NIKE, Inc. (NYSE:NKE) today reported financial results for its
fiscal 2022 fourth quarter and full year ended May 31, 2022.
- Fourth quarter reported revenues were $12.2 billion, down 1
percent compared to prior year and up 3 percent on a
currency-neutral basis*
- NIKE Direct reported revenues for the fourth quarter were $4.8
billion, up 7 percent compared to prior year and up 11 percent on a
currency-neutral basis
- Wholesale reported revenues for the fourth quarter were $6.8
billion, down 7 percent compared to prior year and down 3 percent
on a currency-neutral basis
- Gross margin for the fourth quarter decreased 80 basis points
to 45 percent.
- Diluted earnings per share was $0.90 for the fourth
quarter
- The Company announced its Board of Directors has authorized a
new four-year, $18 billion program to repurchase shares of NIKE's
Class B Common Stock
“NIKE’s results this fiscal year are a testament to the
unmatched strength of our brands and our deep connection with
consumers," said John Donahoe, President and CEO, NIKE, Inc. “Our
competitive advantages, including our pipeline of innovative
product and expanding digital leadership, prove that our strategy
is working as we create value through our relentless drive to serve
the future of sport."**
Fourth quarter NIKE Direct revenues grew 7 percent on a
reported basis and 11 percent on a currency-neutral basis, led by
25 percent growth in EMEA, 43 percent growth in APLA and 5 percent
growth in North America, partially offset by a decline in Greater
China. NIKE Brand Digital grew 15 percent on a reported basis and
18 percent on a currency-neutral basis, driven by double digit
growth in APLA, North America and EMEA. NIKE-owned stores declined
2 percent on a reported basis and increased 1 percent on a
currency-neutral basis.
“In this dynamic environment, NIKE's unrivaled strengths
continue to fuel our momentum,” said Matt Friend, Executive Vice
President and Chief Financial Officer, NIKE, Inc. "Two years into
executing our Consumer Direct Acceleration, we are better
positioned than ever to drive long-term growth while serving
consumers directly at scale."**
Non-recurring Items Impacting Comparability in the Fourth
Quarter
Fourth quarter results contain several non-comparable items,
including non-recurring charges recorded in Other (income) expense,
net, totaling approximately $150 million, associated with the
deconsolidation of our Russian operations, and the
transition of our businesses in Argentina, Chile and Uruguay to
strategic distributor models.
Fourth Quarter Income Statement Review
- Revenues for NIKE, Inc. decreased 1 percent to $12.2
billion compared to the prior year and were up 3 percent on a
currency-neutral basis.
- Revenues for the NIKE Brand were $11.7 billion, down 1 percent
on a reported basis and up 3 percent on a currency-neutral basis,
led by 20 percent growth in EMEA.
- Revenues for Converse were $593 million, down 1 percent on a
reported basis and up 3 percent on a currency-neutral basis, due to
wholesale revenue declines offset by growth in our direct to
consumer business.
- Gross margin decreased 80 basis points to 45.0 percent,
primarily due to higher inventory obsolescence reserves in Greater
China and elevated freight and logistics costs, partially offset by
strategic pricing actions, favorable changes in net foreign
currency exchange rates, including hedges, and margin expansion in
our NIKE Direct business.
- Selling and administrative expense increased 8 percent
to $4.0 billion.
- Demand creation expense was $1.1 billion, up 6 percent,
primarily due to increased sports marketing expenses and continued
investments in digital marketing to support heightened digital
demand.
- Operating overhead expense increased 8 percent to $3.0 billion,
due to higher strategic technology investments, and an increase in
NIKE Direct variable costs and wage-related expenses.
- The effective tax rate was (4.7) percent compared to
18.6 percent for the same period last year, due to a shift in our
earnings mix and a non-cash, one-time benefit related to the
onshoring of our non-U.S. intangible property.
- Net income was $1.4 billion, down 5 percent, and
Diluted earnings per share was $0.90, down 3 percent
compared to prior year.
Fiscal 2022 Income Statement Review
- Revenues for NIKE, Inc. increased 5 percent to $46.7
billion, up 6 percent on a currency-neutral basis.
- Revenues for the NIKE Brand were $44.4 billion, up 5 percent on
a reported basis and 6 percent on a currency-neutral basis, driven
by double-digit growth in NIKE Direct, partially offset by slight
declines in wholesale revenues.
- NIKE Direct revenues were $18.7 billion, up 14 percent on a
reported basis and up 15 percent on a currency-neutral basis, led
by NIKE Brand digital growth of 18 percent and NIKE-owned stores
were up 10 percent.
