WHEN: TODAY, Wednesday, October 25, 2017
WHERE: CNBC's "Closing Bell" – Live from Nike's Investor Day at its world headquarters in Beaverton, OR
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Nike Chairman and CEO Mark Parker and CNBC's Sara Eisen on CNBC's "Closing Bell" (M-F 3PM-5PM) today, Wednesday, October 25th.
Following is a link to video of the interview on CNBC.com: https://www.cnbc.com/video/2017/10/25/full-interview-with-mark-parker.html.
All references must be sourced to CNBC.
SARA EISEN: NIKE ONE OF THE BRIGHT SPOTS IN TODAY'S SELL OFF AS THE COMPANY LAYS OUT NEW AMBITIOUS GROWTH TARGETS OF ITS INVESTOR DAY IN BEAVERTON, OREGON, JOINING ME NOW TO DISCUSS IN AN CNBC EXCLUSIVE INTERVIEW IS NIKE CHAIRMAN AND CEO MARK PARKER MARK. I'M SORRY I COULDN'T BE THERE, TRAVELING SEVEN MONTHS PREGNANT ACROSS COUNTRY CAN BE TRICKY. WELCOME.
MARK PARKER: YEAH, SORRY, SARA.
EISEN: THANK YOU FOR JOINING US. THE NEWS TODAY, EVERYBODY WAS LOOKING FOR YOU TO UPDATE THIS $50 BILLION TARGET ON REVENUES THAT YOU LAID OUT LAST TIME FOR 2020 YOU DIDNT DO THAT DOES THAT MEAN THAT THAT NUMBERS STILL ACHIEVABLE?
PARKER: WE PLAN TO ACHIEVE OUR 50 BILLION TARGET WITHIN THE NEXT FIVE YEARS AND WHAT WE LAID OUT TODAY WAS A HIGH SINGLE DIGIT REVENUE GROWTH AND MID-TEENS EPS TARGET AND W'ELL DISSECT THAT INTO ALL THE VARIOUS ELEMENTS TO GIVE YOU MORE DEPTH AND DETAIL ON IT. WE DID THAT SOMEWHAT TODAY DURING OUR MEETING AND WE'LL WRAP THAT UP WITH ANDY CAMPION OUR CFO IN JUST A BIT, BUT WHAT'S EXCITING ABOUT TODAY IS IT REALLY MAPS OUT OUR OVERALL LONG-TERM GROWTH STRATEGY. AND LOTS TO BE EXCITED ABOUT CONSUMER DIRECT OFFENSE IS REALLY WHAT WERE LINING UP AGAINST. IT IS INCREDIBLY CRITICAL THAT WE SERVE THE CONSUMER AT A HIGHER LEVEL. I THINK THAT'S TRUE WITH EVERYBODY. THE INNOVATION WE'RE LAYING OUT, INCREDIBLE ARRAY OF INNOVATION, THE BEST PIPELINE OF INNOVATION IVE SEEN IN MY WHOLE TIME AT NIKE, AND THATS BEEN A WHILE. AND THEN WE'RE GOING FASTER, SO WERE TAKING OUR BUSINESS AND GOING TWICE AS FAST, AND SOME PARTS THROUGH THE EXPRESS LANE INITIATIVE WERE GOING EVEN FASTER THAN THAT SO SPEED, DIRECT, INNOVATION.
EISEN: I WANTED TO PICK UP ON THE INNOVATION THEMES FOR SURE. YOU SAY MORE THAN 50% OF THE GROWTH IS GOING TO COME FROM INNOVATION IN NEW CATEGORIES. YOU'RE EXCITED ABOUT THAT THE PIPELINE. NIKE'S BEEN CRITICIZED BY SOME ANALYSTS AND INVESTORS LATELY FOR BEING IN AN INNOVATION LULL, SO CAN YOU GIVE US A LITTLE MORE SPECIFICITY ON WHAT YOU HAVE PLANNED AND HOW YOU PLAN TO COMBAT THAT NARRATIVE?
