Mentions of ‘direct-to-consumer’ (DTC) and ‘mergers and acquisitions’ (M&A) in earnings transcripts saw over 100% and 200% growth, respectively, between 2019 and 2020, according to the filing analytics database by GlobalData. With digital revenues skyrocketing, the data and analytics company notes that this area could be a real stand-out segment for Nike, which has seen its earnings transcript sentiment growth slowed in Q1 2021*, compared with Q4.

Rinaldo Pereira, Senior Business Fundamentals Analyst at GlobalData, comments: “Much before the pandemic, Nike implemented innovative digital strategies that paid dividends, with the DTC segment moving towards generating nearly half of its total revenue. Nike has seen earnings transcript sentiment growth slowed in Q1 2021* compared to Q4 2020, driven by wholesale business’ influence and negativity around short-term volatility.”

GlobalData’s Filing Analytics platform identified that alongside ‘DTC’, discussions around ‘Physical Retail’ were also up in 2020.

Furthermore, ‘Digital’ was also the top keyword in 2020 documents, with Nike being supremely committed to online apparel sales and consumer trends. According to GlobalData estimates, online retail is expected to grow at a compound annual growth rate (CAGR) of 14% between 2019 and 2023**.

Pereira adds: “Nike can achieve a Netflix-like subscription model and generate recurring revenue, with Nike Live stores and via its retail app. Contactless shopping and pickups continue to be prominent in 2021, and similar omnichannel strategies will be the key to Nike’s success looking beyond the pandemic.”

The deals database by GlobalData also reveals that Nike was only involved in ten deals between 2016 and 2021 (until February), half of which were related to the digital segment. It does seem that Nike has underachieved on the digital M&A front, but that attitude is soon to change.

Pereira concludes: “The sportswear company is likely to be involved in more digital investment or M&A, with rising discussions around M&A in 2020 and Q1 2021. Nike’s recent acquisition of Datalogue proves that the company is prepared to invest to further drive double-digit growth in its DTC segment.”

* Q3 2021 (ended February 2021) earnings transcript released on 18 March 2021

** GlobalData’s Global Online Retailing Report 2019-2023, published November 2020