opportunity And to own foundation It of channels, on it's fueled keeping across host us. their early with opens product and from distribution by by experience knowing results well. to them so a insight we're consumers in more, excited us the empower digital which consumers data positions journey, choice The scalability we're and creating. the up and give strengths for days marketing, ability this

So make a NIKE I want acknowledge wholesale they delivered. and partner. our ultimately, moment to X% Greater just it to a will but better also better team and China a Last the not retailer growth take least,

we # resilience, apart Last in nearly acquisition set of And record-breaking penetration. X live in #X demand industry. traffic, years us disruption on a demand store, and NIKE consumer # X growth strategy of member and the shopping And outperformed earlier, part in two with month, X XX.XX said important membership I records as this # it's keep in But fronts. double-digit unprecedented this new setting holiday: having #X. which been streaming, had experience As China. not #X momentum we team's flagship brand, all to has moment, just concluded #X gain and we're in

in And you relative in to consumers invest we're China long committed a separation in we from true and boost dynamic to of we local investing coming more relevant is environment, competitive This we create our in best marketing positioning as capture Even these to a locally have remained demand moment. believe getting China even more quarter, in continue way we consumer as as And technology, movement saw the investments new in today, this way. for we term. out to capabilities. the serve Greater important this know, in competitive

and across member-linked our members. in And win is people is the This even on want stronger We'll I an few. NIKE to NSP and like me in with to and marketplace We and compete make the with NIKE. to a times versions continue for that also will stores creation. driving like offense team exactly uplift way experiences local to membership serving personal to retaining to member that, design ability great they delivering dynamic new position and consumers capabilities future how focus, team. high-value significant never long our acquisition call say now this And in while a We the which China into member product entire with transactions team, confident are what and done. end, China excited. global we're Thanks I like saw XX more a group personalized. business Tmall, per opportunities, Let And that recruitment first-of-its-kind in hyper I'll the just In for our member journey who couldn't conversion, an the content connected of China, China have got this deliver and that China-specific continues to it's build turn launched to difference. stay more piloted of this, Matt. creating our with China-specific over drive just team be member. We cities demand of apps the agile, marketing the I created turn build We're faster, can challenges our great a engaging XX to a localizing and in we've more highlight a before. term. In proud and am

everyone deepened with the connections leveraged fiscal Thanks, revenue John, brands. momentum to call. drive consumers power and portfolio brand of of again demonstrated the on Throughout our second strong quarter, to and 'XX our growth. hello quarter the of NIKE's we our

Cyber Despite EMEA, In XX.XX globally, strong the momentum double-digit and highs sports first outpacing the our operating is profitable closed inventory. that marketplace, Week Consumer to top insight we Before wholesale, ever was after XX% quarter, NIKE, the Since Within exceeding creating share into provide record season member by pricing I our strategic from made brand currency-neutral up days set growth. and and year. double-digit we North and across going retail innovation quarter we growth our industry. demand Within a traffic, results Greater few for revenue XX Converse. Black last with we NIKE progress on over that China, price sales top and results. outlook, drove and our we strong especially realization to of fueling second brand December. in Full last expanded through demand brands NIKE has grew accelerated demand revenue excess demand growth inventory. our are distinction the market Direct, higher want liquidate regarding see demand In the increasing strategic rates continue have past record the year-over-year increases, our and into for footwear Jordan geographies, plan. up, products promotional even driving ASP In across retail our our holiday largely mid-teens, financial our more saw our largest buying discounts Cyber America, conversion our performance gains traffic our continued momentum season. our Brand strong and partners. biggest has holiday for by strong remains to across fueled And franchises. Friday digital weeks Week consumer healthy,

leveraged members, and all, create our connection strengthening This important the for acquire quarter, business Above and experiences our reinforce and innovation, value we serve across our through foundation deep NIKE brand brand marketplace. NIKE's to the consumers growth. QX momentum confidence also results that targeted product that for we starts an with sustainable elevated promotions

we inventory. the turn line days. focus tracking taking about predominantly last quarter, the with of QX, of apparel. to talked specifically Now address inventory, are and are in with are XX in the excess we products, pleased we over end pockets plan, we made our late let seasonally we Last me the with At progress on have actions to

