NIKE INC Stock Forecasts | NKE EPS & Price Predictions

EX-99.1 2 q3fy22exhibit991er.htm EX-99.1 Document


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

NIKE, INC. REPORTS FISCAL 2022 THIRD QUARTER RESULTS

BEAVERTON, Ore., Mar. 21, 2022 — NIKE, Inc. (NYSE:NKE) today reported fiscal 2022 financial results for its third quarter ended February 28, 2022.

•Third quarter reported revenues were $10.9 billion, up 5 percent compared to prior year and up 8 percent on a currency-neutral basis.*

•NIKE Direct sales were $4.6 billion, up 15 percent on a reported basis and up 17 percent on a currency-neutral basis.

•NIKE Brand Digital sales increased 19 percent, or 22 percent on a currency-neutral basis, led by 33 percent growth in North America.

•Gross margin increased 100 basis points to 46.6 percent.

•Diluted earnings per share for the quarter was $0.87.

"NIKE’s strong results this quarter show that our Consumer Direct Acceleration strategy is working, as we invest to achieve our growth opportunities," said John Donahoe, President and CEO, NIKE, Inc. "Fueled by deep consumer connections, compelling product innovation and an expanding digital advantage, we have the right playbook to navigate volatility and create value through our relentless drive to serve the future of sport."**

Third Quarter revenues increased 8 percent on a currency-neutral basis, led by NIKE Direct growth of 17 percent. NIKE Brand Digital business fueled growth, increasing by 22 percent, driven by double-digit growth in North America, APLA and EMEA, partially offset by declines in Greater China. Further contributing to NIKE Direct growth was the steady normalization of traffic in owned physical retail, with NIKE owned stores up 14 percent. Wholesale revenues declined 1 percent on a reported basis and were up 1 percent on a currency-neutral basis, with growth in EMEA and APLA offset by declines in North America and Greater China.

“Our third quarter results demonstrate NIKE’s ability to navigate through volatility, while continuing to serve consumers directly and digitally, at scale,” said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. “Marketplace demand continues to significantly exceed available inventory supply, with a healthy pull market across our geographies.”**

Third Quarter Income Statement Review

•Revenues for NIKE, Inc. increased 5 percent to $10.9 billion compared to the prior year and were up 8 percent on a currency-neutral basis.

◦Revenues for the NIKE Brand were $10.3 billion, up 8 percent compared to prior year on a currency-neutral basis, led by 13 percent growth in EMEA.

◦Revenues for Converse were $567 million, down 1 percent on a reported basis and up 2 percent on a currency-neutral basis, led by strong performance in North America and Europe, partially offset by declines in Asia.

•Gross margin increased 100 basis points to 46.6 percent, driven by margin expansion in our NIKE Direct business driven by lower markdowns, changes in foreign currency exchange rates

and a higher mix of full-price sales, partially offset by lower full-price product margins largely due to increased freight and logistics costs.

•Selling and administrative expense increased 13 percent to $3.4 billion.

◦Demand creation expense was $854 million, up 20 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 11 percent to $2.6 billion, primarily due to higher strategic technology investments and wage-related expenses.

•The effective tax rate for the quarter was 16.4 percent compared to 11.4 percent for the same period last year, due to a shift in our earnings mix, the effects of stock-based compensation and recently finalized U.S. tax regulations.

•Net income was $1.4 billion, down 4 percent, and Diluted earnings per share was $0.87.

February 28, 2022 Balance Sheet Review

•Inventories for NIKE, Inc. were $7.7 billion, up 15 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 $13.5 billion, up approximately $939 million 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 third quarter, NIKE returned approximately $1.7 billion to shareholders, including:

•Dividends of $484 million, up 12 percent from the prior year.

•Share repurchases of $1.2 billion for the quarter, reflecting 8.1 million shares retired as part of the four-year, $15 billion program approved by the Board of Directors in June 2018. As of February 28, 2022, a total of 68.9 million shares have been repurchased under the program for a total of approximately $7.6 billion.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on March 21, 2022, to review fiscal third 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, April 11, 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						%		NINE MONTHS ENDED						%
(In millions, except per share data)	2/28/2022			2/28/2021			Change		2/28/2022			2/28/2021			Change
Revenues	$	10,871		$	10,357		5	%	$	34,476		$	32,194		7	%
Cost of sales	5,804			5,638			3	%	18,500			17,887			3	%
Gross profit	5,067			4,719			7	%	15,976			14,307			12	%
Gross margin	46.6		%	45.6		%			46.3		%	44.4		%

Demand creation expense	854			711			20	%	2,789			2,117			32	%
Operating overhead expense	2,584			2,330			11	%	7,980			7,166			11	%
Total selling and administrative expense	3,438			3,041			13	%	10,769			9,283			16	%
% of revenues	31.6		%	29.4		%			31.2		%	28.8		%

Interest expense (income), net	53			64			—		165			199			—
Other (income) expense, net	(94)			(22)			—		(235)			18			—
Income before income taxes	1,670			1,636			2	%	5,277			4,807			10	%
Income tax expense	274			187			47	%	670			589			14	%
Effective tax rate	16.4		%	11.4		%			12.7		%	12.3		%

NET INCOME	$	1,396		$	1,449		-4	%	$	4,607		$	4,218		9	%

Earnings per common share:
Basic	$	0.88		$	0.92		-4	%	$	2.91		$	2.68		9	%
Diluted	$	0.87		$	0.90		-3	%	$	2.85		$	2.62		9	%

Weighted average common shares outstanding:
Basic	1,579.0			1,578.0					1,581.1			1,570.9
Diluted	1,610.7			1,616.9					1,615.8			1,607.3