PARKER: YEAH, ULTIMATELY, THE MOST IMPORTANT THING WE DO IS CREATE GREAT PRODUCT THAT'S WHERE THE CONSUMERS VOTE. AND THE INNOVATION THAT WE PUT FORTH WHETHER IT BE IN PERFORMANCE OR LIFESTYLE SPORTSWEAR IS REALLY WHAT COUNTS. SO AS I SAID IF YOU LOOKED ACROSS THE SPECTRUM OF THE CATEGORIES UP AND DOWN THE PRICE POINTS BETWEEN FOOTWEAR AND APPAREL MENS AND WOMENS WE HAVE THE BEST LINE UP OF INNOVATION WE HAVE EVER HAD SOME OF THE HIGHLIGHTS I PUT OUT THERE WOULD BE IN THE RUNNING CATEGORY WHICH IS A $5 BILLION CATEGORY FOR NIKE WE'VE GOT THREE PLATFORMS THAT ARE IN VARIOUS STAGES OF SCALING. VAPOR MAX, WHICH IS A NEW FORM OF AIR MAX, THE TOP $150 RUNNING SHOE ON THE MARKET TODAY. WE HAVE NEW AIR MAX COMING WITH THE AIR MAX 270. REACT PLATFORM WHICH IS A HIGHLY RESPONSIVE LIGHTWEIGHT PLATFORM THAT GOES ACROSS ALL SPORT CATEGORIES AND INTO SPORTSWEAR AND THEN WE HAVE THE ZOOM X WHICH IS AN AMAZING HIGH ENERGY RETURN CUSHIONING SYSTEM THAT WAS FEATURED IN BREAKING TWO MARATHON ATTEMPT.
EISEN: I THINK PART ALSO OF THE BULLISH OUTLOOK THAT INVESTORS LIKED WAS THREE QUARTERS OF THE GROWTH THAT YOU PROJECT IS GOING TO COME FROM INTERNATIONAL. I THINK THAT'S UP FROM AROUND HALF RIGHT NOW WHERE SPECIFICALLY DO YOU SEE THAT GROWTH? IS IT IN CHINA THAT'S BEEN WORKING WELL FOR YOU.
PARKER: WELL OBVIOUSLY CHINA'S A REALLY CRITICAL MARKET IT'S A BIG PART OF THAT GROWTH POTENTIAL, BUT WE ALSO SEE THAT IN ASIA PACIFIC, LATIN AMERICA, AND THEN OF COURSE EUROPE. SO ALL PARTS OF INTERNATIONAL BUSINESS ARE GOING TO BE GROWING. CHINAS THE BIGGEST. IF YOU LOOK AT THE POPULATION THAT TARGET POPULATION IN CHINA FOR NIKE, ITS REALLY MOVING TOWARD TEN TIMES OF WHAT IT IS IN THE UNITED STATES AND THE APPETTITE FOR NIKE AS THE NUMBER ONE BRAND IN INCREDIBLY STRONG ITS A DIGITALLY BASED CONSUMER. WERE SEEING REAL SUCCESS IN OUR CONNECTIONS TO CONSUMERS THROUGH OUR OWN PLATFORM, THROUGH OUR OWN RETAIL AND THEN OBVIOUSLY THROUGH OUR DIGITAL PARTNERS LIKE TEAMALL FOR EXAMPLE GREAT APPETITE FOR SPORT FOR CHINA.
EISEN: WE JUST LOOKED AT A CHART OF THE CHINA SALES WHICH I KNOW ARE STILL A BRIGHT SPOT WITHIN YOUR REPORT, BUT THEYVE SLOWED I MEAN, WERE NOT SEEING 30% GROWTH THAT WE WERE SEEING SEVERAL QUARTERS AGO, CAN YOU GET BACK TO THAT POINT OR IS IT JUST BECAUSE THE SIZE IS GROWING OF YOUR BUSINESS THERE
PARKER: I THINK THERE'LL BE INFLECTIONS UP AND DOWN IF YOU LOOK AT ACROSS ANY OF THE QUARTERS BUT AS WE LOOK LONG-TERM, OUR PROGNOSIS FOR GROWTH IN CHINA IS ACTUALLY QUITE BULLISH. SO WERE, WE FEEL VERY STRONGLY ABOUT NOT ONLY WHERE WE ARE IN TERMS OF THE BRAND, BUT IN TERMS OF THE PRODUCT AND AGAIN, THE CONNECTIONS WE'RE MAKING WITH THE CONSUMERS THROUGHOUT CHINA SO, AND THE OTHER THING, THE BACKDROP FACTOR THERE IS THE POPULATION IS A LOT MORE ACTIVE. WE SEE 400 MILLION PEOPLE IN CHINA THAT ARE ACTIVE AT LEAST ONCE A WEEK. AND THAT'S GROWING SO THE POTENTIAL FOR THAT MARKET IS ENORMOUS AND WE FEEL REALLY GOOD ABOUT WHERE WE ARE POSITIONED TODAY AND GOING FORWARD.
