NIKE, Inc. (NYSE:NKE) today reported financial results for its
fiscal 2024 fourth quarter and full year ended May 31, 2024.
- Full year revenues were $51.4 billion compared to $51.2 billion
in the prior year, up 1 percent on a currency-neutral basis*
- Fourth quarter revenues were $12.6 billion, down 2 percent on a
reported basis and flat on a currency-neutral basis
- NIKE Direct revenues for the fourth quarter were $5.1 billion,
down 8 percent on a reported basis and down 7 percent on a
currency-neutral basis
- Wholesale revenues for the fourth quarter were $7.1 billion, up
5 percent on a reported basis and up 8 percent on a
currency-neutral basis
- Gross margin for the fourth quarter increased 110 basis points
to 44.7 percent
- Diluted earnings per share was $0.99 for the fourth
quarter
"We are taking our near-term challenges head-on, while making
continued progress in the areas that matter most to NIKE's future –
serving the athlete through performance innovation, moving at the
pace of the consumer and growing the complete marketplace," said
John Donahoe, President & CEO, NIKE, Inc. "I'm confident that
our teams are lining up our competitive advantages to create
greater impact for our business."**
Matthew Friend, Executive Vice President & Chief Financial
Officer, NIKE, Inc. said, "We are driving better balance across our
portfolio. While we are encouraged by our progress, our fourth
quarter results highlighted challenges that have led us to update
our Fiscal '25 outlook. We are taking actions to reposition NIKE to
be more competitive, and to drive sustainable, profitable long-term
growth."**
Fourth Quarter Income Statement Review
- Revenues for NIKE, Inc. were $12.6 billion, down 2
percent on a reported basis and flat on a currency-neutral basis.
- Revenues for the NIKE Brand were $12.1 billion, down 1 percent
on a reported basis and up 1 percent on a currency-neutral basis,
with currency-neutral growth in Greater China, APLA and EMEA,
partially offset by a decline in North America.
- NIKE Direct revenues were $5.1 billion, down 8 percent on a
reported basis and down 7 percent on a currency-neutral basis, due
to declines in NIKE Brand Digital of 10 percent and NIKE-owned
stores of 2 percent.
- Wholesale revenues for the fourth quarter were $7.1 billion, up
5 percent on a reported basis and up 8 percent on a
currency-neutral basis.
- Revenues for Converse were $480 million, down 18 percent on a
reported basis and down 17 percent on a currency-neutral basis,
primarily due to declines in North America and Western Europe.
- Gross margin increased 110 basis points to 44.7 percent,
primarily due to strategic pricing actions, lower ocean freight
rates and logistics costs, and lower warehousing, partially offset
by lower margin in NIKE Direct and unfavorable changes in net
foreign currency exchange rates.
- Selling and administrative expense decreased 7 percent
to $4.1 billion.
- Demand creation expense was $1.1 billion, flat compared to
prior year as lower sports marketing expense was offset by higher
advertising and marketing expense.
- Operating overhead expense decreased 9 percent to $3.0 billion,
primarily due to lower wage-related expenses. Included in Operating
overhead expense was $39 million of restructuring charges.
- The effective tax rate was 13.1 percent compared to 17.3
percent for the same period last year, due to changes in earnings
mix, partially offset by decreased benefits from stock-based
compensation.
- Net income was $1.5 billion, up 45 percent, and
Diluted earnings per share was $0.99, including $0.02 of
restructuring charges, net of tax benefit. Excluding these charges,
Diluted earnings per share would have been $1.01*.
Fiscal 2024 Income Statement Review
- Revenues for NIKE, Inc. were $51.4 billion compared to
$51.2 billion in the prior year, up 1 percent on a currency-neutral
basis.
- Revenues for the NIKE Brand were $49.3 billion, up 1 percent on
a reported and currency-neutral basis, with currency-neutral growth
in Greater China and APLA, partially offset by a decline in North
America.
- NIKE Direct revenues were $21.5 billion, up 1 percent on a
reported and currency-neutral basis, led by NIKE-owned stores
growth of 6 percent, partially offset by a decline in NIKE Brand
Digital of 3 percent.
- Wholesale revenues were $27.8 billion, up 1 percent on a
reported basis and up 2 percent on a currency-neutral basis.
- Revenues for Converse were $2.1 billion, down 14 percent on a
reported basis and down 15 percent on a currency-neutral basis,
primarily due to declines in North America and Western Europe.
- Gross margin increased 110 basis points to 44.6 percent,
primarily due to strategic pricing actions and lower ocean freight
rates and logistics costs, partially offset by higher product input
costs, lower margin in NIKE Direct and unfavorable changes in net
foreign currency exchange rates.
- Selling and administrative expense increased 1 percent
to $16.6 billion, including $379 million of restructuring charges.
- Demand creation expense was $4.3 billion, up 6 percent compared
to prior year, reflecting an increase in advertising and marketing
expense.
- Operating overhead expense was $12.3 billion, flat compared to
prior year as lower wage-related expenses and lower technology
spend were offset by restructuring charges.
- The effective tax rate was 14.9 percent, compared to
18.2 percent for the same period last year, due to changes in
earnings mix and one-time items including the benefit provided by
the delay of the effective date of US foreign tax regulations in
the first quarter of fiscal 2024.
