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Nike’s Flagship Brand Is Soaring — but What’s Going On With Jordan and Converse?

Nike Inc.’s shares continue to surge today — rising as much as 12 percent to a high of $80.96 — on the heels of Thursday’s earnings beat, evidencing renewed momentum in its previously stagnant U.S. business.

CEO Mark Parker credited the company’s heightened focus on innovation, digital and direct-to-consumer with bolstering its success in the fourth quarter.

“Digital innovation allows us to push the edges on new immersive experiences, whether that’s in our own channels or through partnered retail or social media platforms,” Parker told investors during a conference call yesterday. “Digital acceleration is also critical to creating an overall faster company, from consumer insight to responsive manufacturing to delivering products to the consumer when they want it.”

Still, not every facet of Nike’s business is on the up and up. As its hero brand rebounds domestically — posting a Q4 sales gain of 9 percent to $9.3 billion after previously stalling out amid competition from Adidas — its Converse and Jordan brand businesses have tumbled.

Converse posted a Q4 sales decline of 14 percent to $512 million, and Jordan brand’s wholesale sales fell 8 percent to $2.9 billion. While the shortfalls could be concerning on their face, at least some of the deceleration is linked to Nike’s planned DTC focus, which sees the firm pulling back some wholesale distribution in favor of selling directly to consumers on its own e-commerce sites and retail outposts.

“Contraction [at Converse] was primarily driven by the decision to right-size wholesale distribution in North America and Europe, the Middle East and Africa,” Nike CFO Andrew Campion told investors. “At the same time, Converse Direct grew double digits in Q4, including strong double-digit growth in digital for the full year with acceleration in Q4.”

In fiscal year ’19, Campion said the brand will launch a more “direct, branded and immersive” digital experience to drive closer connections with consumers.

Meanwhile, Nike’s finance chief said Jordan Brand is returning to a “pull market” in North America — where the brand had been tightening supply to create demand — and that he expects a return to global growth in fiscal year ’19. (Pull marketing refers to a bevy of tactics used by companies to generate high demand for products).

“Consumers love the Jordan Brand, and their passion for the brand is unwavering,” Campion said. “At the same time, we saw an opportunity to recalibrate the supply of select styles across just distribution channels. While that included tightening the supply in some cases, it also included expanding the supply of the hottest, most iconic Jordan styles on the Nike SNKRS App, which has fast become the leading destination for high-heat footwear launches globally.”

Where price is concerned, Campion said the firm is still seeing full-price sell-through for the Jordan brand, which he suggested is a leading indicator of its strength.

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