Nike CEO John Donahoe mentioned Thursday the corporate is “really focused” on Gen Z shoppers in China and that the athletic attire retailer is continuous to see robust demand within the area, even amid Covid-related disruptions.
“We’re still the number one cool and favorite brand in Shanghai and in Beijing. We’re really focused on the Gen Z consumer in China, we saw a very good response from the Gen Z consumer who wants the most innovative products and wants brands that are globally relevant,” Donahoe instructed CNBC’s “Closing Bell.”
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“We saw good response in Q2, and we have the same focus and outlook going forward,” he mentioned.
At the top of Nike’s fiscal second-quarter, ended Nov. 30, China’s “zero Covid policy” was nonetheless in impact and 1,500 Nike shops throughout the area had been shut down, resulting in a 3% drop in gross sales in contrast with the year-ago interval.
Revenue in China – the sneaker large’s third-biggest market by income – was down 22% through the interval from the identical quarter in 2021, when Covid disruptions had been extra steady within the area.
Donahoe did not handle whether or not spending has ramped again up now that China has rescinded its zero Covid coverage and reopened, however he mentioned the corporate is assured the area stays a robust market.
“We factored in some disruption in our outlook, but we view that as transitory, we still believe in the fundamentals of China,” mentioned Donahoe.
“We invested in building hyperlocal product where we take an iconic franchise like Air Force One, or Dunk and we localize it so it’s relevant for the Chinese consumer — and the Chinese consumer really responded to that,” he mentioned.
For the final a number of quarters, Nike, like different retailers, has been grappling with a glut of stock however Donahoe mentioned the issue is primarily in North America and the corporate goals to see ranges normalized by the top of the fiscal 12 months in May.
“The consumer is still paying list price for the Nike products that they know and love. In the areas where we have excess inventory, which is primarily apparel in North America, we are working through it. We’re discounting and working through it,” mentioned Donahoe.
Recently, the sneaker large has tried to maneuver away from wholesalers in favor of a direct-to-consumer technique, however throughout its most up-to-date fiscal quarter, wholesale income jumped 19% – largely as a result of the corporate lastly had the stock accessible to promote to these companions.
Nike has invested closely in its direct-to-consumer technique, however Donahoe glossed over that concentrate on Thursday and mentioned wholesalers stay “very, very important” to Nike.
“Consumers in this day and age want to get what they want, when they want it, how they want it, and in our industry, they’ve been very clear they want a premium and consistent shopping experience regardless of channel,” he mentioned.
The prime government additionally disregarded issues over the macroenvironment, saying, “We’re prepared for anything but our focus is to make sure that we get stronger through this period, regardless of how the inflation and economy play out.”