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Nike Inc Release Fiscal 2022 Q4 & Full Year Financial Statements

NIKE, Inc. Reports Fiscal 2022 Fourth Quarter and Full Year Results

• Fourth quarter reported revenues were $12.2 billion, down 1 percent compared to prior year.
• NIKE Direct reported revenues for the fourth quarter were $4.8 billion, up 7 percent compared to prior year.
• Wholesale reported revenues for the fourth quarter were $6.8 billion, down 7 percent compared to prior year.
• Gross margin for the fourth quarter decreased 80 basis points to 45 percent.

Fourth quarter
NIKE Direct revenues grew 7 percent, 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 driven by double digit growth in APLA, North America and EMEA. NIKE-owned stores declined 2 percent.

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.

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.