JD Sports has already reported for much of Nike’s Q1 as JD’s 1H21 results were to the end of July and August was included in its current trading comments. However, Nike’s update gives some strategic insight into Nike’s US strategy which JD’s strategy dovetails nicely with and Nike’s forward guidance is encouraging for the overall category. Nike guides for revenue to be up high single to low double-digits YOY. Supply is expected to be constrained near-term due to supply decisions taken at the start of the pandemic, with 2H growth to be up significantly. Our JD forecasts are based on Sports Fashion revenues down 7% in 2H and we continue to believe risk is on the upside. Nike Q1 revenues down 1%; key points For the 3 months to 31 August, Nike reported Q1 revenues down 1% yoy (flat at constant FX) with Nike Direct +12% (+13% at constant FX). Nike Brand digital sales increased 82% (83% at constant FX), with a double-digit increase in the US and triple-digit in EMEA, and now account for over 30% of its business. Nearly all NIKE-owned physical stores were open in the US, EMEA and Greater China, with 90% open in APLA. Store sales were down yoy though EMEA returned to growth, up 5%, and Greater China up 6%. The US was down 1%, with footwear up 11% and apparel down 21%. Group gross margin was down 90bps, impacted by higher promotions to clear stock. Tight cost control and lower tax meant net income increased 11%. Innovation resonated well and was an even larger part of the mix in Q1. Inventory is healthy and stock levels are expected to normalise over the next 2 months. Stock has been cleared at lower promotional levels compared to the overall market. Strong momentum in iconic styles like the Air Force 1 & Air Jordan 1, along with Women’s Apparel, which grew nearly 200%. Nike continues to accelerate the shift to its One Nike marketplace approach, which leads with Nike Digital and its own stores as well as a small number of strategic partners which share the Nike vision. In the US, Nike shifted product allocations to fuel higher demand in Nike Digital and a smaller group of strategic wholesale partners. The result was high single-digit growth in differentiated wholesale offset by a decline of over 20% in undifferentiated wholesale, all with higher full price realization versus the prior year. Nike expects this trend to continue throughout this fiscal year as it changes the shape of the North America marketplace and continues to rationalise its wholesale channel. Nike earns 10% points higher gross margin on digital revenues versus wholesale.