- Revenues for Converse were $2.3 billion, up 6 percent on a
reported basis and up 7 percent on a currency-neutral basis, led by
double-digit growth in our direct to consumer business, partially
offset by lower wholesale revenues.
- Gross margin increased 120 basis points to 46.0 percent,
primarily due to margin expansion in our NIKE Direct business, a
higher mix of full-price sales and favorable changes in net foreign
currency exchange rates, including hedges, partially offset by
elevated freight and logistics costs and higher inventory
obsolescence reserves in Greater China in the fourth quarter.
- Selling and administrative expense increased 14 percent
to $14.8 billion.
- Demand creation expense was $3.9 billion, up 24 percent
compared to prior year, primarily due to normalization of spend
against brand campaigns and continued investments in digital
marketing to support heightened digital demand.
- Operating overhead expense increased 11 percent to $11.0
billion due to higher strategic technology investments, and an
increase in wage-related expenses and NIKE Direct variable
costs.
- The effective tax rate was 9.1 percent, compared to 14.0
percent for the same period last year, due to a shift in our
earnings mix and a non-cash, one-time benefit related to the
onshoring of our non-U.S. intangible property.
- Net income was $6.0 billion, up 6 percent, and
Diluted earnings per share was $3.75, up 5 percent compared
to prior year.
May 31, 2022 Balance Sheet Review
- Inventories for NIKE, Inc. were $8.4 billion, up 23
percent compared to the prior year period, driven by elevated
in-transit inventories due to extended lead times from ongoing
supply chain disruptions, partially offset by strong consumer
demand.
- Cash and equivalents and short-term investments were
$13.0 billion, $479 million lower than prior year, as free cash
flow was offset by share repurchases and dividends.
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 fourth quarter, the Company returned approximately $1.5
billion to shareholders, including:
- Dividends of $481 million, up 11 percent from prior
year.
- Share repurchases of $1.1 billion, reflecting 8.5
million shares retired as part of the four-year, $15 billion
program approved by the Board of Directors in June 2018.
In fiscal 2022, the Company returned approximately $5.8 billion
to shareholders, including:
- Dividends of $1.8 billion, up 12 percent from prior
year.
- Share repurchases of $4.0 billion, reflecting 27.3
million shares retired. As of May 31, 2022, a total of 77.4 million
shares for $8.7 billion had been repurchased under the current
program.
In June 2022, the Board of Directors authorized a new four-year,
$18 billion program to repurchase shares of NIKE's Class B common
stock. The Company's new program will replace the current $15
billion share repurchase program, which will be terminated in
fiscal year 2023. Repurchases under the Company's new program will
be made in open market or privately negotiated transactions in
compliance with the Securities and Exchange Commission Rule 10b-18,
subject to market conditions, applicable legal requirements and
other relevant factors. The new share repurchase program does not
obligate the Company to acquire any particular amount of common
stock, and it may be suspended at any time at the Company's
discretion.
Conference Call
NIKE, Inc. management will host a conference call beginning at
approximately 2:00 p.m. PT on June 27, 2022, to review fiscal
fourth quarter and full year 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, July 15, 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 or the Supplemental NIKE
Brand Revenue 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
%
TWELVE MONTHS ENDED
%
(In millions, except per share data)
5/31/2022
5/31/2021
Change
5/31/2022
5/31/2021
Change
Revenues
$
12,234
$
12,344
-1
%
$
46,710
$
44,538
5
%
Cost of sales
6,731
6,689
1
%
25,231
24,576
3
%
Gross profit
5,503