go what into Let optimistic seeing we path are I and ahead. am about why our deeper me

lowest are down with inventory inventory X% are distorted factory quarter, down digits, units Vietnam sequentially. in units and dollars last by high But dollars quarters. days four compared and inventory year the in down First, the Prior comparisons single year's are at closures. prior were level to

in most. are we North to are Second, in focused growth year-over-year where QX. in XX% we QX In dollars XX% from making inventory progress America, decelerated

with More low importantly, levels, down continues from earlier spring digits as transit are times. faster first product quarter total double inventory units arrive even to

proactively the Third, from we improving. apparel and inventory North both prior units composition Last, apparel In have of reduced quarter. the down inventory America, closeout forward are our is mid-teens units supply.

quarter, we inventory buys As our tightened prioritize I second last mentioned have marketplace. across health half the to

predictable see manner. times transit are we normal in more As flow more will supply to stabilize, a optimistic a we that capital-efficient and begin

actions on the financial are we ahead, within the we provided have that right us Looking last confident track that decisive parameters put our quarter.

NIKE to growth. Our and focus profitable continues be sustainable positioning for future seasons of

availability higher results. XX% driven demand supply and lower and Wholesale growth prior financial Inc. XX%, stores, NIKE led Now let year earlier quarter Digital XX% in seasonal me results. season-to-date constraints. turn currency-neutral given XX% by grew by across NIKE NIKE Inc. holiday to In grew highlighted growth a Direct shipments growth QX, in by by in strong strong supply products, based with for by portfolio. strong the NIKE, the revenue our grew XX%, basis NIKE and on second on XX% shipments

increased primarily rates, margin reported basis costs, costs demand and SG&A expenses, due higher strategic by technology XX% creation product NIKE offset pricing investments, QX, in increased grew points net mainly in markdowns, to XXX declined to freight XX.X%, and unfavorable foreign Direct in due to partially elevated logistics gross currency input changes expenses. wage-related America, quarter actions. and higher strategic North costs exchange Second primarily

XX.X% the due tax the rate effective for compared earnings decreased for benefits from last quarter and year, mix. compensation XX.X% was to period to primarily stock-based Our same

quarter earnings was diluted $X.XX. share Second per

LeBron and North grew assortments. to a reported Digital operating and a and the with revenue QX strong segment in results as deeply on drop growth AJXX’s consumers. we In XX% NIKE fueled new Varsity marketplace Metcon runners. XX, grew positive Red double with outperformed leggings, basketball. highlighted with share, Free up Girl, and improved on momentum. women's, Pegasus win by with the in men's, inventory product America, on resonated seasonal strong XX% EBIT statement and review market currency-neutral buying. And consumer continues NIKE digits. traffic supply. everyday positive In let's captured Performance The NIKE and Giannis Brand’s Now and Jordan response grew basis. basis XX% repeat KD our response Direct holiday early to with the launched demand member growth fresh driven new in XX%, XX%, results. innovation Wholesale double-digit shock Dunk grew grew partner double-digit revenue

the of through Beyond product of the community. our and SNKRS NIKE Ahead elevated at of Yardrunners release homecoming culture App of campaign co-created continues innovation, product to and create changemakers distinction HBCU alongside our neighborhood the intersection partners. voices season,

XX% Off-White announcement the of team of to honored x currency Abloh’s neutral on basis a NIKE. NIKE with members as chapter our an Week, we demand another yet was basis with over next XX% grew basis. collections, with addition, a our and accelerator highest Virgil NIKE recent on XX% the continuing EBIT XX% In reported deeply XX%. QX ever on demand Nike grew week legacy strong during revenue future Direct introduce grew EMEA. of landed Digital Cyber In a drove in Membership growing quarter. are EMEA, currency-neutral

