Nike Inc
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Consumer Discretionary : Textiles, Apparel & Luxury Goods | Large Cap Blend
Company profile

NIKE, Inc. is engaged in the design, development, marketing and selling of athletic footwear, apparel, equipment, accessories and services. The Company's operating segments include North America, Western Europe, Central & Eastern Europe, Greater China, Japan and Emerging Markets. Its portfolio brands include the NIKE Brand, Jordan Brand, Hurley and Converse. As of May 31, 2016, the Company focused its NIKE brand product offerings in nine categories: Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Men's Training, Women's Training, Action Sports, Sportswear (its sports-inspired lifestyle products) and Golf. Men's Training includes its baseball and American football product offerings. It also markets products designed for kids, as well as for other athletic and recreational uses, such as cricket, lacrosse, tennis, volleyball, wrestling, walking and outdoor activities. The Company sells a range of performance equipment and accessories under the NIKE Brand name.

Closing Price
$122.86
Day's Change
0.78 (0.64%)
Bid
--
Ask
--
B/A Size
--
Day's High
124.19
Day's Low
121.15
Volume
(Average)
Volume:
4,947,049

10-day average volume:
4,817,138
4,947,049

NIKE, Inc. Reports Fiscal 2021 First Quarter Results

4:15 pm ET September 22, 2020 (BusinessWire) Print

NIKE, Inc. (NYSE:NKE) today reported fiscal 2021 financial results for its first quarter ended August 31, 2020.

First quarter reported revenues were $10.6 billion, down 1 percent on a reported basis and flat to prior year on a currency-neutral basis* NIKE Direct sales were $3.7 billion, up 12 percent on a reported basis, and up 13 percent on a currency-neutral basis, with growth across all geographies NIKE Brand digital sales increased 82 percent, or 83 percent on a currency-neutral basis, with double-digit increases across North America, Greater China, and APLA and triple-digit growth in EMEA Diluted earnings per share for the quarter was $0.95, up 10 percent Inventory rose 15 percent versus prior year but decreased 9 percent versus prior quarter

"Our results this quarter continue to demonstrate NIKE's full competitive advantage, as we strengthen our position in the midst of disruption," said John Donahoe, President and CEO, NIKE, Inc. "In this dynamic environment, no one can match our pace of launching innovative product and our Brand's deep connection to consumers. These strengths, coupled with our digital acceleration, are unlocking NIKE's long-term market potential."**

Our first quarter revenue performance was impacted by strong NIKE Brand digital growth of 82 percent, offset by lower revenue in our wholesale business and NIKE-owned stores. Nearly all of the NIKE-owned physical doors were open during the quarter across North America, EMEA and Greater China with approximately 90 percent of doors open in APLA. However, despite a majority of stores open in the quarter, we continue to experience year-over-year declines in physical retail traffic across the marketplace due to COVID-19 impacts and safety related measures, offset partially by higher conversion rates. EMEA returned to growth of 5 percent on a reported basis, led by triple-digit growth in digital. Greater China revenue increased by 6 percent on a reported basis and 8 percent on a currency-neutral basis, led by digital and NIKE Factory Stores.

"NIKE is recovering faster based on accelerating brand momentum and digital growth, as well as our relentless focus on normalizing marketplace supply and demand," said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. "We continue to drive investment in capabilities that will fuel our consumer-led digital transformation, catalyzing long-term growth and profitability for NIKE."**

First Quarter Income Statement Review

Revenues for NIKE, Inc. decreased 1 percent to $10.6 billion, and were flat to prior year on a currency-neutral basis. Revenues for the NIKE Brand were $10.0 billion, flat to prior year on a currency-neutral basis driven by double-digit growth in NIKE Direct, as well as growth in Sportswear and the Jordan Brand, offset by declines in our wholesale business. Revenues for Converse were $563 million, up 2 percent on a currency-neutral basis, mainly driven by strong demand in Europe and in digital, globally. Gross margin decreased 90 basis points to 44.8 percent primarily as a result of impacts from COVID-19, including higher promotions to reduce excess inventory across the marketplace and higher supply chain costs. These factors were offset slightly by favorable full price product margins and the reversal of certain prior quarter reserve accruals associated with purchase order cancellation costs due to higher than anticipated consumer demand. Selling and administrative expense decreased 11 percent to $3.0 billion. Demand creation expense was $677 million, down 33 percent due primarily to lower marketing spend as live sporting events were predominately postponed or cancelled, slightly offset by continued investments in digital marketing to support heightened digital demand. Operating overhead expense decreased 1 percent to $2.3 billion as lower travel and related expenses were slightly offset by restructuring costs and continued investments in digital capabilities, both of which are associated with the Consumer Direct Acceleration, the next digitally empowered phase of our strategy. The effective tax rate was 11.5 percent compared to 12.4 percent for the same period last year, primarily due to benefits from stock-based compensation offset by a reserve for a discrete tax matter. Net income was $1.5 billion, up 11 percent as lower selling and administrative expense more than offset lower gross margin and revenue and diluted earnings per share was $0.95, increasing 10 percent.