5,655
-3
%
21,479
19,962
8
%
Gross margin
45.0
%
45.8
%
46.0
%
44.8
%
Demand creation expense
1,061
997
6
%
3,850
3,114
24
%
Operating overhead expense
2,974
2,745
8
%
10,954
9,911
11
%
Total selling and administrative
expense
4,035
3,742
8
%
14,804
13,025
14
%
% of revenues
33.0
%
30.3
%
31.7
%
29.2
%
Interest expense (income), net
40
63
—
205
262
—
Other (income) expense, net
54
(4
)
—
(181
)
14
—
Income before income taxes
1,374
1,854
-26
%
6,651
6,661
0
%
Income tax (benefit) expense
(65
)
345
-119
%
605
934
-35
%
Effective tax rate
(4.7
) %
18.6
%
9.1
%
14.0
%
NET INCOME
$
1,439
$
1,509
-5
%
$
6,046
$
5,727
6
%
Earnings per common share:
Basic
$
0.91
$
0.96
-5
%
$
3.83
$
3.64
5
%
Diluted
$
0.90
$
0.93
-3
%
$
3.75
$
3.56
5
%
Weighted average common shares
outstanding:
Basic
1,572.0
1,579.0
1,578.8
1,573.0
Diluted
1,595.0
1,614.9
1,610.8
1,609.4
Dividends declared per common share
$
0.305
$
0.275
$
1.190
$
1.070
NIKE, Inc.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
May 31,
May 31,
% Change
(Dollars in millions)
2022
2021
ASSETS
Current assets:
Cash and equivalents
$
8,574
$
9,889
-13
%
Short-term investments
4,423
3,587
23
%
Accounts receivable, net
4,667
4,463
5
%
Inventories
8,420
6,854
23
%
Prepaid expenses and other current
assets
2,129
1,498
42
%
Total current assets
28,213
26,291
7
%
Property, plant and equipment, net
4,791
4,904
-2
%
Operating lease right-of-use assets,
net
2,926
3,113
-6
%
Identifiable intangible assets, net
286
269
6
%
Goodwill
284
242
17
%
Deferred income taxes and other assets
3,821
2,921
31
%
TOTAL ASSETS
$
40,321
$
37,740
7
%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt
$
500
$
—
—
Notes payable
10
2
400
%
Accounts payable
3,358
2,836
18
%
Current portion of operating lease
liabilities
420
467
-10
%
Accrued liabilities
6,220
6,063
3
%
Income taxes payable
222
306
-27
%
Total current liabilities
10,730
9,674
11
%
Long-term debt
8,920
9,413
-5
%
Operating lease liabilities
2,777
2,931
-5
%
Deferred income taxes and other
liabilities
2,613
2,955
-12
%
Redeemable preferred stock
—
—
—
Shareholders’ equity
15,281
12,767
20
%
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
40,321
$
37,740
7
%
NIKE, Inc.
DIVISIONAL REVENUES
(Unaudited)
% Change Excluding Currency
Changes1
% Change Excluding Currency
Changes1
THREE MONTHS ENDED
%
TWELVE MONTHS ENDED
%
(Dollars in millions)
5/31/2022
5/31/2021
Change
5/31/2022
5/31/2021
Change
North America
Footwear
$
3,580
$
3,793
-6
%
-6
%
$
12,228
$
11,644
5
%
5
%
Apparel
1,375
1,448
-5
%
-5
%
5,492
5,028
9
%
9
%
Equipment
160
143
12
%
12
%
633
507
25
%
25
%
Total
5,115
5,384
-5
%
-5
%
18,353
17,179
7
%
7
%
Europe, Middle East &
Africa
Footwear
2,030
1,831
11
%
22
%
7,388
6,970
6
%
9
%
Apparel
1,083
1,023
6
%
16
%
4,527
3,996
13
%
16
%
Equipment
138
125
10
%
20
%
564
490
15
%
17
%
Total
3,251
2,979
9
%
20
%
12,479
11,456
9
%
12
%
Greater China
Footwear
1,178
1,316
-10
%
-12
%
5,416
5,748
-6
%
-10
%
Apparel
350
572
-39
%
-40
%
1,938
2,347
-17
%
-21
%
Equipment
33
45
-27
%
-28
%
193
195
-1
%
-6
%
Total
1,561
1,933
-19
%
-20
%
7,547
8,290
-9
%
-13
%
Asia Pacific & Latin
America
Footwear
1,197
1,007
19
%
28
%
4,111
3,659
12
%
17
%
Apparel
429
396
8
%
16
%
1,610
1,494
8
%
12
%
Equipment
56
55
2
%
9
%
234
190
23
%
28
%
Total
1,682
1,458
15
%
24
%
5,955
5,343
11
%
16
%
Global Brand Divisions2
48
7
586
%
524
%
102
25
308
%
302
%
TOTAL NIKE BRAND
11,657
11,761
-1
%
3
%
44,436
42,293
5
%
6
%
Converse
593
596
-1
%
3
%
2,346
2,205
6
%
7
%
Corporate3
(16
)
(13
)
—
—
(72
)
40
—
—
TOTAL NIKE, INC. REVENUES
$
12,234
$
12,344
-1
%
3
%
$
46,710
$
44,538
5
%
6
%
TOTAL NIKE BRAND
Footwear
$
7,985
$
7,947
0
%
4
%
$
29,143
$
28,021
4
%
4
%
Apparel
3,237
3,439
-6
%
-2
%
13,567
12,865
5
%
6
%
Equipment
387
368
5
%
10
%
1,624
1,382
18
%
18
%
Global Brand Divisions2
48
7
586
%
524
%
102
25
308
%
302
%
TOTAL NIKE BRAND REVENUES
$
11,657
$
11,761
-1
%
3
%
$
44,436
$
42,293
5
%
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.
