Anisha Sherman

Anisha Sherman asked about long-term margins, specifically if there are any structural factors preventing Michael Kors from eventually returning to its historical operating margins of over 20%.

Answer

Chairman and CEO John Idol affirmed that Michael Kors is expected to reach approximately $4 billion in revenue over the next few years, which will create significant leverage. He highlighted the company's efforts to shrink its cost structure, including closing over 150 stores and rationalizing the employee base. He expressed confidence that Michael Kors could absolutely achieve a 20%+ operating margin over time, with a focus on making it sustainable by ensuring consumer desirability. For Jimmy Choo, he projected it could become an $800 million business, potentially larger with accessories growth, and expects it to return to a double-digit operating margin within the next few years.

Anisha Sherman asked Elliott Hill about the phasing of growth across Nike's product verticals beyond running, inquiring where the company holds similar conviction for rapid business ramp-up. She also followed up with Matt Friend and Elliott Hill on North America's wholesale growth, asking if they are satisfied with the current partner mix or if the goal is to continue expanding new distribution points into the next fiscal year.

Answer

Elliott Hill, President and CEO, Nike, stated that teams are building a diverse portfolio, with innovation flowing across Nike, Jordan, and Converse through the Sport Offense. He highlighted global football as furthest along with strong order books (40% up for World Cup '22), and anticipated growth in training, women's basketball (Sabrina, A'ja, Caitlin), and men's basketball (JAW, GT Future). He also mentioned new innovations like Nike Mind and AeroFit. Matthew Friend, EVP and CFO, Nike, addressed the North America marketplace, expressing satisfaction with current partners and a balanced order book for the back half of the year, with growth from both new and existing partners. He noted that while new distribution isn't strictly "needed" to sustain momentum, the consumer-based marketplace strategy means they are always looking for opportunities. Elliott Hill added that setting three-year visions by account, by sport, with partners is key to driving profitable, sustainable growth.