Dividends declared per common share	$	0.305		$	0.275				$	0.885		$	0.795


NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)


	February 28,		February 28,		% Change
(Dollars in millions)	2022		2021
ASSETS
Current assets:
Cash and equivalents	$	8,704	$	8,516	2	%
Short-term investments	4,763		4,012		19	%
Accounts receivable, net	3,827		3,669		4	%
Inventories	7,700		6,693		15	%
Prepaid expenses and other current assets	1,968		1,810		9	%
Total current assets	26,962		24,700		9	%
Property, plant and equipment, net	4,806		4,958		-3	%
Operating lease right-of-use assets, net	2,959		3,149		-6	%
Identifiable intangible assets, net	291		271		7	%
Goodwill	284		242		17	%
Deferred income taxes and other assets	3,275		2,865		14	%
TOTAL ASSETS	$	38,577	$	36,185	7	%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	—	—
Notes payable	—		4		-100	%
Accounts payable	2,770		2,257		23	%
Current portion of operating lease liabilities	455		470		-3	%
Accrued liabilities	5,391		5,907		-9	%
Income taxes payable	202		256		-21	%
Total current liabilities	8,818		8,894		-1	%
Long-term debt	9,418		9,412		0	%
Operating lease liabilities	2,784		2,964		-6	%
Deferred income taxes and other liabilities	2,748		2,984		-8	%
Redeemable preferred stock	—		—		—
Shareholders’ equity	14,809		11,931		24	%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	38,577	$	36,185	7	%


NIKE, Inc.
DIVISIONAL REVENUES
(Unaudited)


							% Change Excluding Currency Changes1								% Change Excluding Currency Changes1
	THREE MONTHS ENDED				%				NINE MONTHS ENDED				%
(Dollars in millions)	2/28/2022		2/28/2021		Change				2/28/2022		2/28/2021		Change
North America
Footwear	$	2,532	$	2,382	6	%	6	%	$	8,648	$	7,851	10	%	10	%
Apparel	1,207		1,087		11	%	11	%	4,117		3,580		15	%	15	%
Equipment	143		95		51	%	49	%	473		364		30	%	30	%
Total	3,882		3,564		9	%	9	%	13,238		11,795		12	%	12	%
Europe, Middle East & Africa
Footwear	1,569		1,606		-2	%	4	%	5,358		5,139		4	%	4	%
Apparel	1,083		898		21	%	28	%	3,444		2,973		16	%	16	%
Equipment	127		105		21	%	29	%	426		365		17	%	16	%
Total	2,779		2,609		7	%	13	%	9,228		8,477		9	%	9	%
Greater China
Footwear	1,554		1,614		-4	%	-6	%	4,238		4,432		-4	%	-9	%
Apparel	548		616		-11	%	-13	%	1,588		1,775		-11	%	-15	%
Equipment	58		49		18	%	15	%	160		150		7	%	1	%
Total	2,160		2,279		-5	%	-8	%	5,986		6,357		-6	%	-11	%
Asia Pacific & Latin America
Footwear	1,005		903		11	%	20	%	2,914		2,652		10	%	13	%
Apparel	394		365		8	%	16	%	1,181		1,098		8	%	10	%
Equipment	62		47		32	%	44	%	178		135		32	%	36	%
Total	1,461		1,315		11	%	19	%	4,273		3,885		10	%	13	%
Global Brand Divisions2	41		6		583	%	561	%	54		18		200	%	206	%
TOTAL NIKE BRAND	10,323		9,773		6	%	8	%	32,779		30,532		7	%	7	%
Converse	567		570		-1	%	2	%	1,753		1,609		9	%	8	%
Corporate3	(19)		14		—		—		(56)		53		—		—
TOTAL NIKE, INC. REVENUES	$	10,871	$	10,357	5	%	8	%	$	34,476	$	32,194	7	%	7	%

TOTAL NIKE BRAND
Footwear	$	6,660	$	6,505	2	%	5	%	$	21,158	$	20,074	5	%	5	%
Apparel	3,232		2,966		9	%	12	%	10,330		9,426		10	%	9	%
Equipment	390		296		32	%	36	%	1,237		1,014		22	%	21	%
Global Brand Divisions2	41		6		583	%	561	%	54		18		200	%	206	%
TOTAL NIKE BRAND REVENUES	$	10,323	$	9,773	6	%	8	%	$	32,779	$	30,532	7	%	7	%
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						%		NINE MONTHS ENDED						%
(Dollars in millions)	2/28/2022			2/28/2021			Change		2/28/2022			2/28/2021			Change
North America	$	967		$	970		0	%	$	3,636		$	3,295		10	%
Europe, Middle East & Africa	713			533			34	%	2,394			1,885			27	%
Greater China	784			973			-19	%	2,054			2,552			-20	%
Asia Pacific & Latin America	478			408			17	%	1,347			1,112			21	%
Global Brand Divisions2	(975)			(852)			-14	%	(3,033)			(2,546)			-19	%
TOTAL NIKE BRAND1	1,967			2,032			-3	%	6,398			6,298			2	%
Converse	168			150			12	%	504			405			24	%
Corporate3	(412)			(482)			15	%	(1,460)			(1,697)			14	%
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES1	1,723			1,700			1	%	5,442			5,006			9	%
EBIT margin1	15.8		%	16.4		%			15.8		%	15.5		%
Interest expense (income), net	53			64			—		165			199			—
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	1,670		$	1,636		2	%	$	5,277		$	4,807		10	%
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.