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.
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.
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 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 Investors.Nike.com. Individuals can also visit Nike News 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