NIKE, Inc. (NYSE:NKE) today reported fiscal 2022 financial results for its second quarter ended November 30, 2021.
"NIKE's strong results this quarter provide further proof that our strategy is working, as we execute through a dynamic environment," said John Donahoe, President and CEO, NIKE, Inc. "We are now in a much stronger competitive position today than we were 18 months ago. And I want to thank our roughly 75,000 global teammates for all their work to provide consumers with the compelling new product, innovation and experiences that only NIKE can deliver."**
Second Quarter revenues were flat on a currency-neutral basis as we continue to manage the ongoing impact of supply chain challenges across the marketplace. Revenues in Greater China and APLA declined, largely due to lower levels of available inventory resulting from COVID-19 related factory closures. While closures had an impact across our portfolio, North America and EMEA delivered growth due to higher levels of in-transit inventory entering the second quarter.
Despite continued inventory constraints and supply chain challenges, NIKE Direct grew 8 percent, led by North America Direct growth of 30 percent, including record Black Friday week results. NIKE Brand Digital delivered strong revenue growth of 11 percent, led by double-digit growth in North America and APLA, partially offset by a decline in Greater China. Contributing to NIKE Direct growth was the steady normalization of owned physical retail with NIKE owned stores up 4 percent.
"Our second quarter results reflect our deep consumer connections, the continued strength of our brands and strong marketplace demand," said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. "As we navigate through short-term supply challenges, we are focused on executing our Consumer Direct Acceleration strategy to fuel our long-term financial outlook."**
Second Quarter Income Statement Review
November 30, 2021 Balance Sheet Review
Shareholder Returns
NIKE continues to have a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 20 consecutive years of increasing dividend payouts. In the second quarter, NIKE returned approximately $1.4 billion to shareholders, including:
Conference Call
NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on December 20, 2021, to review fiscal second quarter results. The conference call will be broadcast live via the Internet and can be accessed at http://investors.nike.com. For those unable to listen to the live broadcast, an archived version will be available at the same location through 9:00 p.m. PT, January 10, 2022.
About NIKE, Inc.
NIKE, Inc., based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Converse, a wholly-owned NIKE, Inc. subsidiary brand, designs, markets and distributes athletic lifestyle footwear, apparel and accessories. For more information, NIKE, Inc.’s earnings releases and other financial information are available on the Internet at http://investors.nike.com. Individuals can also visit http://news.nike.com and follow @NIKE.
* |
See additional information in the accompanying Divisional Revenues table regarding this non-GAAP financial measure. |
** |
The marked paragraphs contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed from time to time in reports filed by NIKE with the U.S. Securities and Exchange Commission (SEC), including Forms 8-K, 10-Q and 10-K. |
NIKE, Inc. |
||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||
|
THREE MONTHS ENDED |
