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The leading athletic apparel brand turned in another round of solid operating results in the fiscal fourth quarter. Nike (NYSE: NKE) reported broad-based growth across geographies, footwear and apparel, and the men's and women's categories.
While management didn't knock investors' socks off with guidance, the outlook didn't disappoint, either, as the company expects current demand trends to continue in the year ahead.
Here are three highlights from the quarter that reveal a brand that is continuing to fire on all cylinders.
Sales of lifestyle sneakers are booming, thanks to new designs like the Nike x AMBUSH Air Max 180. IMAGE SOURCE: NIKE.
1. Innovation fuels revenue growth
Said Nike CEO Mark Parker:
Nike delivered strong results in fiscal year 2019, growing 11% on a currency-neutral basis, which outpaced our expectations from the beginning of the year. Our results are further proof that the demand for sport performance and athletic lifestyle product is thriving, and our Consumer Direct Offense is capturing more of that opportunity every day.
Total Nike brand revenue (excluding revenue from Converse and other corporate items) accelerated from 9% in the year-ago quarter to 10% in the most recent quarter. That doesn't sound like much, but it's noteworthy for a business that generated $39.1 billion in revenue over the last year.
What's more, Nike has seen much better performance in North America, where sales growth accelerated from a decline of 2% in fiscal 2018 to an increase of 7% in fiscal 2019. The acceleration was balanced across footwear and apparel, with footwear seeing the biggest jump in growth (no pun intended).
While sales of performance sneakers have been declining in recent years, lifestyle sneakers are experiencing rising demand. On that note, Parker stated that demand is so strong for Nike AIR that it is "outpacing supply."
Product innovation, including the React Element 55, 87, and Presto, in addition to AIR, drove more than 20% growth in sportswear in the fourth quarter. Parker said, "We see great opportunity for both platforms to continue to carve out new space in the lifestyle market."
2. Growth in women's sportswear
One significant opportunity for Nike is growing the women's category, which makes up less than a quarter of total revenue. The women's business has been growing slightly faster than men's lately. On this front, here's what Parker had to say:
It's hard to overstate how important this year has been to the evolution of the women's offense at Nike. The business grew double digits in fiscal 19 accelerating in the back half of the year. Our momentum in women's is a great example of how our renewed focus is really moving the needle through thoughtful design, powerful brand messages, and digitally led distribution.