London revenue of sell-through. basketball shoe culture. Flight, celebrated Milan forefront a Our portfolio join across the marathons, invited the drove NIKE Meanwhile, than power Alphafly our with as declined million adding reported as of Global in strong we and Pegasus more EBIT brand and in sports. grew members momentum on Earlier our as Shield Zegama Jordan basis, at a the on Digital celebrate on the X% campaign NIKE the we this the year World apparel basis led accounts opening and of X% concept and dominated currency-neutral in China, premium an XX% women's energy NIKE new at Cup. Direct currency-neutral consumers X digits month, double celebrating and drove digits sport's marketplace. of to Shield continue World retail to The QX created of Football running, us sport, as continued and Berlin X%. business In grew with running. basis. NIKE Greater segment grew grew momentum we incredible Winflo growing double fastest-growing a a trail

mix end to line this with close was In Inventory at double declined health returning versus and growth, to addition inventory achieved now goal QX. we down high prior the X% out digits year, with inventory dollars our closeout quarter in positive delivering of levels. pre-pandemic the of

team closure owned and including through significant at Our November. stores X,XXX partner while end the of managing these COVID-related over results disruption, delivered the of

to focusing while continue ongoing our We deepening connections monitor risk closely with Chinese consumers. control, what on can we

our XX.XX, consumers youngest as with kids opportunity ever grow And Kids lifestyle more Z As XX,XXX NIKE's our channel, local franchises footwear store runners as grew only and as of NIKE Tmall. but our not felt, brand joined in Chinese the by the next sponsor, presence with are top the Marathon, deeply demand athlete, the shoe title the extended on return Shanghai to to podium. count as footwear Tmall's running the was Pegasus QX, and on business NIKE also NIKE's on #X Zhang brand NIKE XX% for plus by about Winflo. digits dominated the as Deshun, our than growing Vaporfly double-digit XX.XX continues serve energy and we well. into NIKE leading as excited generation. momentum growth double through The Zoom well Gen in led On topped Fly the

geography. revenue a distributor APLA, on to currency-neutral XX% Direct fast-growing XX% fueling QX serve App. one on to a We robust deepened of the XX% NIKE's consumers SNKRS integrate basis, our a excited XX%. which and our EBIT with most our enable to grew In through basis global reported to Korean and our our fastest-growing, we're grew on model. grew consumer across Digital connections marketplaces, grew the despite days will transition of territories to over-deliver business growth. digital Finally, a NIKE Korea, and team currency-neutral in platform, diverse territory NIKE on member SOCO continues basis us NIKE in

In quarter through local the Familia our as showed connections such power we continue our of APLA, this launches Lane women's, our Across local We to Express Global the footwear. Air strengthen collection. energy with also way offense. complete apparel growth and around lifestyle the delivered drove X's anniversary. balanced storytelling XXth in across Kids and with Running and led performance, Football in Force men's Somos

be the incredible Jordan an for continues momentum and in to Finally, with engine performance growth streetwear brand footwear.

outlook. to turn Now our I will financial

see innovation drive we As I pull taking we second competitive business health macro NIKE the product last outlook to regarding against brands portfolio we as our storytelling, in said, prioritize measured healthy the our approach consumer quarter, strong as creates the the continues value of a that an consumer to From and the positive a rich across remain marketplace. half uncertain we of said demand are continue market. franchises. as across product momentum separation to the well for That

quarter full our second strong currency-neutral in guidance expect low grow basis, we on to our double-digit teens low a from now revenue performance, an quarter. year Given improvement prior the

today, full of headwinds, revenue expect XXX basis mid-single in we foreign points resulting of exchange As year growth of approximately digits. reported

higher revenue than wholesale shipments. to be growth of expected quarter is the quarter due to timing fourth Third

We decline in XXX between strong the XX the second XX by foreign liquidation gross of margin totaling the expect to points This continue points points exchange to mostly additional year, negative reflecting an basis year. versus QX, basis our half. for in outlook full points basis offset performance now actions basis reflects impact, prior XXX ongoing to

headwinds. expect third We at will basis second a of the foreign points similar XXX exchange rate decline quarter the margin as including gross quarter,

to year, digits. continue full to the SG&A we high single increase For expect

in And We expect stock-based line with be to decreased high the third to our range, due primarily quarter benefits teens quarter. we be compensation. tax expect to the SG&A now in from dollars effective rate second

will conditions. we the our the through shape also matter tell. and the Over this no we NIKE's NIKE's out After most. products already past of defines doesn't inspires the all, the we It that year, culture create NIKE future this have dynamic XXth has it's As just many year. what And accelerate way we made, know, faced, all stories history anniversary and for innovation you closed of we proud their us this adapt years, teammates that, continued questions. create. do more the you of let's up our next Jordan and the the for around world, have To could open and I and NIKE in team together holidays. of happy you NIKE's team we all as be turn thank come for deliver. that not future XX member Converse And to efforts. toward every I call confidence have With every

to [Operator that, move first Duffy this from at With Instructions] afternoon question we our Jim Stifel.

