Nike’s gross margin rising by 150 basis points, according to Cowen’s John Kernan, is “indicative of the power of Nike’s innovation and scaling digital platforms and apps.” According to the report, the Nike app is the quickest growing platform, expanding almost triple digits in Q1. In light of its success, the company pulled forward the rollout of the app in China to late in Q2.
Digital is an important growth driver in all regions for Nike, noted Macquarie Research’s Laurent Vasilescu noted in the report – North America was up 30 percent, China was up more than 70 percent, APLA was up almost 50 percent and EMEA was up by double digits.
Shares increased by as much as 6.4 percent on Wednesday morning (Sept. 25), coming out ahead of the previous intraday high of $90 at $92.79. And while the company kept its high single-digit revenue growth target, it increased its gross margin expansion forecast to 50 to 75 basis points.
Susquehanna’s Sam Poser wrote, according to the outlet, “Accelerating investments in digital, supply chain and product innovation are paving the way for a bright future of continued top-line growth and margin expansion.”
In separate news, news recently surfaced that Nike is launching a new subscription program geared toward children. The Nike Adventure Club allows parents to order shoes for their kids and pay either $20, $30 or $50 per month to gain access to new shoes monthly, bi-monthly or quarterly. The most expensive $50 option takes off around $10 per pair of Nike shoes purchased (as the average retail price is $60).
