Nike Inc (NYSE:NKE) hailed the success of its Nike Direct business as third-quarter revenues climbed, fueling speculation retailers such as JD Sports Fashion PLC (LSE:JD.) could benefit from market trends.
Total sales in the three months ending 28 Feb were up 5% to US$10.9bn, with Nike Direct sales totalling US$4.6bn, a 15% increase like-for-like.
A statement from Nikw also thanked the “normalisation of traffic” in the sports and fashion wear’s own physical stores, owing to an easing of lockdown restrictions, where sales were up 14%.
Nike launched its direct-to-consumer strategy in 2017, with the aim of growing its direct sales and becoming less reliant on its wholesale business.
It hoped to achieve this through investment in e-commerce, apps and product innovations through apps like SNKRS, where customers can buy Nike shoes before their release in retailers such as JD Sports Fashion PLC (LSE:JD.) and Footlocker.
"Nike’s strong results this quarter show that our Consumer Direct Acceleration strategy is working, as we invest to achieve our growth opportunities," said president and chief executive John Donahoe.
"Fueled by deep consumer connections, compelling product innovation and an expanding digital advantage, we have the right playbook to navigate volatility and create value through our relentless drive to serve the future of sport.”
Profits grew 9% in the year so far to just under $16bn compared to the same period 12 months earlier.
Peel Hunt notes in a comment that Nike’s third-quarter trading update “will also bring JD back into investors’ minds.”
“It is interesting that Nike suggests that the changes in its wholesaler portfolio and strategy are now complete.”
“Thus, we categorically do no expect JD’s allocations of exclusive product from the big brands to fall, and we see the recent share price weakness as a very good buying opportunity.”
Shares in JD Sports climbed 3.54% to 154.1p in morning deals. Shares are down 29% this year and have been on the decline since reaching an all-time high of 233p in November.