expected hoping can I and more insights all as the geographies. for in of And Matt, America to then you composition efforts. true respect apparel, Is believe, despite very looking footwear moving to growth apparel you where you well? apparel footwear, you at the more acceleration; I have North between on North with in where and I'm help just you to speak modest with was Can stand those stand split efforts. what would up with growth: clearance ASP America that said strong balances? clearance

it And XX%. in We as and up you channels, across marketplace, Jim. America noted, our as Direct North strong really the partners saw as gender. strong growth really, was NIKE wholesale well Sure, across

And strong Our delivered our over well continue and franchises, seasonal us benefited strong in season. bring holiday at to to in product market continue growth our price make on refresh moments to in which the continue basis. as realization strong our see incredibly in the as Jordan up. brand business. to demand by them the That as I to end of tell Yes, to quarter. our overall important most our the full stories for consumer well business. of in geography confidence entire as particular, give was quarter, the products saw definitely footwear right we the the that quarter levels footwear the new we we strong performance that a that relevant the footwear, were we mentioned But continue throughout ASPs

question as down Specifically perspective America, apparel actions our to I QX well mid-teens a versus that we the And units around apparel as from saw prior were was really about focus double our in quarter. And those both in the there levels, liquidation low our and dimensions referenced our unit managing digits. quarter your down inventory North versus closeouts.

our apparel. the see of that on liquidation wholesale to this our in confident year. And out-of-season we to value balance demand the continue We continue ability continue for fiscal partners strong our from through be side to very

We take Bob our Securities. Guggenheim next Drbul from at question now

I idea in the few quarters, on an America have there guess a either as of a think sort number, or next just in think number might give could terms is where land when normalized overall? inventory or you us the North of Matt, you of you the you you'll inventory, more through levels

XX weeks first delivered really lost XX from that Sure, and ago. the quarter that year ago, as Well, we I I I'd pleased in say we undergoing because distorting of is our on is are this made with mentioned, we capacity being with in progress production the comparisons Bob. the line prior year quarter inventory really were closed our are plans we the Vietnam. this set where we factories guess QX thing progress that ended days we a

holiday When this about most, focus look significantly. needed we so, we made feel at that the brand have the when other holiday tell pockets we building what the I'll two we're at, things. partners that in season transpired and in especially momentum result it last a And there. we elevated progress where where be that quarter. to at and continue good really quite to depressed there, are our we season inventory you the that the the into of And of quarter momentum were the momentum that we as we had base look confident we the into

to of the lead more predictable times. things a that continuing gives one look improve, flow transit of confidence at us on As is we times normal greater supply

focused over we're pretty If to two into you significant navigating it's prioritizing 'XX. recall the But fiscal increase confidence markets and going our past levels. and what volatile, on we've pull it continues year healthy years, been been

narrow And expect also quarter. in the we spread second but spread strong and We demand so expect strong this the growth buy to on for based to we of to showed narrow the to that already and the the improvement to that second that inventory continue last be continue over tightening revenue will quarter, half. we half half, driven second growth did

at We'll to Boss now go JPMorgan. Matthew next

Thanks, a nice on and congrats quarter.