PARKER: EISEN: WHAT ABOUT THE U.S., MARK? WHAT'S THE MAJOR DRIVER OF THE SLOWDOWN IN BUSINESS IN NORTH AMERICA?
PARKER: WELL, I THINK WE'VE SEEN THAT ACCELERATION OF THE RETAIL CONSOLIDATION GOING ON OVER THE LAST 12, 18, 24 MONTHS. AND THAT'S OBVIOUSLY DEACCELERATED THE OVERALL MARKET. SO WHAT WE'RE DOING IS SHIFTING OUR POSITION TO GO MORE DIRECT TO CREATE MORE DIFFERENTIATED RETAIL AND TO CREATE A BETTER EXPERIENCE FOR THE CONSUMER MOVING FORWARD. THAT'S WHAT'S CRITICAL. SO HOW DO WE TAKE THAT DISRUPTION AND TURN IT INTO AN OPPORTUNITY? AND THAT'S REALLY WHAT A LOT OF TODAY OUR DISCUSSION TODAY AND OUR GROWTH STRATEGY IS ALL ABOUT IS LAYING THAT OUT.
EISEN: YOU CAN'T IGNORE THE MARKET SHARE LOSS THOUGH, THE RESURGENCE OF ADIDAS. I KNOW YOU HATE TO TALK ABOUT COMPETITORS AND DON'T LIKE TO EVEN NAME THEM. DID THAT CATCH YOU OFF GUARD?
PARKER: WELL, YOU KNOW, FIRST OF ALL, LET ME SAY COMPETITION IS A GREAT THING. WE'RE A SPORTS COMPANY, WE LOVE COMPETITION, IT MAKES US BETTER. WE ARE -- IF YOU LOOK AT OUR MARKET SHARE, WE'VE BASICALLY SUSTAINED OUR MARKET SHARE WHEN YOU LOOK AT ALL THE CHANNELS ACROSS THE FOOTWEAR AND APPAREL INDUSTRY. THAT SAID, THERE'S HUGE OPPORTUNITY FOR US GOING FORWARD. SO, TODAY'S MEETING IS ALL ABOUT HOW DO WE TAKE OUR INNOVATION, HOW DO WE GET TO MARKET FASTER? HOW DO WE CONNECT WITH THE CONSUMER TO ELEVATE THAT EXPERIENCE?, BECAUSE THAT'S ULTIMATELY WHATS GOING TO DRIVE THE GROWTH AND MAKE US MORE COMPETITIVE INCREDIBLY EXCITING, WHAT'S GOING ON HERE AT NIKE. THE EXCITEMENT THAT WE HAVE AS A TEAM AND THAT'S WHAT WE'RE TRYING TO SHARE TODAY.
EISEN: ALL RIGHT, SO YOU STILL WON'T GO THERE. THE CONSUMER, THE DIRECT CONSUMER SHIFT THAT YOU'RE IMPLEMENTING, IT'S A BIG DEAL. DO YOU THINK WALL STREET FULLY APPRECIATES IT?
PARKER: WELL, I WOULD SAY THAT OUR LONG-TERM INVESTORS APPRECIATE IT. BUT IT'S HARD TO APPRECIATE A TOTAL TRANSFORMATION OF THE BUSINESS. AND THAT'S REALLY WHAT WERE TALKING ABOUT. THE COMPANY IS GOING THROUGH A MASSIVE TRANSFORMATION. WHEN YOU LOOK AT THE SUPPLY CHAIN, SPEEDING THAT UP, THE PRODUCT CREATION PROCESS, MOVING THAT A LOT QUICKER. SO THE WHOLE SPEED TO MARKET, THE CONNECTION TO THE CONSUMER, THE DIRECT CONNECTION WE HAVE TO CONSUMERS, POWERED BY DIGITAL AND MEMBERSHIP, IS ENORMOUS. THIS IS A MASSIVE CHANGE. AND THEN THE INNOVATION PIPELINE ACROSS BOTH PERFORMANCE AND SPORTSWEAR, WE'VE NEVER SEEN AS MUCH INNOVATION AS WHAT WE'VE GOT IN THE PIPELINE, UP AND DOWN THE PRICE POINTS AS WELL. WE FEEL REALLY STRONG ABOUT THE TRANSFORMATIO. I HOPE TODAY REALLY GAVE INVESTORS AND ANALYSTS A BETTER SENSE OF WHAT OUR GROWTH STRATEGY IS. WE'RE GOING INTO GREAT DETAIL. SO THERE'S A MASSIVE TRANSFORMATION GOING ON HERE AT NIKE.
