Nike CEO touts strength in Gen Z China shopper as Covid disruptions dent regional sales

Nike CEO John Donahoe said Thursday the institution is "really focused" connected Gen Z consumers successful China and that the diversion apparel retailer is continuing to spot beardown request successful the region, adjacent amid Covid-related disruptions. 

"We're inactive the fig 1 chill and favourite marque successful Shanghai and successful Beijing. We're truly focused connected the Gen Z user successful China, we saw a precise bully effect from the Gen Z user who wants the astir innovative products and wants brands that are globally relevant," Donahoe told CNBC's "Closing Bell." 

"We saw bully effect successful Q2, and we person the aforesaid absorption and outlook going forward," helium said.

At the extremity of Nike's fiscal second-quarter, ended Nov. 30, China's "zero Covid policy" was inactive successful effect and 1,500 Nike stores crossed the portion were unopen down, starring to a 3% driblet successful income compared with the year-ago period.

Revenue successful China – the sneaker giant's third-biggest marketplace by gross – was down 22% during the play from the aforesaid 4th successful 2021, erstwhile Covid disruptions were much unchangeable successful the region.

Donahoe didn't code whether spending has ramped backmost up present that China has rescinded its zero Covid policy and reopened, but helium said the institution is assured the portion remains a beardown market. 

"We factored successful immoderate disruption successful our outlook, but we presumption that arsenic transitory, we inactive judge successful the fundamentals of China," said Donahoe. 

"We invested successful gathering hyperlocal merchandise wherever we instrumentality an iconic franchise similar Air Force One, oregon Dunk and we localize it truthful it's applicable for the Chinese user — and the Chinese user truly responded to that," helium said.

For the past respective quarters, Nike, similar different retailers, has been grappling with a glut of inventory but Donahoe said the occupation is chiefly successful North America and the institution aims to spot levels normalized by the extremity of the fiscal twelvemonth successful May. 

"The user is inactive paying database terms for the Nike products that they cognize and love. In the areas wherever we person excess inventory, which is chiefly apparel successful North America, we are moving done it. We're discounting and moving done it," said Donahoe. 

Recently, the sneaker elephantine has tried to determination distant from wholesalers successful favor of a direct-to-consumer strategy, but during its astir caller fiscal quarter, wholesale gross jumped 19% – mostly due to the fact that the institution yet had the inventory disposable to merchantability to those partners. 

Nike has invested heavy successful its direct-to-consumer strategy, but Donahoe glossed implicit that absorption connected Thursday and said wholesalers stay "very, precise important" to Nike. 

"Consumers successful this time and property privation to get what they want, erstwhile they privation it, however they privation it, and successful our industry, they've been precise wide they privation a premium and accordant buying acquisition careless of channel," helium said.  

The apical enforcement besides brushed disconnected concerns implicit the macroenvironment, saying, "We're prepared for thing but our absorption is to marque definite that we get stronger done this period, careless of however the ostentation and system play out."