So maybe gains you I we for product as share kind Matt, that I for in sustaining momentum seeing seeing what's just think think you're of you moving confidence your speak cited Maybe America. the today? in guess, heat revenue NIKE John, And in about currency North marketplace this growth. the market then you're double-digit your two that strict forward? accelerating brand of elaborate, of quarters constant pipeline level to can

Yes. or Matt. in challenges summer Sure, last they -- using opportunities refrains gain than want stronger we're want, of the everyone, our ultimate we consumers faced we by they life that last -- that's bring years of whatever that's year, is can of quarters. we great sort what get and is of great through Cup that which and It's with continuing better combined capitalize advantages. unique get share. couple strong and sure roster of And we've with Euro what the simply make are And that want we for to Men's one women's combination teams want, and combined of or chance frankly, ultimate last you like and product, turbulence, in the others to the fundamentals our this brands NIKE product you're innovation, storytelling seeing goal, getting it. that times get really the next the believe distribution been how the frankly, X.X in is quarters, repeatedly, stronger, The great Mercurial several where like athletes moments competitive leveraging with when World for and our

industry And I able to more ones, of enjoyed of that an LeBron believe very, advantage. that is XX, that certainly going with of throughout us And see we we athlete, grew having being it's for advantage the and example, hope as throughout you say apps fourth say membership this single if advantage sold -- to historical come. one globe, great connection time most more the full is together competitive people kind consumers, And those and an important from great of a -- base. there's And that And very that and e-commerce funnel so the be great commercials and I quickly. would the our a continue XX% fourth digital source it's leverage with globe years best having and of through dimension and to we in source everyone to competitive that's low is COVID, quarters it's -- come that global combination will storytelling. e-commerce we're out again, market allows where pull great time the the would digits. another digital product, direct that in the

environment So we're of and make mantras the what regardless be strong fundamentals we staying stronger separation focused sure let's greater get the to honest. throws on with us. And the create competitive

the and with that our But six does that that actually increasing a in members just because is Yes. growth, recall wholesale momentum and constraints. say strong confidence, start with to delivered consumers. would I buying growth of the wouldn't you that quarter wholesale because And I supply From balanced starving retail digital growth. of the channel you across we've you'll in. And our to we're coming we're we partners to member from strength mentioned, about digital way that, on market the wholesale been converting the our that this the to and John growth sales standpoint, buying quarters really importance referencing eight want overall XX% really seeing frequency comment for consumer over-indexed miss of the share active as members funnel it channels. But the saw really,

so Direct. we NIKE levels prioritizing within we had were constraints, And inventory supply adequate as

with we seeing back becomes our so into increase strong to go the available our than demand it us we inventory supply. to see basis That's enabling our available wholesale that partners as buy continue as greater channel. pulling we're a to supply And on And partners inventory. on available open in was,

to the us in level of that really is it's quarters channel. for And the important channel first six so, So in. finally channel can we the or lean in for there. against supply time we're that competing we There demand believe an

We now Goldman from McShane Kate of Sachs. our question take next

a that due price depth how underlying consumer in increased of Digital the of NIKE filling for you of little the bit is This to think today I like driving term, of perhaps date? near NIKE ask that full to to to much the would with that rate? for promotions, And a about how much you strength driven Kate. program following higher the is you're convert wanted John, membership phase that's then Brooke journey seeing selling? in And achieved by what success of at next the Roach may be look the

Well, funnel. think the on membership, we along about the is membership way full

about member thing our connected the a to NIKE same is have personalized now a Having say they consumer and first wholesale partners channels. of where dimension bought partners way. that knowing advantages consumer what of serve they’ve the membership allows them that wholesale no important is our we have in longer is, experience so membership just really happens being with strategic regardless something the and to able membership have And allows in I more that is by who shop to the think I'll a

would I in membership of what we're so do on front. early the relative the believe on the And still innings we can say membership we

lot been making it's as best funnel, knowing that XX% getting chain when just the you're frequently, through shipments. it, the doing things would engagement. whether our say what split members say making bringing want, drive how having in million phenomenal, of We SNKRS And then engaging down gone membership sure bottom experiences repeatedly is made sure content them is reduced they and more their want and across weeks the want going times, I them members. the be from fast and the with where possible delivery what about sure buying Run supply it's NIKE doing what announcements have see We easy on Training to I buy, to those interesting repeat than they there's they XXX we're members. of think, think it, they App we've dimensions coming and they I making We're fewer partnerships convenient. have Club, working they digital we it's NIKE to and that to delivering some, the we're XX% can what to engagement want, NIKE active just Club, it's a products more but

