- Prachi Singh |
Nike hosted its 2017 Investor Day yesterday, in which the company provided an overview on how it is accelerating the next phase of long-term, sustainable and profitable growth. Fuelled by the Consumer Direct Offense, the company stated during the investor meeting that it expects to drive high-single digit revenue growth, expanding margins and mid-teens earnings per share growth on average over the next five years.
“The consumer today expects a premium experience, with innovative product and services delivered faster and more personally,” said Mark Parker, Chairman, President and CEO of Nike in a statement, adding, “Fuelled by a transformation of our business, we are attacking growth opportunities through innovation, speed and digital to accelerate long-term, sustainable and profitable growth.”
Nike reveals new strategies to boost growth
The company expanded on its new Consumer Direct Offense which aims to serve the athlete faster and more personally, at scale, led by digital. With focused growth through key categories this new offense is expected to connect the Nike brand and products with consumers in new ways across 12 key cities and 10 key countries.
Addressing Nike’s new Consumer Direct Offense and Triple Double strategy, Andy Campion, Executive Vice President and CFO, stated in the release: “We have implemented new consumer focused strategies several times in our company’s history, and in each instance, we have ignited Nike’s next horizon of long-term growth.”
The company expects new innovation platforms to drive over 50 percent of revenue growth, revenue generated from digital platforms, both owned and partnered, is anticipated to increase from nearly 15 percent in fiscal year 2018 to more than 30 percent, speed-to-market is anticipated to double as Nike reduces the overall product creation timeline by over 50 percent, leveraging the triple double strategy is expected to drive higher, more consistent full-price sell-through in season.
The company also added during the investor meeting that, by geography, it expects to grow North America in the mid-single digit range, Europe, Middle East & Africa (EMEA) in the mid-to-high single digit range, Greater China in the low to mid-teen range, and Asia Pacific & Latin America (APLA) in the high single-digit to low double-digit range, in each case on average over the next five years.
The company expects to reinvest three to four percent of revenue over the next five years through capital expenditures and expects the target range for return on invested capital to average in the low 30 percent range. Finally, the company expects to continue to increase shareholder returns by maintaining a 25 to 35 percent dividend payout ratio coupled with share repurchases.