Nike Continues to Stretch Its Limits
Nike Inc. continues to outperform.
The Beaverton, Ore.-based athletic apparel and accessories group revealed quarterly and full-year earnings Thursday afternoon, improving on the top and bottom lines thanks to strength in all channels during the most recent quarter. Nike’s stock shot up nearly 7 percent in after-hours trading as a result.
“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,” John Donahoe, the group’s president and chief executive officer, said in a statement. “[Fiscal year] 21 was a pivotal year for Nike as we brought our Consumer Direct Acceleration strategy to life across the marketplace. Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for Nike’s long-term growth.”
Total revenues for the three-month period ending May 31, surged 96 percent to $12.3 billion, up from $6.3 billion a year ago. For the full fiscal year, revenues were $44.5 billion, compared with $37.4 billion last year.
The company logged $1.5 billion in profits during the quarter, compared with losses of $790 million a year ago, and more than $5.7 billion in profits for the year, up from $2.5 billion in 2020’s fiscal year, as a result.
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By region, revenues grew 141 percent on a reported basis in North America during the fourth quarter, up 29 percent compared with 2019. Revenues in the Europe, Middle East and Africa region grew 124 percent, up 21 percent compared with 2019, despite temporary COVID-19-related store closures throughout the quarter. It was also the seventh consecutive year of double-digit, currency-neutral growth in the Greater China market.
Nike’s fourth-quarter direct sales increased 73 percent. In e-commerce, Nike’s digital sales grew 41 percent during the quarter, compared with the same time last year, and were up 147 percent compared with 2019’s pre-pandemic fourth quarter. Fourth-quarter digital revenues in the EMEA region increased 40 percent, compared with 2020, or up 170 percent, compared with 2019’s fourth quarter.
Donahoe told analysts on Thursday evening’s conference call that Nike’s digital business almost doubled in the last year, and is now worth about $9 billion.
“We continue to see digital as our leading growth [strategy] in fiscal 2022, and we see no sign of this shift slowing,” he said on the call. “This is a time when strong brands can get stronger.”
He credited a return of sporting events, the surge in online shopping and an increased interest in health and wellness as growth drivers. Future growth opportunities, he said, include the women’s and international businesses, as well as the Jordan brand, which Donahoe said increased 31 percent during the 2021 fiscal year to $5 billion.
Also on Thursday, Nike revealed a partnership with Louis Vuitton for the new Air Force 1 sneaker, part of Virgil Abloh’s spring 2022 men’s collection.
“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 at Nike. “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.”
The company said about 99 percent of stores in the EMEA region are currently open or operating on reduced hours. The company ended the quarter with $9.4 billion in long-term debt and $9.8 billion in cash and cash equivalents. Nike now expects fiscal year 2022’s revenues to increase in the low double digits to about $50 billion, with higher gains in the first half.
Shares of Nike, which closed up 0.38 percent to $133.60 each, are up 31.7 percent, year-over-year.
“Our goal isn’t just to take market share; our goal is to grow the entire market,” Donahoe said on the call.
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