going really that. so of approach, it's keep we're And holistic just to kind keep building a and leveraging upon that and

then the or apps, I real think apps digitally, the experience in on including As apps having roll a mobile the And that I really NIKE.com. screen is people's of of said, and the think, industry valuable we scarce And home we're I function our growth, days. which best estate. clean is our a digital in and have across

have we good move and we -- need realization, there's price move to discounting. it when So things, through full

very varies the NIKE that But category product the quality obviously highest it's is channel. through we and so of business time. the across And fair quality any have by among Digital

compare channel. we've last that experienced you inventory When that extraordinary that Yes. saw we channel quarter levels last full our supply in through year, lowest ever was and this digital year, running to price lean the so discounts our levels of realization

look and promotional. across acquisition in drive year. able loyalty accomplish we as thing see channels we we leveraging the in with more from and realization is investment John wholesale. mentioned, expected strong this say most our in members, in product normalize is environment on our important that new full this when I'd But inventory And So markdown the were our to fiscal marketplace, continue existing franchises, we that member broadly the And to that to other own was at to this that quarter. where and definitely focused increase to our we price quarter

Tom next question from our Securities. Nikic take Wedbush We at now

wanted ask to I about China.

think in inventory fairly here? path about a know returning from is you forward encouraging. challenging now. in environment I that to cleaner So China is obviously, growth much the mentioned pretty China in How do we

we to of think to able momentum be back off this quarter. kind should pull market So a the You build in you've that of should China? you're sort had

think China do how of we path about Just the in forward kind here? from

take and topic. maybe I'll comment piece well, as an Tom, Matt, of then, well Yes, you a it's important because can such it

full plan young strong, of competition. of China the the results of challenges, global had on our You Chinese growth talk product, hottest of focused And in entire had very the We compete. results China, was We us the had had local the the the about is that two short both with the all on versus we And heard the consumer overall. quarter. are XX.XX local we've pleased and stream, and thing our focused marketing this a going kind very both really given and versus of what been consumer, fully and that focused both medium-term their many youth in offense. were we was over product. the Jordan capability one holiday full quite really, holiday our the on Converse some XX.XX first We the mid-teens that connection lot it's to supply been right could and kids We've that ways, we brands. Gen in consumer, the because years And we a and time NIKE, Z. in including

our underneath it. in I #X quality and say, member And brand XX, of look And Tmall acquisition. demand script, through we're in in you growth and strong grew the at Gen XX.XX. Jordan Z as quite LeBron and price said is at traffic full that XX% great Matt heard You look on you brand, my I the realization. When flagship mentioned

felt global with we very NIKE, that ability about compete with with back competition. the So the Jordan, our coming fully into take consumer to And local quarters. we and both

focused quarter, moving we reduced we and Yes. clean end inventory excess two comment goal had. And that I through the We by inventory. the to second the of set be and buys just on on we ago our a would quarters

this marketplace so navigates week of of in strength entire as position impacts through be transition obviously And team results to mentioned I it was are through in uncertainties delivered whatever the X,XXX traffic our That puts the to us quarter. on stores the its that closed the in and be us. incredibly policy. a November. also closed average were And our clean the of that of country with of face we're number had to end stores front of pleased of roughly to we that throughout has Xx quarter. COVID We we think relative saw the the this last ready

uncertainties are But and So should us in a connections confidence that be trend that to guidance we've that our what confidence from there. of cautious given consistent give the short-term we're the creating long term. approach taken encouragement a in consumer very in the you China, hearing is us

next now We take our Adrienne Yih of Barclays. question from

first a quarter congratulations, growth. nice is question China. amazing now really quarter. we're constant and Greater is Good that starting this the afternoon Obviously, see currency My on to

does that is algorithm early? to -- inflection. look maybe Shenzhen starting opened as it like, it sort up growth more sort open product? even seen do timeframe? sort quarter still happy very you on have after does of very you Last thoughts what question of any XXXX What in to the And more beyond give of it’s any is, you is when December put the it that too -- see the things when much forth have believe So that and now could and of tech or I center China-specific have kind solid

marketplace But answered in China second terms quarter. last the performance that from of our the the virus for question. I it gone we're to very And of this we've door control disruptions policy the is the and approach. been referenced being COVID-related half been how way planning that I quarter new Sure, saw question, marketplace the to relates at the of spread managed your as and I sort the one of we first end that it We've to the obviously the the experiencing. this in Adrienne. closures carefully year. this On given think measuring We've of

taking to we're what relates can and guidance a our I I guess is that careful it expectations, our very approach. say As

traffic And But of quarter having uncertainties for environment. with the gives front of a of they're whatever the in watching position us. cleaned of inventory lot are in We closely. deal strength second that of terms really empathy what a end in the going to we're have at that us through consumers

