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Published: 2021-12-20 16:16:46 ET
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EX-99.1 2 q2fy22exhibit991er.htm EX-99.1 Document

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Investor Contact:Media Contact:
Paul TrussellKeJuan Wilkins
investor.relations@nike.com
media.relations@nike.com

NIKE, INC. REPORTS FISCAL 2022 SECOND QUARTER RESULTS

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.

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:
•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.

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.
(Tables Follow)


NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED%SIX MONTHS ENDED%
(In millions, except per share data)11/30/202111/30/2020Change11/30/202111/30/2020Change
Revenues$11,357 $11,243 1 %$23,605 $21,837 8 %
Cost of sales6,144 6,396 -4 %12,696 12,249 4 %
Gross profit5,213 4,847 8 %10,909 9,588 14 %
Gross margin45.9 %43.1 %46.2 %43.9 %
Demand creation expense1,017 729 40 %1,935 1,406 38 %
Operating overhead expense2,742 2,538 8 %5,396 4,836 12 %
Total selling and administrative expense3,759 3,267 15 %7,331 6,242 17 %
% of revenues33.1 %29.1 %31.1 %28.6 %
Interest expense (income), net55 70 — 112 135 — 
Other (income) expense, net(102)54 — (141)40 — 
Income before income taxes1,501 1,456 3 %3,607 3,171 14 %
Income tax expense164 205 -20 %396 402 -1 %
Effective tax rate10.9 %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:
Basic1,582.4 1,573.0 1,582.2 1,567.4 
Diluted1,617.4 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)20212020
ASSETS
Current assets:
Cash and equivalents$10,751 $8,635 25 %
Short-term investments4,352 3,177 37 %
Accounts receivable, net3,746 3,713 1 %
Inventories6,506 6,090 7 %
Prepaid expenses and other current assets1,822 1,992 -9 %
Total current assets27,177 23,607 15 %
Property, plant and equipment, net4,812 4,959 -3 %
Operating lease right-of-use assets, net3,017 3,086 -2 %
Identifiable intangible assets, net265 270 -2 %
Goodwill242 223 9 %
Deferred income taxes and other assets3,404 2,691 26 %
TOTAL ASSETS$38,917 $34,836 12 %
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt$— $— — 
Notes payable9 41 -78 %
Accounts payable2,795 2,154 30 %
Current portion of operating lease liabilities462 458 1 %
Accrued liabilities5,431 6,030 -10 %
Income taxes payable160 188 -15 %
Total current liabilities8,857 8,871 0 %
Long-term debt9,417 9,410 0 %
Operating lease liabilities2,835 2,896 -2 %
Deferred income taxes and other liabilities2,884 3,019 -4 %
Redeemable preferred stock— — — 
Shareholders’ equity14,924 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)11/30/202111/30/2020Change11/30/202111/30/2020Change
North America
Footwear$2,852 $2,512 14 %13 %$6,116 $5,469 12 %12 %
Apparel1,480 1,368 8 %8 %2,910 2,493 17 %16 %
Equipment145 126 15 %16 %330 269 23 %23 %
Total4,477 4,006 12 %12 %9,356 8,231 14 %13 %
Europe, Middle East & Africa
Footwear1,806 1,731 4 %4 %3,789 3,533 7 %4 %
Apparel1,202 1,104 9 %8 %2,361 2,075 14 %11 %
Equipment134 123 9 %7 %299 260 15 %11 %
Total3,142 2,958 6 %6 %6,449 5,868 10 %7 %
Greater China
Footwear1,235 1,567 -21 %-25 %2,684 2,818 -5 %-11 %
Apparel564 681 -17 %-21 %1,040 1,159 -10 %-16 %
Equipment45 50 -10 %-15 %102 101 1 %-6 %
Total1,844 2,298 -20 %-24 %3,826 4,078 -6 %-13 %
Asia Pacific & Latin America
Footwear887 991 -10 %-8 %1,909 1,749 9 %9 %
Apparel402 432 -7 %-5 %787 733 7 %8 %
Equipment58 48 21 %22 %116 88 32 %32 %
Total1,347 1,471 -8 %-6 %2,812 2,570 9 %10 %
Global Brand Divisions2
6 8 -25 %-5 %13 12 8 %13 %
TOTAL NIKE BRAND10,816 10,741 1 %0 %22,456 20,759 8 %6 %
Converse557 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 %
Apparel3,648 3,585 2 %1 %7,098 6,460 10 %8 %
Equipment382 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)11/30/202111/30/2020Change11/30/202111/30/2020Change
North America$1,235 $1,023 21 %$2,669 $2,325 15 %
Europe, Middle East & Africa806 660 22 %1,681 1,352 24 %
Greater China569 891 -36 %1,270 1,579 -20 %
Asia Pacific & Latin America388 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 %
Converse132 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), net55 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.