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Nike’s Function-Meets-Fashion Formula Fuels Growth

Early on Nike Inc. learned the benefits of melding function and fashion, and it’s a formula that’s allowed the mega brand to create a innovative product that appeals to consumers on and off the court.

The company reported revenue if the first quarter ended Aug. 31 up 10 percent to $9.9 billion and net income rising 15 percent to $1.1 billion. To continue the momentum, the Nike has several product extensions and introductions planned for the spring and beyond.

Mark Parker, president and CEO of Nike, speaking on a conference call with analysts, said the company’s product strategy is creating excitement due to the “unique intersections between sport and style across our brand.”

Parker cited examples like the on and off court collaboration between Serena Williams and Virgil Abloh for the U.S. Tennis Open, Converse’s limited edition Chuck Taylors and One Stars with creative partners in fashion and music, and our first Jordan Brand football kit with French soccer team Paris Saint-Germain.

“As I said before, it’s not lifestyle versus performance or fashion versus sports,” he said. “The consumer continues to be inspired by seeing those worlds come together.”

Parker said a key to strong brand platforms is not just their own sales potential but the ability to bring fresh products to market. He said, “We’re seeing it with Nike Air and React. Consumers are drawn to their comfort and performance and they’re asking for more style options.”

For example, VaporMax and 270 have both proven there is much growth potential in Nike Air, as the company develops more comfort innovation in new forms. He said for Spring 2019, Nike is taking the “exaggerated air” in the Air Max 270 and going a step further with the introduction of the Air Max 720. This new platform is engineered for maximum comfort, cradling the entire foot.

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Nike React is another example of how the company has been able to capitalize on the appeal of performance innovation and bring it into mainstream sportswear. The React Element 87’s comfort cushioning has been adapted to more performance and lifestyle shoes at several price points, he noted.

The ZoomX running show “continues to power the world’s fastest runners including Eliud Kipchoge during his epic world record smashing run at the Berlin Marathon this month,” Parker said. “This quarter, we took the magic of the Vaporfly 4% and merged it with an iconic running shoe, creating the Peg Turbo. The launch has created incredible energy for the whole Pegasus franchise and helped lead our overall running business to solid growth this quarter.”

He noted that one of Nike’s most versatile and long-lasting platforms has been the Flyknit. Using digital knitting, Nike now has been able to create a product with strong breathability, stretch and support. In basketball, for example, the KD11 and the LeBron 16 each leverage specific yarns and knit structures to match individual athlete needs.

Parker said, “The LeBron 16 with its Battleknit 2.0 has had a great early read with consumers, both men and women.”

As part of Nike’s broader commitment to scale sustainable platforms, it’s expanding Nike Flyleather through styles like the Air Force 1, Cortez and the Air Max 95. Flyleather is a material that looks and feels like premium leather, but it’s lighter, more durable and more sustainable, he explained, that uses at least 50 percent reclaimed leather and helps eliminate waste.

“In the coming year, for the first time ever, Nike will bring digitally powered adjustable footwear to professional sports,” Parker said. “Building on the auto-lacing platform from HyperAdapt, this breakthrough creates a custom fit. We had a group of elite athletes on campus this summer for an intense wear test and their feedback was that they never felt more secure or more in control of their movement. This next generation adaptable innovation will set the standard for optimal fit and we’ll offer it at more accessible price points and in greater quantities.”

In addition, he said a strong roster of core footwear at entry price points is equally important to Nike’s overall growth potential. He said, “We’re not yet where we want to be in core footwear, particularly in North America. But two priorities for the business are to develop innovation specifically for the core consumer and to better leverage pinnacle performance platforms like Nike Air in this zone.”