And this quarter, we are seeing consumers spending more time in brick-and-mortar locations. But 90% of their shopping journeys are starting with digital. And so we continue to believe that our digital and physical strategy of serving consumers at the right strategy to serve demand as we look forward.
John Donahoe: And Matt, if we just extend out as you asked a little bit longer term, we step back, we still see the same fundamentals, which are some structural tailwinds in our industry, right? The definition of sport is expanding. And so with the movement towards health and wellness and fitness and new big areas of movement like dance, one of my favorite. We’ve had a lot of interaction with breakdancing in the last three months here on campus seeing some of the elite breakdancers who will compete in the Paris Olympics come in. But dance, throughout Asia and other places is a huge market. So we just see an expanding definition of sport where movement has become sport and we’re at center of that. The movement towards athleisure, right, there doesn’t need to be a trade-off between what you wear on the pitch and at work between comfort and performance and style.
Athleisure combines all of those, and we are very well positioned to continue to drive that trend. And then the digital connection of consumers means that sport, whether they’re watching it or commerce is always one click away. And our leading portfolio of digital assets gives us a huge advantage there. So those are some structural tailwinds. And then we just do – we’re in a great industry with those tailwinds. We’ve got to do what we do so well, innovation plus great storytelling plus great marketplace, we believe will drive real strong growth, and we see great growth in women’s. Jordan, we think, has extraordinary growth. Running, we think we have great growth. Continuing to expand the market in basketball, global football. And as Matt mentioned, this driving performance and then into lifestyle is something that makes our industry, our business and our future quite attractive.
Operator: Jay Sole from UBS has the next question.
Jay Sole: Great. Thank you so much. Matt, you talked about you’re seeing underlying structural gains and profitability and margins. Can you just talk about how you’re feeling about the long-term opportunity for margin in the context of the long-term guidance you gave a couple of years ago for NIKE’s ability to get to a high teens EBIT margin over time? Thank you.
Matt Friend: Sure, Jay. Well, we remain confident in our ability to drive our long-term financial goals. And we still believe those long-term goals of profitability are achievable. But the timing is difficult to predict. But the reason why I emphasized what I emphasized this quarter is that I feel – I really feel strongly that fiscal year ’24 is a turning point for us and a proof point for NIKE to drive more profitable growth. The structural things that I referenced, the structural drivers, I should say that I referenced, it starts with creating value for the consumer and our products. And we continue to see benefits in our gross margin through strategic pricing and managing the price value of our products with ASPs across the NIKE brand across all geos up this quarter.
One of the opportunities we continue to see, and we saw some benefit of it this quarter is lowering our supply chain costs. We’ve increased the size of our supply chain in the last few years to be able to address the growth that we’ve seen in our business, both overall and in digital. And now our teams are very focused on driving greater efficiency in the way that we serve consumer demand across channels. And I mentioned a couple of examples like reducing digital split shipments so that a consumer doesn’t get two boxes for the same order, the way that we’re lowering our outbound fulfillment costs through the investment in regional service centers that are closer to where consumer demand is. And so those are just a couple of examples that we continue to see.
And then, of course, we do expect that while the ultimate landing spot of digital and direct isn’t as clear, we do believe we’re going to be a more direct at a more digital company and a more profitable company. And there’s a channel mix and channel profitability opportunity that comes with that as well. So we continue to believe these goals are achievable. And based on our gross margin plans for this year, our performance in the first quarter, we believe we’re turning the corner on starting to climb to greater profitability as a company and as a brand.
Operator: The next question comes from Piral Dadhania, RBC.
Piral Dadhania: Hi. Evening. Thank you for taking my question. Most have been answered. So maybe I could just ask a follow-up, a clarification. Matt, I think you said that in Q1, your partners registered a high single-digit to low double-digit sales growth in the period. I just wanted to understand whether that was their sell-out number or whether that was your sell-in number. Any clarification there would be very helpful.
Matt Friend: Sure. That was a sellout number. That was the sales to consumer number.
Operator: We’ll take our next question from Jonathan Komp, Baird.
Jonathan Komp: Yes, hi. Good afternoon. Matt, if I could ask a follow-up, just as you think about the second quarter, given some of the unusual comparisons, would you be willing to share any shaping guidance across some of the segments? And then bigger picture, if you could just comment on sort of the shape of the recovery of the sales and the profitability that you’re seeing in China? And any thoughts as we look to the balance of the year? Thank you.
Matt Friend: Sure. Well, as it relates to the second quarter, what I said was that we expect our growth to be up slightly versus the prior year. I did answer Matt’s question just and I’ll connect the two together, but we are expecting retail sales to sell out to the consumer to be in line with the mid-single digit that we delivered this quarter across the full marketplace. And the second quarter is really the last season that we’ve managed the sell-in to a more restricted level so that we could ensure that the marketplace was set right as we look towards the remainder of this year. As far as the comparisons go, Q2, and I think I referenced the wholesale number earlier, but we’re comping about 27% currency-neutral growth in Q2, but what we’re much more focused on is the quality and the health of the growth that we’re delivering in the quarter.