August 31, 2020 Balance Sheet Review

Inventories for NIKE, Inc. were $6.7 billion, up 15 percent compared to the prior year period, and down 9 percent from the previous quarter as we continued to strategically manage excess inventory resulting from a significant number of door closures and lower wholesale shipments globally during the fourth quarter of fiscal year 2020. Cash and equivalents and short-term investments were $9.5 billion, $5.8 billion higher than last year primarily due to proceeds from a corporate bond issuance in March and positive free cash flow, partially offset by share repurchases and cash dividends. Total liquidity at August 31 was $13.4 billion which includes cash and equivalents and short-term investments as well as committed credit facilities which remain undrawn.

Shareholder Returns

NIKE has a strong track record of investing to fuel growth and consistently increasing returns to shareholders including 18 consecutive years of increasing dividend payouts. In the first quarter, the Company paid dividends of $384 million to shareholders, up 11 percent from the prior year.

During the fourth quarter 2020, NIKE, Inc. temporarily suspended share repurchase activity in March to maximize liquidity during the COVID-19 pandemic. Prior to the temporary suspension of the share repurchase program, a total of 45.2 million shares had been repurchased for approximately $4.0 billion, resulting in approximately $11.0 billion in remaining capacity under the 2018 share repurchase program.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on September 22, 2020, to review fiscal first quarter results. The conference call will be broadcast live via the Internet and can be accessed at http://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, October 6, 2020.

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 http://investors.nike.com. Individuals can also visit http://news.nike.com and follow @NIKE.

* See additional information in the accompanying Divisional Revenues table regarding this non-GAAP financial measure.
                                                                                          NIKE, Inc.
                                                                               CONSOLIDATED STATEMENTS OF INCOME
                                                                                          (Unaudited)
 
                                                                                                                     
                                                                       THREE MONTHS ENDED                                                                %
(In millions, except per share data)                               8/31/2020                                              8/31/2019                                      Change
------------------------------------------- ---------------------------------------------------    ---------------------------------------------------    ----------------------------------
Revenues                                    $     10,594     $     10,660                 -1 %
Cost of sales                                      5,853            5,789                  1 %
------------------------------------------- -----------  -------------------- -------------------- -----------  -------------------- -------------------- -------------- --------------------
Gross profit                                       4,741            4,871                 -3 %
                                                    44.8   %                            45.7   %                     
     Gross margin
                                                                                                                 
Demand creation expense                              677            1,018                -33 %
Operating overhead expense                         2,298            2,310                 -1 %
------------------------------------------- -----------  -------------------- -------------------- -----------  -------------------- -------------------- -------------- --------------------
Total selling and administrative expense           2,975            3,328                -11 %
                                                    28.1   %                            31.2   %                                    
     % of revenues
                                                                                                                 
Interest expense (income), net                        65               15     --  
Other (income) expense, net                          (14 )                               (33 )                      --  
------------------------------------------- -----------  -------------------- -------------------- -----------  -------------------- -------------------- -------------- --------------------
Income before income taxes                         1,715            1,561                 10 %
Income tax expense                                   197              194                  2 %
------------------------------------------- -----------  -------------------- -------------------- -----------  -------------------- -------------------- -------------- --------------------
                                                    11.5   %                            12.4   %                                    
     Effective tax rate
                                                                                                                 
------------------------------------------- ---------------------------------------------------    ---------------------------------------------------    ----------------------------------
NET INCOME                                  $      1,518     $      1,367                 11 %
------------------------------------------- ----- ------ -------------------- -------------------- ----- ------ -------------------- -------------------- -------------- --------------------
                                                                                                                 
Earnings per common share:                                                                                                          
                                            $       0.97     $       0.87                 11 %
     Basic
                                            $       0.95     $       0.86                 10 %
     Diluted
                                                                                                          
Weighted average common shares outstanding:                                                                                  
                                                 1,561.8          1,562.4      
     Basic
                                                 1,593.3          1,597.5      
     Diluted
                                                                                                  
                                                                                  NIKE, Inc.
                                                                          CONSOLIDATED BALANCE SHEETS
                                                                                  (Unaudited)
                                                                                  