% |
SIX MONTHS ENDED |
% |
||||||||||||||||||
(In millions, except per share data) |
11/30/2021 |
11/30/2020 |
Change |
11/30/2021 |
11/30/2020 |
Change |
||||||||||||||||
Revenues |
$ |
11,357 |
|
$ |
11,243 |
|
1 |
% |
$ |
23,605 |
|
$ |
21,837 |
|
8 |
% |
||||||
Cost of sales |
6,144 |
|
6,396 |
|
-4 |
% |
12,696 |
|
12,249 |
|
4 |
% |
||||||||||
Gross profit |
5,213 |
|
4,847 |
|
8 |
% |
10,909 |
|
9,588 |
|
14 |
% |
||||||||||
Gross margin |
45.9 |
% |
43.1 |
% |
|
46.2 |
% |
43.9 |
% |
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||||||
Demand creation expense |
1,017 |
|
729 |
|
40 |
% |
1,935 |
|
1,406 |
|
38 |
% |
||||||||||
Operating overhead expense |
2,742 |
|
2,538 |
|
8 |
% |
5,396 |
|
4,836 |
|
12 |
% |
||||||||||
Total selling and administrative expense |
3,759 |
|
3,267 |
|
15 |
% |
7,331 |
|
6,242 |
|
17 |
% |
||||||||||
% of revenues |
33.1 |
% |
29.1 |
% |
|
31.1 |
% |
28.6 |
% |
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||||||
Interest expense (income), net |
55 |
|
70 |
|
— |
|
112 |
|
135 |
|
— |
|
||||||||||
Other (income) expense, net |
(102 |
) |
54 |
|
— |
|
(141 |
) |
40 |
|
— |
|
||||||||||
Income before income taxes |
1,501 |
|
1,456 |
|
3 |
% |
3,607 |
|
3,171 |
|
14 |
% |
||||||||||
Income tax expense |
164 |
|
205 |
|
-20 |
% |
396 |
|
402 |
|
-1 |
% |
||||||||||
Effective tax rate |
10.9 |
% |
14.1 |
% |
|
11.0 |
% |
12.7 |
% |
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||||||
NET INCOME |
$ |
1,337 |
|
$ |
1,251 |
|
7 |
% |
$ |
3,211 |
|
$ |
2,769 |
|
16 |
% |
||||||
|
|
|
|
|
|
|
||||||||||||||||
Earnings per common share: |
|
|
|
|
|
|
||||||||||||||||
Basic |
$ |
0.84 |
|
$ |
0.80 |
|
5 |
% |
$ |
2.03 |
|
$ |
1.77 |
|
15 |
% |
||||||
Diluted |
$ |
0.83 |
|
$ |
0.78 |
|
6 |
% |
$ |
1.98 |
|
$ |
1.73 |
|
14 |
% |
||||||
|
|
|
|
|
|
|
||||||||||||||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
||||||||||||||||
Basic |
1,582.4 |
|
1,573.0 |
|
|
1,582.2 |
|
1,567.4 |
|
|
||||||||||||
Diluted |
1,617.4 |
|
1,609.5 |
|
|
1,618.5 |
|
1,601.9 |
|
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||||||
Dividends declared per common share |
$ |
0.305 |
|
$ |
0.275 |
|
|
$ |
0.580 |
|
$ |
0.520 |
|
|
NIKE, Inc. |
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|||||
|
|
|
|
|||||
|
November 30, |
November 30, |
% Change |
|||||
(Dollars in millions) |
2021 |
2020 |
||||||
ASSETS |
|
|
|
|||||
Current assets: |
|
|
|
|||||
Cash and equivalents |
$ |
10,751 |
|
$ |
8,635 |
|
25 |
% |
Short-term investments |
4,352 |
|
3,177 |
|
37 |
% |
||
Accounts receivable, net |
3,746 |
|
3,713 |
|
1 |
% |
||
Inventories |
6,506 |
|
6,090 |
|
7 |
% |
||
Prepaid expenses and other current assets |
1,822 |
|
1,992 |
|
-9 |
% |
||
Total current assets |
27,177 |
|
23,607 |
|
15 |
% |
||
Property, plant and equipment, net |
4,812 |
|
4,959 |
|
-3 |
% |
||
Operating lease right-of-use assets, net |
3,017 |
|
3,086 |
|
-2 |
% |
||
Identifiable intangible assets, net |
265 |
|
270 |
|
-2 |
% |
||
Goodwill |
242 |
|
223 |
|
9 |
% |
||
Deferred income taxes and other assets |
3,404 |
|
2,691 |
|
26 |
% |
||
TOTAL ASSETS |
$ |
38,917 |
|
$ |
34,836 |
|
12 |
% |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Current portion of long-term debt |
$ |
— |
|
$ |
— |
|
— |
|
Notes payable |
9 |
|
41 |
|
-78 |
% |
||
Accounts payable |
2,795 |
|
2,154 |
|
30 |
% |
||
Current portion of operating lease liabilities |
462 |
|
458 |
|
1 |
% |
||
Accrued liabilities |