EISEN: WELL, AND AS YOU DO THAT, MARK, WHAT DOES IT MEAN FOR SOME OF YOUR RETAILERS. WHAT DOES IT MEAN FOR FOOT LOCKER OR FINISH LINE OR DICK'S WHICH HAS BEEN STRUGGLING LATELY?
PARKER: WE'RE WORKING WITH THE RETAIL PARTNERS TO DIFFERENTIATE THE MARKETPLACE. I THINKS WHAT'S IMPORTANT IS THE GREATEST PERCENTAGE OF GROWTH GOING FORWARD IS GOING TO BE THROUGH DIFFERENTIATED RETAIL. SO THAT MEANS AN ELEVATED NIKE EXPERIENCE, MORE DISTINCTIVE EXPERIENCE WHERE THE BRAND AND THE PRODUCT IS CELEBRATED, THE STORY TELLING IS ROBUST AND CLEAR AND COMPELLING. SO WE'RE WORKING DIRECTLY WITH OUR RETAIL PARTNERS WHO WILL ACTUALLY ELEVATE THEIR GAME ALONG WITH OURS AT THE SAME TIME.
EISEN: UH-HUH.
PARKER: WE THINK THERES ROOM WITH OUR KEY STRATEGIC PARTNERS TO MOVE FORWARD, BUT, WE'RE PUTTING A LOT OF EMPHASIS IN BALANCE WITH THAT THROUGH DIGITAL AT THE SAME TIME. SO IT'S GOING TO BE A MARKETPLACE THAT WE CREATE WITH OUR PARTNERS AND THEN THROUGH HEAVY INVESTMENT IN OUR DIGITAL CAPABILITIES.
EISEN: YEAH, SPEAKING OF DIGITAL, WHAT'S THE LATEST ON YOUR PARTNERSHIP WITH AMAZON? I KNOW THIS WAS A SLOW, SORT OF SMALL ROLLOUT, BUT INVESTORS WERE VERY EXCITED ABOUT IT. WHAT CAN YOU TELL US ABOUT WHATS PLANNED?
PARKER: WELL, WE'RE STILL IN THE PILOT STAGE, SO WE'RE LEARNING A LOT. WE'RE STILL CONVERSING ON HOW TO BEST MOVE FORWARD. BUT I WILL SAY WE'RE ENCOURAGED AND WE'VE SEEN A LOT OF LEARNINGS ON BOTH SIDES OVER THE PAST FEW MONTHS. IT'S REALLY INCREDIBLY IMPORTANT THAT OUR BRAND IS REPRESENTED AT THE HIGHEST LEVEL POSSIBLE. I THINK PARTNERSHIPS LIKE TMALL IN CHINA AND ZALANDO IN EUROPE ARE GREAT EXAMPLES WHERE LARGE DIGITAL PLATFORM PARTNER CAN ACTUALLY HELP US MOVE THE BRAND FORWARD AND GROW OUR BUSINESS.
EISEN: WHAT ABOUT JORDAN BRAND? WHAT CAN YOU TELL US? I KNOW THE GROWTH IS STRONG OVERSEAS, THERE IS CHATTER THAT IN NORTH AMERICA, IT'S LOST A LITTLE BIT OF ITS RELEVANCE. WE GOT THOSE MPD NUMBERS THAT SHOW THAT ADIDAS TOOK THE NUMBER TWO SPOT OVER JORDAN BRAND FOR US SALES LAST YEAR. IS IT LOSING ITS LUSTER?
PARKER: YEAH. NO, I DONT THINK ITS LOSING ITS LUSTER, I THINK WE'RE GOING THROUGH A MARKET CORRECTION IN THE UNITED STATES. I THINK AS WE MOVE FORWARD THROUGH THE REST OF THIS FISCAL YEAR INTO THE NEXT FISCAL YEAR WITH THE EXPANSION OF CATEGORIES WITHIN JORDAN, THE EMPHASIS ON PERFORMANCE IN BASKETBALL AND OTHER SPORT CATEGORIES, DIMENSIONALIZING OUR SPORTSWEAR BUSINESS, THE OPPORTUNITY WE SEE IN WOMEN'S -- IN WOMEN'S SNEAKERS SPECIFICALLY, AND IN APPAREL, WE'RE QUITE BULLISH ON THE OPPORTUNITY FOR JORDAN GOING FORWARD.
