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NIKE, Inc. Fiscal 2021 Fourth Quarter & Full Year Results

NIKE present a solid year’s results driven by 4th Quarter resurgence.

• Fourth quarter reported revenues were $12.3 billion, up 96 percent compared to prior year and increasing 21 percent compared to the fourth quarter of 2019.
• Full year reported revenues increased 19 percent to $44.5 billion.
• NIKE Direct fourth quarter sales increased 73 percent to $4.5 billion.
• Gross margin for the fourth quarter increased 850 basis points to 45.8 percent.

“NIKE’s strong results this quarter and full fiscal year demonstrate NIKE’s unique competitive advantage and deep connection with consumers all over the world,” said John Donahoe, President & CEO, NIKE, Inc. “FY21 was a pivotal year for NIKE as we brought our Consumer Direct Acceleration strategy to life across the marketplace. Fuelled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for NIKE’s long-term growth.”

Fourth quarter revenue growth was led by higher wholesale shipments due to the annualization of COVID-19 related physical retail closures in the prior year in North America, EMEA and APLA. As physical retail re-opened, NIKE Brand Digital continued to deliver strong revenue growth of 41 percent versus prior year and 147 percent compared to the fourth quarter of 2019.

EMEA’s fourth quarter reported revenues increased 124 percent, up 21 percent compared to the fourth quarter of 2019, despite temporary COVID-19 related store closures throughout the quarter. As physical retail was temporarily closed, EMEA Digital fourth quarter sales increased 40 percent, or 170 percent compared to the fourth quarter of 2019. Today, approximately 99 percent of stores in EMEA are open or operating on reduced hours.

North America delivered record revenues, up 141 percent on a reported basis for the fourth quarter, up 29 percent compared to the fourth quarter of 2019, including increased wholesale revenue due to delayed shipments from the previous quarter. As markets re-opened and sport returned, North America Digital growth continued to be strong, increasing 54 percent versus prior year and 177 percent compared to the fourth quarter of 2019.

For the full year NIKE, Inc. revenues increased 19 percent on a reported basis or 14 percent compared to fiscal year 2019, reflecting growth across all Geographies and Converse, including seven consecutive years of double-digit, currency-neutral growth for their Greater China business.

“NIKE’s brand momentum is a testament to our authentic consumer connections, digital strength and continued operational execution,” said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. “As we advance our consumer-led digital transformation, we are building a new financial model that will continue to fuel long-term sustainable, profitable growth for NIKE.”

Fourth Quarter Income Statement Review
Revenues for NIKE, Inc. rose 96 percent to $12.3 billion, up 88 percent on a currency-neutral basis, largely driven by the recovery of their business operations due to the impact of COVID-19 in the prior year. Revenues for the NIKE Brand were $11.8 billion, up 88 percent to prior year on a currency-neutral basis, driven by triple-digit growth in their wholesale business and strong double-digit growth in NIKE Direct. Revenues for Converse were $596 million, up 85 percent on a currency-neutral basis, led by strong marketplace demand in North America and Western Europe.

Gross margin increased 850 basis points to 45.8 percent, primarily due to annualizing the impacts of COVID-19 including lower factory cancellation charges, lower inventory obsolescence reserves as well as the favorable rate impact of supply chain fixed costs on a higher volume of wholesale shipments. The increase in gross margin also reflects favorable margins in the NIKE Direct business.

Selling and administrative expense increased 17 percent to $3.7 billion. Demand creation expense was $997 million, up 21 percent, primarily due to the return of sport and brand events driving increased advertising and marketing expense as well as digital marketing investments. Operating overhead expense increased 16 percent to $2.7 billion, due to an increase in wage-related expenses, higher strategic technology investments and NIKE Direct variable costs, partially offset by lower bad debt expense.

Net income was $1.5 billion.

Fiscal 2021 Income Statement Review
Revenues for NIKE, Inc. increased 19 percent to $44.5 billion, up 17 percent on a currency-neutral basis. Revenues for the NIKE Brand were $42.3 billion, up 17 percent on a currency-neutral basis, driven by growth across NIKE Direct and wholesale, double-digit growth across footwear and apparel, with growth led by Sportswear and the Jordan Brand. NIKE Direct revenues were $16.4 billion, up 32 percent, or 30 percent on a currency-neutral basis, led by 64 percent, or 60 percent on a currency-neutral basis, growth in NIKE Brand Digital, with all geographies growing strong double-digits. Despite temporary store closures across the marketplace due to COVID-19, comparable store sales grew 4 percent. Revenues for Converse were $2.2 billion, up 16 percent on a currency-neutral basis, led by strong double-digit sales growth in their digital business.

Gross margin increased 140 basis points to 44.8 percent, primarily due to annualizing the impacts of COVID-19 including lower factory cancellation charges, lower inventory obsolescence reserves as well as the favorable rate impact of supply chain fixed costs on a higher volume of wholesale shipments. The increase in gross margin also reflects higher full-price product margins across wholesale and NIKE Direct.

Selling and administrative expense decreased 1 percent to $13.0 billion. Demand creation expense was $3.1 billion, down 13 percent to prior year, primarily due to lower marketing and advertising expenses for their brand events and retail operations, as well as lower sports marketing expenses as sporting events were postponed due to COVID-19. This activity was partially offset by higher digital marketing investments. Operating overhead expense increased 4 percent to $9.9 billion due to an increase in strategic technology investments, higher NIKE Direct variable costs and approximately $260 million in restructuring-related costs, partially offset by lower bad debt expense and lower travel and related expenses.

Net income was $5.7 billion.

May 31, 2021 Balance Sheet Review
Inventories for NIKE, Inc. were $6.9 billion, down 7 percent compared to the prior year period, driven by strong consumer demand as we return to healthy inventory levels across markets closed in the prior year due to COVID-19.

Cash and equivalents and short-term investments were $13.5 billion, $4.7 billion higher than last year, primarily due to proceeds from net income partially offset by cash dividends.

Read the full statement here.