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in developing platforms that operate effectively with these technologies, systems, networks or standards. A growing portion of consumers access our NIKE Direct digital
platforms, but in the event that it is more difficult for consumers to access and use our digital platforms, consumers find that our digital platforms do not effectively meet their
needs or expectations or consumers choose not to access or use our digital platforms or use devices that do not offer access to our platforms, the success of our NIKE Direct
operations could be adversely impacted. Our competitors may develop, or have already developed, digital experiences, features, content, services or technologies that are
similar to ours or that achieve greater acceptance.
We may not realize a satisfactory return on our investment in our NIKE Direct operations and management's attention from our other business opportunities could be diverted,
which could have an adverse effect on our business, financial condition or results of operations.
If the technology-based systems that give our consumers the ability to shop or interact with us online do not function effectively, our operating results, as well as
our ability to grow our digital commerce business globally or to retain our customer base, could be materially adversely affected.
Many of our consumers shop with us through our digital platforms. Increasingly, consumers are using mobile-based devices and applications to shop online with us and with
our competitors, and to do comparison shopping, as well as to engage with us and our competitors through digital services and experiences that are offered on mobile
platforms. We are increasingly using social media and proprietary mobile applications to interact with our consumers and as a means to enhance their shopping experience.
Any failure on our part to provide attractive, effective, reliable, secure, user-friendly digital commerce platforms that offer a wide assortment of merchandise with rapid delivery
options and that continually meet the changing expectations of online shoppers or any failure to provide attractive digital experiences to our customers could place us at a
competitive disadvantage, result in the loss of digital commerce and other sales, harm our reputation with consumers, have a material adverse impact on the growth of our
digital commerce business globally and have a material adverse impact on our business and results of operations. In addition, as use of our digital platforms continues to grow,
we will need an increasing amount of technical infrastructure to continue to satisfy our consumers' needs. If we fail to continue to effectively scale and adapt our digital
platforms to accommodate increased consumer demand, our business may be subject to interruptions, delays or failures and consumer demand for our products and digital
experiences could decline.
Risks specific to our digital commerce business also include diversion of sales from our and our retailers' brick and mortar stores, difficulty in recreating the in-store experience
through direct channels and liability for online content. Our failure to successfully respond to these risks might adversely affect sales in our digital commerce business, as well
as damage our reputation and brands.
We rely significantly on information technology to operate our business, including our supply chain and retail operations, and any failure, inadequacy or
interruption of that technology could harm our ability to effectively operate our business.
We are heavily dependent on Information Technology Systems, across our supply chain, including product design, production, forecasting, ordering, manufacturing,
transportation, sales and distribution, as well as for processing financial information for external and internal reporting purposes, retail operations and other business activities.
Information Technology Systems are critical to many of our operating activities and our business processes and may be negatively impacted by any service interruption or
shutdown. For example, our ability to effectively manage and maintain our inventory and to ship products to customers on a timely basis depends significantly on the reliability
of these Information Technology Systems. Over a number of years, we have implemented Information Technology Systems in all of the geographical regions in which we
operate. Our work to integrate, secure and enhance these systems and related processes in our global operations is ongoing and NIKE will continue to invest in these efforts.
We cannot provide assurance, however, that the measures we take to secure and enhance these systems will be sufficient to protect our Information Technology Systems and
prevent cyber-attacks, system failures or data or information loss. The failure of these systems to operate effectively, including as a result of security breaches, viruses,
hackers, malware, natural disasters, vendor business interruptions or other causes, failure to properly maintain, protect, repair or upgrade systems, or problems with
transitioning to upgraded or replacement systems could cause delays in product fulfillment and reduced efficiency of our operations, could require significant capital
investments to remediate the problem which may not be sufficient to cover all eventualities, and may have an adverse effect on our reputation, results of operations and
financial condition. In addition, the increased use of employee-owned devices for communications as well as work-from-home arrangements, such as those implemented in
response to the COVID-19 pandemic, present additional operational risks to our Information Technology Systems, including, but not limited to, increased risks of cyber-attacks.
Further, like other companies in the retail industry, we have in the past experienced, and we expect to continue to experience, cyber-attacks, including phishing, and other
attempts to breach, or gain unauthorized access to, our systems. To date, these attacks have not had a material impact on our operations, but we cannot provide assurance
that they will not have an impact in the future.
We also use Information Technology Systems to process financial information and results of operations for internal reporting purposes and to comply with regulatory financial
reporting, legal and tax requirements. If Information Technology Systems suffer severe damage, disruption or shutdown and our business continuity plans, or those of our
vendors, do not effectively resolve the issues in a timely manner, we could experience delays in reporting our financial results, which could result in lost revenues and
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