EISEN: SPEAKING OF BASKETBALL, NBA ROLLOUT, BIG DEAL. LITTLE ROCKY. WHAT WAS WITH THE LEBRON UNIFORM RIPPING, WHAT CAN YOU TELL US? HAVE YOU MADE IMPROVEMENTS?
PARKER: WELL, ABSOLUTELY. YEAH, WE OBSESS THE DETAIL, THE QUALITY OF THE PERFORMANCE OF A PRODUCT, ESPECIALLY THE PRODUCT THAT IS ON THE BEST ATHLETES ON THE COURTS AND FIELDS OF PLAY. SO IT'S CRITICAL. WE'RE WORKING WITH THE NBA, WE'VE ISOLATED THE ISSUE AND WE FEEL LIKE WEVE GOT COMMAND OF THE SITUATION AND FEEL GOOD ABOUT WHERE WE ARE. IT'S REALLY AN INCREDIBLY INNOVATED UNIFORM IF YOU LOOK AT THE LIGHTWEIGHT – THE RANGE OF MOTION, THE TEMPERATURE, THE VENTILATION THAT WE HAVE BUILT INTO THE UNIFORM, SO THE PLAYER FEEDBACK HAS BEEN ENORMOUSLY POSITIVE. SO WE FEEL LIKE WE'VE ISOLATED THAT ISSUE AND FEEL GOOD ABOUT WHERE WE'RE GOING GOING FORWARD. AND ALSO WITH THE ENTIRE NBA RELATIONSHIP. THE NBA IS AN INCREDIBLE PARTNER, OUR SUCCESS SO FAR IS WITH THE BUSINESS IS TWO TIMES WHAT WE THOUGHT IT WOULD BE, DOUBLE THE SUCCESS RIGHT OUT OF THE CHUTE. AND THEN WE'RE QUITE BULLISH ON WHERE THAT GOES FROM HERE.
EISEN: AND THEN FINALLY, MARK, I WANTED TO ASK YOU A BROADER POLICY QUESTION, NIKE WAS THE CORPORATE FACE OF TPP. I WAS THERE AT CAMPUS WHEN PRESIDENT OBAMA THERE WAS TO TOUT THE TRANSPACIFIC TRADE DEAL. IT WAS ONE OF PRESIDENT TRUMP'S FIRST ACTIONS WAS TO REMOVE THE U.S. FROM TPP. THEY'RE CURRENTLY RENEGOTIATING NAFTA. DO YOU WORRY ABOUT THIS WORLD? NIKE IS ONE OF THE MOST DEPENDENT COMPANIES FROM A SUPPLY AND DEMAND STANDPOINT ON OVERSEAS MARKETS, DO YOU WORRY ABOUT WHICH WAY THIS ADMINISTRATION IS TAKING US IN A TRADE DIRECTION?
PARKER: WELL, JUST TO BE CLEAR, WE BELIEVE, AS A COMPANY, IN FREE AND FAIR TRADE. WE'RE HOPEFUL THAT THE PARTNERS CAN COME TOGETHER AND MOVE FORWARD TOWARDS AN AGREEMENT THAT'S APPROPRIATE FOR THE 21ST CENTURY. IF THERE ARE FUNDAMENTAL CHANGES, WE FEEL LIKE WE'RE IN A GREAT POSITION TO ACTUALLY ADAPT. WE'RE VERY AGILE. TO ADAPT TO THE SITUATION AND MOVE FORWARD. WE'VE BEEN A PARTICIPANT IN THE GLOBAL ECONOMY FOR DECADES, LITERALLY. AND I THINK WE KNOW HOW TO ADJUST OUR OFFENSE IF WE NEED TO DO THAT.
EISEN: MARK PARKER. THANK YOU VERY MUCH FOR COMING ON AND WEIGHING IN AT YOUR INVESTOR DAY. CERTAINLY INVESTORS LIKE WHAT THEY HEARD TODAY. THE CEO AND CHAIRMAN OF NIKE.
PARKER: THANKS.
For more information contact:
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CNBC
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CNBC
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e: emma.martin@nbcuni.com
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