BEAVERTON, Ore., Dec. 20, 2021 — NIKE, Inc. (NYSE:NKE) today reported fiscal 2022 financial results for its second quarter ended November 30, 2021.
- Second quarter reported revenues were $11.4 billion, up 1 percent compared to prior year and flat on a currency-neutral basis.*
- NIKE Direct sales were $4.7 billion, up 9 percent on a reported basis and up 8 percent on a currency-neutral basis.
- NIKE Brand Digital sales increased 12 percent, or 11 percent on a currency-neutral basis, led by 40 percent growth in North America.
- Gross margin increased 280 basis points to 45.9 percent.
- Diluted earnings per share for the quarter was $0.83, up 6 percent.
"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
- Revenues for NIKE, Inc. increased 1 percent to $11.4 billion compared to the prior year and were flat on a currency-neutral basis.
- Revenues for the NIKE Brand were $10.8 billion, flat to prior year on a currency-neutral basis, driven by NIKE Direct growth, offset by lower revenues in our wholesale business.
- Revenues for Converse were $557 million, up 16 percent on a currency-neutral basis, led by strong performance across all channels in Europe and North America.
- Gross margin increased 280 basis points to 45.9 percent, led by margin expansion in our NIKE Direct business driven by lower markdowns, a higher mix of full-price sales and changes in foreign currency exchange rates, partially offset by lower full-price product margins largely due to increased freight and logistics costs.
- Selling and administrative expense increased 15 percent to $3.8 billion.
- Demand creation expense was $1.0 billion, up 40 percent, primarily due to normalization of spend against brand campaigns and continued investments in digital marketing to support heightened digital demand.
- Operating overhead expense increased 8 percent to $2.7 billion, primarily due to higher strategic technology investments and wage-related expenses.
- The effective tax rate for the quarter was 10.9 percent compared to 14.1 percent for the same period last year, due to a shift in our earnings mix and the effects of stock-based compensation.
- Net income was $1.3 billion, up 7 percent, and diluted earnings per share was $0.83, increasing 6 percent.
November 30, 2021 Balance Sheet Review
- Inventories for NIKE, Inc. were $6.5 billion, up 7 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 during the quarter.
- Cash and equivalents and short-term investments were $15.1 billion, up approximately $3.3 billion from last year, driven by strong free cash flow, partially offset by share repurchases and cash dividends.
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:
- Dividends of $437 million, up 14 percent from the prior year.
- Share repurchases of $968 million for the quarter, reflecting 6.0 million shares retired as part of the four-year, $15 billion program approved by the Board of Directors in June 2018. As of November 30, 2021, a total of 60.8 million shares have been repurchased under the program for a total of approximately $6.4 billion.
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 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 investors.nike.com. Individuals can also visit 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.