NIKE revenues up 16 percent compared to prior year
BEAVERTON, Ore., Sept. 23, 2021 — NIKE, Inc. (NYSE:NKE) today reported fiscal 2022 financial results for its first quarter ended August 31, 2021.
First quarter reported revenues were $12.2 billion, up 16 percent compared to prior year and up 12 percent on a currency-neutral basis.*
NIKE Direct sales were $4.7 billion, up 28 percent on a reported basis and up 25 percent on a currency-neutral basis.
NIKE Brand Digital sales increased 29 percent, or 25 percent on a currency-neutral basis.
Gross margin increased 170 basis points to 46.5 percent.
Diluted earnings per share for the quarter was $1.16, up 22 percent.
“NIKE’s strong results this quarter are continued proof of our deep consumer connections, unrelenting innovation pipeline and a digital advantage that fuels our brand momentum,” said John Donahoe, President and CEO, NIKE, Inc. “We have the right playbook to navigate macroeconomic dynamics, as we create value through our relentless drive to fuel the future of sport.”* First Quarter revenues increased 12 percent, on a currency-neutral basis, with growth across all channels, led by NIKE Direct growth of 25 percent. Contributing to NIKE Direct growth was the steady normalization of owned physical retail, which grew 24 percent, exceeding pre-pandemic levels from the first quarter of fiscal 2020. NIKE Brand Digital business continued strong growth, increasing by 25 percent, led by North America growth of 43 percent. “NIKE is a growth company with a market opportunity as large as it's ever been,” said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. “Our Q1 results illustrate how NIKE’s Consumer Direct Acceleration strategy continues to fuel growth and transform our long- term financial model.”**
First Quarter Income Statement Review
Revenues for NIKE, Inc. increased 16 percent to $12.2 billion compared to the prior year, up 12 percent on a currency neutral basis.
Revenues for the NIKE Brand were $11.6 billion, an increase of 12 percent to prior year ona currency-neutral basis, led by NIKE Direct double-digit growth in North America, APLA and EMEA.
Revenues for Converse were $629 million, up 7 percent on a currency-neutral basis, led by performance in Direct to consumer in both North America and Europe.
Gross margin increased 170 basis points to 46.5 percent, led by margin expansion in our NIKE Direct business, a higher mix of full-price sales and favorable changes in foreign currency exchange rates, partially offset by higher product costs primarily due to increased freight costs.
Selling and administrative expense increased 20 percent to $3.6 billion.
Demand creation expense was $918 million, up 36 percent, primarily due to normalization of spend against brand campaigns as we annualize marketplace closures in the prior year, as well as continued investments in digital marketing to support heightened digital demand.
Operating overhead expense increased 15 percent to $2.7 billion, primarily due to an increase in wage-related expenses, higher strategic technology investments and NIKE Direct variable costs.
The effective tax rate for the quarter was 11.0 percent compared to 11.5 percent for the same period last year, due to increased benefits from stock-based compensation and discrete items, offset by a shift in our earnings mix.
Net income was $1.9 billion, up 23 percent, and Diluted earnings per share was $1.16, increasing 22 percent.
August 31, 2021 Balance Sheet Review
Inventories for NIKE, Inc. were $6.7 billion, flat compared to the prior year period, driven by strong consumer demand during the quarter, offset by elevated in-transit inventories due to extended lead times from ongoing supply chain disruptions.
Cash and equivalents and short-term investments were $13.7 billion, up approximately $4.2 billion from last year, due to strong free cash flow generation, partially offset by cash dividends and share repurchases.
NIKE continues to have a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 19 consecutive years of increasing dividend payouts. In the first quarter, NIKE returned approximately $1.2 billion to shareholders, including:
Dividends of $435 million, up 13 percent from the prior year.
Share repurchases of $742 million for the quarter, reflecting 4.8 million shares retired as part of the four-year, $15 billion program approved by the Board of Directors in June 2018. As of August 31, 2021, a total of 54.8 million shares have been repurchased under the program for a total of approximately $5.4 billion.
NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on September 23, 2021, to review fiscal first quarter results. The conference call will be broadcast live via the Internet and can be accessed at https://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, October 14, 2021.