Nike reports strong numbers, faces racial discrimination suit

Dive Brief:

• Nike reported Thursday that third quarter revenues increased 7% to $9.6 billion, compared to $8.98 billion in the year-ago quarter, according to a company press release. By brand on a currency-neutral basis, Nike revenues were $9.1 billion, up 12%, while Converse revenues were $463 million, down 2%.

• Net income for the quarter was $1.1 billion, up from a loss of $921 million in the year-ago quarter. Gross margin increased 130 basis points to 45.1%, driven by higher average selling prices and growth in Nike Direct, among other factors. Increased revenues at the Nike brand were driven by the Sportswear and Jordan categories, as well as "continued double-digit growth across footwear and apparel."

• Also this week, a former employee, Ahmer Inam, filed a lawsuit against the athletics retailer in Oregon alleging racial discrimination, according to online records of the filing. A Nike spokesperson said the company couldn't comment on the complaint, "but Nike is committed to creating a culture of empowerment and respect where everyone can succeed and contribute to our success."

Dive Insight:

The new racial discrimination suit filed against Nike is one in a series that have been filed against the retailer alleging a toxic workplace culture. A class action sex discrimination lawsuit filed by two former female employees in August called national attention to the retailer's practices and caused a mass exodus of executives at the company after internal reviews.

This newest legal action not only raises renewed questions about Nike's workplace culture, but also makes recent marketing efforts, geared toward diversity and inclusion, feel flat. Nike has taken the heat — and praise — for some of its marketing choices, including the Colin Kaepernick campaign it ran last year, but a sex discrimination suit followed by a racial discrimination suit challenge the notion that the company is truly promoting those values.

That being said, up to this point, the sex discrimination suit does not seem to have impacted Nike's sales. In a conference call with executives, CEO Mark Parker said that the women's business is over-indexing the growth in men's and that the new Air Max Dia, a women's-specific design, "is performing extremely well across the globe.

Read More