5,431 |
|
6,030 |
|
-10 |
% |
||
Income taxes payable |
160 |
|
188 |
|
-15 |
% |
||
Total current liabilities |
8,857 |
|
8,871 |
|
0 |
% |
||
Long-term debt |
9,417 |
|
9,410 |
|
0 |
% |
||
Operating lease liabilities |
2,835 |
|
2,896 |
|
-2 |
% |
||
Deferred income taxes and other liabilities |
2,884 |
|
3,019 |
|
-4 |
% |
||
Redeemable preferred stock |
— |
|
— |
|
— |
|
||
Shareholders’ equity |
14,924 |
|
10,640 |
|
40 |
% |
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
38,917 |
|
$ |
34,836 |
|
12 |
% |
NIKE, Inc. |
||||||||||||||||||||
DIVISIONAL REVENUES |
||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
% Change Excluding Currency Changes1 |
|
|
|
% Change Excluding Currency Changes1 |
||||||||||||
|
THREE MONTHS ENDED |
% |
SIX MONTHS ENDED |
% |
||||||||||||||||
(Dollars in millions) |
11/30/2021 |
11/30/2020 |
Change |
11/30/2021 |
11/30/2020 |
Change |
||||||||||||||
North America |
|
|
|
|
|
|
|
|
||||||||||||
Footwear |
$ |
2,852 |
|
$ |
2,512 |
|
14 |
% |
13 |
% |
$ |
6,116 |
|
$ |
5,469 |
|
12 |
% |
12 |
% |
Apparel |
1,480 |
|
1,368 |
|
8 |
% |
8 |
% |
2,910 |
|
2,493 |
|
17 |
% |
16 |
% |
||||
Equipment |
145 |
|
126 |
|
15 |
% |
16 |
% |
330 |
|
269 |
|
23 |
% |
23 |
% |
||||
Total |
4,477 |
|
4,006 |
|
12 |
% |
12 |
% |
9,356 |
|
8,231 |
|
14 |
% |
13 |
% |
||||
Europe, Middle East & Africa |
|
|
|
|
|
|
|
|
||||||||||||
Footwear |
1,806 |
|
1,731 |
|
4 |
% |
4 |
% |
3,789 |
|
3,533 |
|
7 |
% |
4 |
% |
||||
Apparel |
1,202 |
|
1,104 |
|
9 |
% |
8 |
% |
2,361 |
|
2,075 |
|
14 |
% |
11 |
% |
||||
Equipment |
134 |
|
123 |
|
9 |
% |
7 |
% |
299 |
|
260 |
|
15 |
% |
11 |
% |
||||
Total |
3,142 |
|
2,958 |
|
6 |
% |
6 |
% |
6,449 |
|
5,868 |
|
10 |
% |
7 |
% |
||||
Greater China |
|
|
|
|
|
|
|
|
||||||||||||
Footwear |
1,235 |
|
1,567 |
|
-21 |
% |
-25 |
% |
2,684 |
|
2,818 |
|
-5 |
% |
-11 |
% |
||||
Apparel |
564 |
|
681 |
|
-17 |
% |
-21 |
% |
1,040 |
|
1,159 |
|
-10 |
% |
-16 |
% |
||||
Equipment |
45 |
|
50 |
|
-10 |
% |
-15 |
% |
102 |
|
101 |
|
1 |
% |
-6 |
% |
||||
Total |
1,844 |
|
2,298 |
|
-20 |
% |
-24 |
% |
3,826 |
|
4,078 |
|
-6 |
% |
-13 |
% |
||||
Asia Pacific & Latin America |
|
|
|
|
|
|
|
|
||||||||||||
Footwear |
887 |
|
991 |
|
-10 |
% |
-8 |
% |
1,909 |
|
1,749 |
|
9 |
% |
9 |
% |
||||
Apparel |
402 |
|
432 |
|
-7 |
% |
-5 |
% |
787 |
|
733 |
|
7 |
% |
8 |
% |
||||
Equipment |
58 |
|
48 |
|
21 |
% |
22 |
% |
116 |
|
88 |
|
32 |
% |
32 |
% |
||||
Total |
1,347 |
|
1,471 |
|
-8 |
% |
-6 |
% |
2,812 |
|
2,570 |
|
9 |
% |
10 |
% |
||||
Global Brand Divisions2 |
6 |
|
8 |
|
-25 |
% |
-5 |
% |
13 |
|
12 |
|
8 |
% |
13 |
% |
||||
TOTAL NIKE BRAND |
10,816 |
|
10,741 |
|
1 |
% |
0 |
% |
22,456 |
|
20,759 |
|
8 |
% |
6 |
% |
||||
Converse |
557 |
|
476 |
|
17 |
% |
16 |
% |
1,186 |
|
1,039 |
|
14 |
% |
11 |
% |
||||
Corporate3 |
(16 |
) |
26 |
|
— |
|
— |
|
(37 |
) |
39 |
|
— |
|
— |
|
||||
TOTAL NIKE, INC. REVENUES |
$ |
11,357 |
|
$ |
11,243 |
|
1 |
% |
0 |
% |
$ |
23,605 |
|
$ |
21,837 |
|
8 |
% |
6 |
% |
|
|
|
|
|
|
|
|
|
||||||||||||
TOTAL NIKE BRAND |
|
|
|
|
|
|
|
|
||||||||||||
Footwear |
$ |
6,780 |
|
$ |
6,801 |
|
0 |
% |
-1 |
% |
$ |
14,498 |
|
$ |
13,569 |
|
7 |
% |
5 |
% |
Apparel |
3,648 |
|
3,585 |
|
2 |
% |
1 |
% |
7,098 |
|
6,460 |
|
10 |
% |
8 |
% |
||||
Equipment |
382 |
|
347 |
|
10 |
% |
9 |
% |
847 |
|
718 |
|
18 |
% |
15 |
% |
||||
Global Brand Divisions2 |
6 |
|
8 |
|
-25 |
% |
-5 |
% |
13 |
|
12 |
|
8 |
% |
13 |
% |
||||
TOTAL NIKE BRAND REVENUES |