                                                                                  
                                                          August 31,                           August 31,                            % Change
(Dollars in millions)                                                           2020                                 2019
--------------------------------------------------------------- ----------------------------------   ----------------------------------
ASSETS                                                                                               
Current assets:                                                                                      
                                                                $         8,148   $         3,446              136 %
     Cash and equivalents
                                                                          1,332               198              573 %
     Short-term investments
                                                                          3,813             4,656              -18 %
     Accounts receivable, net
                                                                          6,705             5,835               15 %
     Inventories
                                                                          1,939             2,093               -7 %
     Prepaid expenses and other current assets
--------------------------------------------------------------- --------------  -------------------- --------------  -------------------- -------------- --------------------
Total current assets                                                     21,937            16,228               35 %
                                                                          4,969             4,615                8 %
     Property, plant and equipment, net
                                                                          3,158             2,832               12 %
     Operating lease right-of-use assets, net
                                                                            272               279               -3 %
     Identifiable intangible assets, net
                                                                            223               224                0 %
     Goodwill
                                                                          2,699             2,071               30 %
     Deferred income taxes and other assets
--------------------------------------------------------------- --------------  -------------------- --------------  -------------------- -------------- --------------------
TOTAL ASSETS                                                    $        33,258   $        26,249               27 %
--------------------------------------------------------------- ------- ------- -------------------- ------- ------- -------------------- -------------- --------------------
LIABILITIES AND SHAREHOLDERS' EQUITY                                                     
                                                                                                                    
     Current liabilities:
                                                                $             1   $             6              -83 %
     Current portion of long-term debt
                                                                            137               250              -45 %
     Notes payable
                                                                          1,983             2,716              -27 %
     Accounts payable
                                                                            459               427                7 %
     Current portion of operating lease liabilities
                                                                          5,742             4,455               29 %
     Accrued liabilities
                                                                            297               216               38 %
     Income taxes payable
--------------------------------------------------------------- --------------  -------------------- --------------  -------------------- -------------- --------------------
Total current liabilities                                                 8,619             8,070                7 %
                                                                          9,408             3,463              172 %
     Long-term debt
                                                                          2,961             2,675               11 %
     Operating lease liabilities
                                                                          3,046             2,841                7 %
     Deferred income taxes and other liabilities
                                                                 --    --   --  
     Redeemable preferred stock
                                                                          9,224             9,200                0 %
     Shareholders' equity
--------------------------------------------------------------- --------------  -------------------- --------------  -------------------- -------------- --------------------
                                                                                                  NIKE, Inc.
                                                                                              DIVISIONAL REVENUES
                                                                                                  (Unaudited)
                                                                                        
                                                                                        
                                                                                                         % Change
                                                                                                                                                                                     Excluding
                                                                                                                                                                                     Currency
                                                                                                                                                                                    Changes(1)
                                               THREE MONTHS ENDED                                                         %
(Dollars in millions)                            8/31/2020                                   8/31/2019                                    Change
------------------------------ ------------------------------------------  ------------------------------------------  ------------------------------------------
North America                                                                                              
                                                   $                 2,957                     $                 2,669                    11 %                                        11 %
     Footwear
                                                                     1,125                                       1,431                   -21 %                                       -21 %
     Apparel
                                                                       143                                         193                   -26 %                                       -26 %
     Equipment
------------------------------ ------------------------------------------  ------------------------------------------  --------------------- --------------------- --------------------- ---------------------
                                                                     4,225                                       4,293                    -2 %                                        -1 %
          Total
Europe, Middle East & Africa                                                                                                      
                                                                     1,802                                       1,758                     3 %                                         2 %
     Footwear
                                                                       971                                         869                    12 %                                        11 %
     Apparel
                                                                       137                                         146                    -6 %                                        -6 %
     Equipment
------------------------------ ------------------------------------------  ------------------------------------------  --------------------- --------------------- --------------------- ---------------------
                                                                     2,910                                       2,773                     5 %                                         5 %
          Total
Greater China                                                                                                                     
                                                                     1,251                                       1,164                     7 %                                        10 %
     Footwear
                                                                       478                                         465                     3 %                                         5 %
     Apparel
                                                                        51                                          50                     2 %                                         3 %
     Equipment
------------------------------ ------------------------------------------  ------------------------------------------  --------------------- --------------------- --------------------- ---------------------
                                                                     1,780                                       1,679                     6 %                                         8 %
          Total
Asia Pacific & Latin America                                                                                                      
                                                                       758                                         930                   -18 %                                       -12 %
     Footwear
                                                                       301                                         356                   -15 %                                       -10 %
     Apparel
                                                                        40                                          59                   -32 %                                       -28 %
     Equipment
------------------------------ ------------------------------------------  ------------------------------------------  --------------------- --------------------- --------------------- ---------------------
                                                                     1,099                                       1,345                   -18 %                                       -12 %
          Total
Global Brand Divisions(2)                                                4                                           6                   -33 %                                       -31 %
------------------------------ ------------------------------------------  ------------------------------------------  --------------------- --------------------- --------------------- ---------------------
TOTAL NIKE BRAND                                                    10,018                                      10,096                    -1 %                                         0 %
------------------------------ ------------------------------------------  ------------------------------------------  --------------------- --------------------- --------------------- ---------------------
Converse                                                               563                                         555                     1 %                                         2 %
Corporate(3)                                                            13                                           9        --           --   
------------------------------ ------------------------------------------  ------------------------------------------  --------------------- --------------------- --------------------- ---------------------
TOTAL NIKE, INC. REVENUES                          $                10,594                     $                10,660                    -1 %                                         0 %
------------------------------ --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
                                                                                        
