NIKE, Inc. (NYSE:NKE) Q2 2019 Earnings Conference Call - Final Transcript

Dec 20, 2018 • 05:00 pm ET

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NIKE, Inc. (NYSE:NKE) Q2 2019 Earnings Conference Call - Final Transcript

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Executive
Mark G. Parker

experience. Our teams are driving change and it's yielding excellent results. For the quarter Nike Inc revenues grew 10%. On a currency neutral basis, Nike Inc revenue increased 14%. Gross margin was up 80 basis points to prior year, and earnings per share was up 13% to prior year. Specific highlights include 9% growth in North America and nearly 20% constant currency growth in our international geographies. Digital growth of 41% on a constant currency basis and continued momentum in both sportswear and performance categories including a return to growth in the Jordan business.

The momentum we're driving is grounded in strong product innovation. We're increasing the pace of new concepts and bringing a new discipline to how we manage the lifecycle of our innovation. We have a clear road map of how we stage our new platforms giving each one the space to shine through high energy storytelling and then ramping up scale and choice to serve diverse consumer needs. Put simply we're increasing the return on investment in innovation. One of our great differentiators is of course Nike Air, it's being energized through platforms like Vapormax and Air Max 270, two of the world's top selling athletic footwear models.

New interpretations of our icons led by the Air Max 95 and 97 and this spring we're excited to add a new distinct Air platform to the mix with the Air Max 270. The consumer is already anticipating its arrival and will keep the interest high through multiple iterations early in its product lifecycle. NIKE React too will enter a new phase as we expand the platform beyond running and basketball into lifestyle product, with the Element 55 and the Shoe of the Year, the Element 87.

Both styles will scale significantly in 2019. Next year we'll also NIKE React hybrids that combine multiple cushioning platforms along with the redesigned Epic React 2.0 coming in spring.

As we broaden platforms across categories, we're also broadening them across price points to bring them to more people. As we mentioned on our last call, we see greater opportunities for moderately priced footwear from Nike right now. So we're creating a more complete consumer offense for core footwear by creating performance and lifestyle icons and core-only innovation.

At Nike, it's our mission to make athletes better, but perhaps no innovation delivers on that promise like ZoomX and the Vaporfly 4%, which had dominated the world's marathons since 2017.

We've started something special with the 4%, enabling a dramatic improvement for the world's best runners and you can expect more exciting breakthroughs to come here. That reputation has made its way to everyday athletes making 4% the most sought after shoe on race day and it's created a halo effect for many of our Nike's fast footwear styles, especially the Peg 35, driving double-digit growth in the running category in Q2.

I'm excited to announce that in the new year, we'll launch a new adaptive performance platform in basketball at the $350 price