SUPPLEMENTAL NIKE BRAND
REVENUE DETAILS
(Unaudited)
% Change Excluding Currency
Changes1
TWELVE MONTHS ENDED
%
(Dollars in millions)
5/31/2022
5/31/2021
Change
NIKE Brand Revenues by:
Sales to Wholesale Customers
$
25,608
$
25,898
-1
%
-1
%
Sales through NIKE Direct
18,726
16,370
14
%
15
%
Global Brand Divisions2
102
25
308
%
302
%
TOTAL NIKE BRAND REVENUES
$
44,436
$
42,293
5
%
6
%
NIKE Brand Revenues on a Wholesale
Equivalent Basis:3
Sales to Wholesale Customers
$
25,608
$
25,898
-1
%
-1
%
Sales from our Wholesale Operations to
NIKE Direct Operations
10,543
9,872
7
%
7
%
TOTAL NIKE BRAND WHOLESALE EQUIVALENT
REVENUES
$
36,151
$
35,770
1
%
1
%
NIKE Brand Wholesale Equivalent
Revenues by:3,4
Men’s
$
18,797
$
18,391
2
%
3
%
Women’s
8,273
8,225
1
%
1
%
NIKE Kids’
4,874
4,882
0
%
0
%
Jordan Brand
5,122
4,780
7
%
7
%
Others5
(915
)
(508
)
-80
%
-79
%
TOTAL NIKE BRAND WHOLESALE EQUIVALENT
REVENUES
$
36,151
$
35,770
1
%
1
%
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 References to NIKE Brand wholesale
equivalent revenues, which are considered non-GAAP financial
measures, are intended to provide context as to the total size of
the Company’s NIKE Brand market footprint if it had no NIKE Direct
operations. NIKE Brand wholesale equivalent revenues consist of 1)
sales to external wholesale customers and 2) internal sales from
the Company’s wholesale operations to its NIKE Direct operations
which are charged at prices comparable to those charged to external
wholesale customers. 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.
4 As a result of the Consumer Direct
Acceleration strategy, announced in fiscal 2021, the Company is now
organized around a new consumer construct of Men's, Women's and
Kids'. Beginning in the first quarter of fiscal 2022, unisex
products are classified within Men's, and Jordan Brand revenues are
separately reported. Certain prior year amounts have been
reclassified to conform to fiscal 2022 presentation. These changes
had no impact on previously reported consolidated results of
operations or shareholders' equity. For additional information
about the Consumer Direct Acceleration refer to Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations within the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 2021.
5 Others include products not allocated to
Men’s, Women’s, NIKE Kids’ and Jordan Brand, as well as certain
adjustments that are not allocated to products designated by
consumer.
NIKE, Inc.
EARNINGS BEFORE INTEREST AND
TAXES1
(Unaudited)
THREE MONTHS ENDED
%
TWELVE MONTHS ENDED
%
(Dollars in millions)
5/31/2022
5/31/2021
Change
5/31/2022
5/31/2021
Change
North America
$
1,478
$
1,794
-18
%
$
5,114
$
5,089
0
%
Europe, Middle East & Africa
899
550
63
%
3,293
2,435
35
%
Greater China
311
691
-55
%
2,365
3,243
-27
%
Asia Pacific & Latin America
549
418
31
%
1,896
1,530
24
%
Global Brand Divisions2
(1,229
)
(1,110
)
-11
%
(4,262
)
(3,656
)
-17
%
TOTAL NIKE BRAND1
2,008
2,343
-14
%
8,406
8,641
-3
%
Converse
165
138
20
%
669
543
23
%
Corporate3
(759
)
(564
)
-35
%
(2,219
)
(2,261
)
2
%
TOTAL NIKE, INC. EARNINGS BEFORE
INTEREST AND TAXES1
1,414
1,917
-26
%
6,856
6,923
-1
%
EBIT margin1
11.6
%
15.5
%
14.7
%
15.5
%
Interest expense (income), net
40
63
—
205
262
—
TOTAL NIKE, INC. INCOME BEFORE INCOME
TAXES
$
1,374
$
1,854
-26
%
$
6,651
$
6,661
0
%
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. Management uses these
non-GAAP financial measures when evaluating the Company's
performance, including when making financial and operating
decisions. Additionally, management believes these non-GAAP
financial measures provide investors with additional financial
information that 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20220627005703/en/
Investor Contact: Paul Trussell investor.relations@nike.com
Media Contact: KeJuan Wilkins media.relations@nike.com
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