TOTAL NIKE BRAND                                                                                           
                                                   $                 6,768                     $                 6,521                     4 %                                         5 %
     Footwear
                                                                     2,875                                       3,121                    -8 %                                        -7 %
     Apparel
                                                                       371                                         448                   -17 %                                       -16 %
     Equipment
                                                                         4                                           6                   -33 %                                       -31 %
     Global Brand Divisions(2)
------------------------------ ------------------------------------------  ------------------------------------------  --------------------- --------------------- --------------------- ---------------------
TOTAL NIKE BRAND REVENUES                          $                10,018                     $                10,096                    -1 %                                         0 %
------------------------------ --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
(1) The percent change has been calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends by excluding
the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure.
(2) Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.
                                                                                                                                                                                                                                     NIKE, Inc.
                                                                                                                                                                                                                                     EARNINGS BEFORE INTEREST AND TAXES(1)
                                                                                                                                                                                                                                     (Unaudited)
                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                         THREE MONTHS ENDED                                                                                                                                                                                                                                                                                                                                                                               %
(Dollars in millions)                                                                                                                                                                        8/31/2020                                                                                                                                                                                                8/31/2019                                                                                                                                                                                                                                                           Change
--------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------    --------------------------------------------------------------------------------------------------------------------------------------------------------------------    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
North America                                                                                                                                         $ 1,302                                                                                                                           $ 1,100                                                                                                                                                                                            18 %
Europe, Middle East & Africa                                                                                                                              692                                                                                                                               609                                                                                                                                                                                            14 %
Greater China                                                                                                                                             688                                                                                                                               669                                                                                                                                                                                             3 %
Asia Pacific & Latin America                                                                                                                              280                                                                                                                               341                                                                                                                                                                                           -18 %
Global Brand Divisions(2)                                                                                                                                (853 )                                                                                                                                               (857 )                                                                                                                                                                                                              0 %
--------------------------------------------------------------------------- --------------------------------------------------------------------------------  --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------  --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL NIKE BRAND(1)                                                                                                                                     2,109                                                                                                                             1,862                                                                                                                                                                                            13 %
--------------------------------------------------------------------------- --------------------------------------------------------------------------------  --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------  --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Converse                                                                                                                                                  168                                                                                                                               138                                                                                                                                                                                            22 %
Corporate(3)                                                                                                                                             (497 )                                                                                                                                               (424 )                                                                                                                                                                                                            -17 %
--------------------------------------------------------------------------- --------------------------------------------------------------------------------  --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------  --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES(1)                                                                                                  1,780                                                                                                                             1,576                                                                                                                                                                                            13 %
--------------------------------------------------------------------------- --------------------------------------------------------------------------------  --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------  --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Interest expense (income), net                                                                                                                             65                                                                                                                                15                                                                                                                                                                                --                                                                                                                                                                                                                                       
--------------------------------------------------------------------------- --------------------------------------------------------------------------------  --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------  --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES                                                                                                           $ 1,715                                                                                                                           $ 1,561                                                                                                                                                                                            10 %
--------------------------------------------------------------------------- --------------------------------------------------------------------------- ----- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------- ----- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(1)The Company evaluates the performance of individual operating segments based on earnings before interest and taxes (commonly referred to as "EBIT"), which represents net income before interest expense (income), net and income tax expense. Total NIKE Brand EBIT and Total NIKE, Inc. EBIT are considered non-GAAP financial measures and are being provided as management believes this additional information should be considered when assessing the Company's underlying business performance and trends. References to EBIT should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies.
(2)Global Brand Divisions primarily represent demand creation, operating overhead and product creation and design expenses that are centrally managed for the NIKE Brand. Revenues for Global Brand Divisions are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200922005991/en/

SOURCE: NIKE, Inc.

Investor Contact:
Andy Muir
(503) 473-3143

Media Contact:
Mark Rhodes
(503) 532-8877
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