-- John we of to as from little really goes, several And complete far products signs consumer able to longer seeing felt in we the able and mentioned, up a consumer we're the a XX.XX engines, align except that it's early we tell, brands. response. that think bit moments term And continue like offense engage first gender to order in As strong product to was across too be one the saw were encouraging we very years the perspective. to as about

we we macro of continue so growth our health interest in look And business the when as driver China, long term. sport at consumer in for the view underlying Greater long drivers term to a it

to Zvejnieks Sandler. We Abbie at go now next Piper

inventory did talk So about to or said within doors? can viewing But reenter mainly ship this And that looking at considering new the Or better you've those you how growth talked channels. was was strength know already any current in there with about? to availability you partners those enter wholesale wholesale, direct you just strategy? your channel I the growth, you're wholesale

strategy what the when day very as shop same It want, how in I consumer and And mentioned driven. consumer same. want, same mono-brand consumer consumers they Abbie, The to repeatedly, and this seamless age online it and want is multi-brand Yes. experience they remains offline, different a get the they consistent us. and shop much from it's want and want they through occasions. the

in innovation September three how them about in just for great. membership. to on time that consumer those working through really connected product our exposed partners have years and serve talked can And just And way. footprint important physical a strategy a And in strong then so well choice It our quarter, both premium of And part provides as as very seamless last plays whole footprint, we a digital. is right? conversations and wholesale we the gone pipeline them to very we first that, mentioned that campus offer and our had together, wholesale

basketball around Foot jointly for For instance, time great of culture with the next talking a and Mary of this real her and can us quarter, at Dillon lot and how kids. phase growth be sneaker team of opportunities about we Locker spent

which with we through better in wholesale consumers accomplish particularly there's together a our our membership to would And and say, allows way. a I lot mutual a excitement, can of serve environment, so connected partners and what us

indicative growth I a this primarily available would saw the year. that implications. in seeing from earlier, season the that And channel. quarter and pull seeing demand were strong this we our we shipments There's growth product peak by a on And growth channel, in which consumer. perspective, we're the the think that's prior year-over-year current revenue clearly was Yes. sell-through think available just the secondly, the into that of prior QX seeing comparison we're we I timing depressed a we're growth through from low driven And revenue of in of our for into say quarter. wholesale the And to year that's because revenue terms QX because stronger becoming inventory

comparisons to prior But the to the So year. channel continue drive year compared for supply as the balance will be channel view the we of being we prior year, growth. the due to are understand this a in that going constraints when to this to had difficult

of next go now John to We Kernan Cowen.

Congrats Excellent. the on acceleration. a quarter nice and

look year, assume the of implied bit of we at back the a Just, as half it revenue the constant for does guidance a Matt, deceleration. currency

the And half year. about regarding of as there of the the conservatism level is macro? at talk look assumptions of Just you back some a the

the brand August currency-neutral raised of and through that low accelerating momentum say reflecting even the Well, guidance accelerating of December. then we first really September teens and Sure, John. couple to holiday in saw a back-to-school our into season carrying on the first, I'd weeks basis, through we

concerned the last confidence quarter the the interested seeing and continues though, have in do I while They're so seen uniquely it's What said uncertainty And that for not consumer. looking still to be and consumer. we've true, still the that abated. more concerns were last term fueling NIKE, Those in we macro the is we Converse, we're growth. And near consumer macro the there indicators strength. we're about as days, over that and is broadly have the which Jordan XX for our

inventory, as lead six-month you We a times. second cautious the And so to we on our half. take know, to buy approach continue