$ |
10,816 |
|
$ |
10,741 |
|
1 |
% |
0 |
% |
$ |
22,456 |
|
$ |
20,759 |
|
8 |
% |
6 |
% |
1 The percent change has been calculated using actual exchange rates in use during the comparative prior year period and is provided to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure. Management uses this non-GAAP financial measure when evaluating the Company's performance, including when making financial and operating decisions. Additionally, management believes this non-GAAP financial measure provides investors with additional financial information that should be considered when assessing the Company’s underlying business performance and trends. References to this measure should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies. |
2 Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. |
3 Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through the Company’s central foreign exchange risk management program. |
NIKE, Inc. |
||||||||||||||||
EARNINGS BEFORE INTEREST AND TAXES1 |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|||||||||||
|
THREE MONTHS ENDED |
% |
SIX MONTHS ENDED |
% |
||||||||||||
(Dollars in millions) |
11/30/2021 |
11/30/2020 |
Change |
11/30/2021 |
11/30/2020 |
Change |
||||||||||
North America |
$ |
1,235 |
|
$ |
1,023 |
|
21 |
% |
$ |
2,669 |
|
$ |
2,325 |
|
15 |
% |
Europe, Middle East & Africa |
806 |
|
660 |
|
22 |
% |
1,681 |
|
1,352 |
|
24 |
% |
||||
Greater China |
569 |
|
891 |
|
-36 |
% |
1,270 |
|
1,579 |
|
-20 |
% |
||||
Asia Pacific & Latin America |
388 |
|
424 |
|
-8 |
% |
869 |
|
704 |
|
23 |
% |
||||
Global Brand Divisions2 |
(1,071 |
) |
(841 |
) |
-27 |
% |
(2,058 |
) |
(1,694 |
) |
-21 |
% |
||||
TOTAL NIKE BRAND1 |
1,927 |
|
2,157 |
|
-11 |
% |
4,431 |
|
4,266 |
|
4 |
% |
||||
Converse |
132 |
|
87 |
|
52 |
% |
336 |
|
255 |
|
32 |
% |
||||
Corporate3 |
(503 |
) |
(718 |
) |
30 |
% |
(1,048 |
) |
(1,215 |
) |
14 |
% |
||||
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES1 |
1,556 |
|
1,526 |
|
2 |
% |
3,719 |
|
3,306 |
|
12 |
% |
||||
EBIT margin1 |
13.7 |
% |
13.6 |
% |
|
15.8 |
% |
15.1 |
% |
|
||||||
Interest expense (income), net |
55 |
|
70 |
|
— |
|
112 |
|
135 |
|
— |
|
||||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES |
$ |
1,501 |
|
$ |
1,456 |
|
3 |
% |
$ |
3,607 |
|
$ |
3,171 |
|
14 |
% |
1 The Company evaluates the performance of individual operating segments based on earnings before interest and taxes (commonly referred to as “EBIT”), which represents net income before interest expense (income), net and income tax expense. Total NIKE Brand EBIT, Total NIKE, Inc. EBIT and EBIT margin are considered non-GAAP financial measures and are being provided as management believes this additional information should be considered when assessing the Company’s underlying business performance and trends. EBIT margin is calculated as EBIT divided by total NIKE, Inc. Revenues. References to EBIT and EBIT margin should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies. |
2 Global Brand Divisions primarily represent demand creation and operating overhead expense, including product creation and design expenses that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. |
3 Corporate consists primarily of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company’s corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211220005827/en/
Investor Contact:
Paul Trussell
[email protected]
Media Contact:
KeJuan Wilkins
[email protected]