“It was a reminder of the brand’s strength, its leadership in innovation and its global reach,” Camilo Lyon, an analyst with Canaccord Genuity, wrote in a note.
The athletic brand highlighted a few key drivers for its 2017 sales plan, including the women’s business, direct-to-consumer, certain overseas markets and the U.S., as well as its improved supply chain and manufacturing.
Christopher Svezia, an analyst with Susquehanna Financial, said that Converse will also contribute. “We believe Converse can represent a big opportunity,” he wrote in a note. (Svezia affirmed the brand’s target of $3 billion in sales by 2017, up from $1.4 billion in 2013.)
Canaccord’s Lyon lauded innovations like Flyknit, but said the company’s plan to roll out lower price points in April could be a pitfall. “We suspect this will coincide with increased distribution in the mid-tier department store channel,” he wrote. “Initially, we view this positively; however, we question whether enough differentiation can exist between premium product and take-down versions to equally satisfy all consumers.”
Still, Flyknit’s growth represents a strong opportunity on the manufacturing side, he added. “We believe [Nike]’s efforts to reduce waste and labor costs and shorten lead times by mechanizing many of the manufacturing processes will be meaningfully additive in three to five years. This is most evident with the Flyknit platform as it expands from running to other categories such as basketball and apparel,” Lyon said.
Analyst Paul Swinand of Morningstar Capital pointed out that Nike’s financial targets are not surprising. “They’ve always targeted high-single-digit growth, so I don’t know why that’s new,” he said. But Swinand agreed that Flyknit could represent a big opportunity for Nike, maybe even bigger than they are letting on.
“I get the sense they’re being guarded because they don’t want people to know how good it could be,” he said. “It could be one of those things where in five years we find the real benefit hasn’t even been thought of yet.”