Pro Content
Nike Inc Publish Fiscal ’23 Q3 Financial Results
Third quarter reported revenues were $12.4 billion, up 14 percent compared to the prior year. NIKE Direct sales were $5.3 billion, up 17 percent on a reported basis. NIKE Brand Digital sales increased 20 percent on a reported basis. Wholesale revenues grew 12 percent on a reported basis and 18 percent on a currency-neutral basis. Gross margin decreased 330 basis points to 43.3 percent.
John Donahoe, President and CEO, NIKE, Inc. “ We delivered another strong quarter in Q3, with revenue growth of 14% on a reported basis and 19% on a currency-neutral basis, exceeding our plan. Our growth this quarter was broad-based across our brands, channels and geographies. We had strong digital growth of 24%, which once again was fueled by double-digit increases in traffic on mobile and our apps.
“And while Direct, led by Digital, remains strong and will continue to drive our growth, our wholesale channel continues to be an important part of our strategy as we access key consumer segments and achieve distribution scale across the marketplace. Wholesale grew 18% in Q3, reflecting strong retail sales with growth that over-indexed across our strategic partners.
“This quarter continued our positive currency-neutral growth in all four of our geographies. North America, EMEA and APLA all delivered double-digit revenue growth. Greater China grew 1% despite a very challenging December following the shift in the country’s COVID policies. And we’re making great progress on inventory with our inventory dollars down sequentially versus last quarter.
“In Q3, we had inventory growth of 16% year-over-year. Our decisive actions are enabling us to navigate through the shifting dynamics with continued improved efficiency. These results demonstrate yet again that we’re on track to hit our fiscal ’23 priorities of getting inventory in a healthy position and delivering revenue consistent with the financial goals we set earlier in the year. In an environment of increasing macro volatility, the distinction of our brands and our Consumer Direct Acceleration strategy set NIKE apart.
“In EMEA, we saw strong growth across all Western European markets, including positive trends in the UK. Q3 revenue grew 26% on a currency-neutral basis, with NIKE Direct up 39% and NIKE Digital up 43%.
The EMEA consumer has held up remarkably well. And what’s clear is our brand strength has really strong across demand. That’s both for NIKE and Jordan. You saw really strong across channels, digital, very strong this entire year as well as this quarter as well as our direct and wholesale channels. So the brand connection with NIKE across our major fields of play across NIKE and Jordan is as strong there as it is anywhere.”
Third Quarter Income Statement Review
Revenues for NIKE, Inc. increased 14 percent to $12.4 billion compared to the prior year. Revenues for the NIKE Brand were $11.8 billion, up 14 percent on a reported, with double-digit growth in North America, EMEA and APLA. Greater China grew 1 percent on a currency-neutral basis despite a challenging December following the shift in the country’s COVID-19 policies. On a reported basis, revenues for Greater China declined 8 percent. Revenues for Converse were $612 million, up 8 percent on a reported basis and up 12 percent on a currency-neutral basis, led by double-digit growth across all channels in North America, partially offset by declines in Asia.
Gross margin decreased 330 basis points to 43.3 percent, primarily due to higher markdowns to liquidate inventory; continued unfavorable changes in net foreign currency exchange rates; higher product input costs and elevated freight and logistics costs; partially offset by strategic pricing actions. Selling and administrative expense increased 15 percent to $4.0 billion. Demand creation expense was $0.9 billion, up 8 percent, primarily due to advertising and marketing. Operating overhead expense increased 17 percent to $3.0 billion, primarily due to wage-related expenses and NIKE Direct variable costs.
February 28, 2023 Balance Sheet Review
Inventories for NIKE, Inc. were $8.9 billion, up 16 percent compared to the prior year period, primarily driven by higher product input costs and elevated freight costs. Cash and equivalents and short-term investments were $10.8 billion, down approximately $2.7 billion from last year, as cash provided by operations was more than offset by share repurchases, cash dividends and capital expenditures.
Shareholder Returns
NIKE continues to have a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 21 consecutive years of increasing dividend payouts. In the third quarter, NIKE returned approximately $2.0 billion to shareholders, including:
- Dividends of $528 million, up 9 percent from the prior year.
- Share repurchases of $1.5 billion, reflecting 12.9 million retired shares as part of the four-year, $18 billion program approved by the Board of Directors in June 2022. As of February 28, 2023, a total of 32.0 million shares have been repurchased under the program for a total of approximately $3.4 billion.