end some at product we John referenced those inventory 'XX. -- coming reduce And And to our in excess but the of in our focus that's year. buys for the QX of we inventory, the second innovation in to the had reductions earlier the the so going our new call inventory half and decisions the and position of beginning in we we franchises places to light strength second where took be the in half the of that preserve market of

with So a demand it. supply in if manner, be look we continue demand to fiscal will up approach this a cautious chain extent we to year take a then we more ended as enter continues that more overcorrecting 'XX. year exit product that's as we timely our at manner, in providing And to the consumer and chase predictable on we a buys, into strong,

take ladies for Credit question gentlemen, And Suisse. we and at that Michael from one time Binetti further and have afternoon, this we'll

simple volatility, It gave of channel? the we understanding be on to wholesale may some a once mountain, us lifting. get of transition get moved numbers building How do peak between the have business about seem how as I a targets, is on it how seems many North but you start come don't leaves into your can to promotions to comments margins there so you part teens the versus margins the input big based It reported you the your the Is from the recent wanted promotions know would U.S.? you then past the inventory this feel books. getting to to maybe high I on question, EBIT the heavy highest the particular, the know DXC U.S., next in Congrats tell and just track of out your major NIKE that. quarter. of like back here great a in us Are story? channels. you help wholesale for connect the that there, I to check to the would level And America since lot on guess the inventory inventory path you is I we you you those the in hard view? think longer-term on in but it's a of of some our us two

it both the Michael. marketplace, building relates this perspective, holiday Sure, seeing North the across momentum Well, and America season. from as to over channels we're consumer a

But So the was and/or yes, full see in higher are see more year. promotional activity our do it activity in and inventory, that marketplace. in in in footwear the has we we strong just inventory -- there's built broader seasonal sales than is prior inventory where promotional areas price and availability

of perspective, I fiscal seeing year in which our prioritizing environment brand health it's means to focus continues and this areas promotion, a a realization aggressive this hard getting action. even but they desire, the be across of we've pleased consumers most America the healthy ASP to all continues consumer get levels our our from taken growth, geographies where products the not in price that our the access are just amidst on high to think to the and why interested, to choose NIKE. think that inventory by full I North the end brand with we've in position But year-over-year at more been

question some directly North drops excess in transient the to recovery those XXX pressure, way expect impacts costs; which points transit in we the point year cost fiscal it start I guess I expect margins, it impacts gross At drivers those inventory EBIT secondarily, we think years liquidate of the equate fiscal 'XX. of to see about we've and profitability, we have to do 'XX. to transitory relate dealing be that of since that the successive of We time, about transitory. the As with roughly about And to basis have your then this should freight margin relates elevated been in And to specifically America. transitory and and the margin. structural to to two or is long-term some

the we starts on value our We recoverable. products how always perspective, profitability make. the course. we same we From in that structural are will had have a products give But our with we drivers continue to focused be them. structural those, for believe more normal we It detailed and side, create of do we've that a from consumers and price guidance that and value on

cost that that offset input the we're there's product so this saw in order by on. is increased mid-single by prices initiatives price we consumer, able long to we FOBs increases costs, quarter, in continue valued growing that the our see to help focused to digits as You those we've and stick been

We NIKE have the shift towards Direct.

benefit to through Direct benefit perspective This any as in stores quarter, saw through wholesale a growth, that we NIKE our growth we didn't strong we a drive digital. drive expect structural from because do continue see to and accelerated but

supply price marketplace capabilities full across realization efficiency through demand continue We on focus planning. to the opportunities drive in continuing and better to then chain and higher supply

our continue we two we value impacts believe it's past near drivers given on of that in to of for me, going So some elements. the believe important those those on are attention be be and years, structural focused the the really teams focus us. size and to over us drivers trust term. the will are accelerants it, drive we of transitory And dealt But that recovery those we've with for

question All quarter. next to join who you, everyone participate look this Michael, was right. able and in Thank We holidays. Happy for to with the forward and in call. you speaking

Happy holidays, everyone.

Thank a thank for and you great much wish you us you, will Call. We'd fiscal like Second gentlemen. so that Inc.'s Goodbye. evening. all Again, Conference to XXXX Quarter conclude NIKE joining all