- Net income was $5.7 billion, up 12 percent, and
Diluted earnings per share was $3.73, including $0.22 of
restructuring charges, net of tax benefit. Excluding these charges,
Diluted earnings per share would have been $3.95*.
May 31, 2024 Balance Sheet Review
- Inventories for NIKE, Inc. were $7.5 billion, down 11
percent compared to the prior year, reflecting a decrease in
units.
- Cash and equivalents and short-term investments were
$11.6 billion, up $0.9 billion from last year, as cash generated
from operations was partially offset by share repurchases, cash
dividends and capital expenditures.
Shareholder Returns
NIKE continues to have a strong track record of consistently
increasing returns to shareholders, including 22 consecutive years
of increasing dividend payouts.
In the fourth quarter, the Company returned approximately $1.6
billion to shareholders, including:
- Dividends of $560 million, up 7 percent from prior
year.
- Share repurchases of $1.0 billion, reflecting 11.1
million shares retired as part of the four-year, $18 billion
program approved by the Board of Directors in June 2022.
In fiscal 2024, the Company returned approximately $6.4 billion
to shareholders, including:
- Dividends of $2.2 billion, up 8 percent from prior
year.
- Share repurchases of $4.3 billion, reflecting 41.4
million shares retired as part of the four-year, $18 billion
program approved by the Board of Directors in June 2022.
As of May 31, 2024, a total of 84.9 million shares have been
repurchased under the current program for a total of approximately
$9.1 billion.
Conference Call
NIKE, Inc. management will host a conference call beginning at
approximately 2:00 p.m. PT on June 27, 2024, to review fiscal
fourth quarter and full year 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, July 11, 2024.
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.
*
Non-GAAP financial measures. See
additional information in the accompanying Divisional Revenues,
Supplemental NIKE Brand Revenue and Diluted earnings per share
tables.
**
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 Exchange Commission (SEC),
including Forms 8-K, 10-Q and 10-K.
NIKE, Inc.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
THREE MONTHS ENDED
%
TWELVE MONTHS ENDED
%
(In millions, except per share data)
5/31/2024
5/31/2023
Change
5/31/2024
5/31/2023
Change
Revenues
$
12,606
$
12,825
-2%
$
51,362
$
51,217
0%
Cost of sales
6,972
7,230
-4%
28,475
28,925
-2%
Gross profit
5,634
5,595
1%
22,887
22,292
3%
Gross margin
44.7
%
43.6
%
44.6
%
43.5
%
Demand creation expense
1,091
1,092
0%
4,285
4,060
6%
Operating overhead expense
2,997
3,282
-9%
12,291
12,317
0%
Total selling and administrative
expense
4,088
4,374
-7%
16,576
16,377
1%
% of revenues
32.4
%
34.1
%
32.3
%
32.0
%
Interest expense (income), net
(53
)
(28
)
—
(161
)
(6
)
—
Other (income) expense, net
(127
)
3
—
(228
)
(280
)
—
Income before income taxes
1,726
1,246
39%
6,700
6,201
8%
Income tax expense
226
215
5%
1,000
1,131
-12%
Effective tax rate
13.1
%
17.3
%
14.9
%
18.2
%
NET INCOME
$
1,500
$
1,031
45%
$
5,700
$
5,070
12%
Earnings per common share:
Basic
$
0.99
$
0.67
48%
$
3.76
$
3.27
15%
Diluted
$
0.99
$
0.66
50%
$
3.73
$
3.23
15%
Weighted average common shares
outstanding:
Basic
1,508.0
1,536.5
1,517.6
1,551.6
Diluted
1,516.7
1,556.3
1,529.7
1,569.8
Dividends declared per common share
$
0.370
$
0.340
$
1.450
$
1.325
NIKE, Inc.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
May 31,
May 31,
%
Change
(Dollars in millions)
2024
2023
ASSETS
Current assets:
Cash and equivalents
$
9,860
$
7,441
33%
Short-term investments
1,722
3,234
-47%
Accounts receivable, net
4,427
4,131
7%
Inventories
7,519
8,454
-11%
Prepaid expenses and other current
assets
1,854
1,942
-5%
Total current assets
25,382
25,202
1%
Property, plant and equipment, net
5,000
5,081
-2%
Operating lease right-of-use assets,
net
2,718
2,923
-7%
Identifiable intangible assets, net
259
274
-5%
Goodwill
240
281
-15%
Deferred income taxes and other assets
4,511
3,770
20%
TOTAL ASSETS
$
38,110
$
37,531
2%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt
$
1,000
$
—
100%
Notes payable
6
6
0%
Accounts payable
2,851
2,862
0%
Current portion of operating lease
liabilities
477
425
12%
Accrued liabilities
5,725
5,723
0%
Income taxes payable
534
240
123%
Total current liabilities
10,593
9,256
14%
Long-term debt
7,903
8,927
-11%
Operating lease liabilities
2,566
2,786
-8%
Deferred income taxes and other
liabilities
2,618
2,558
2%
Redeemable preferred stock
—
—
—
Shareholders’ equity
14,430
14,004
3%
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
38,110
$
37,531
2%
NIKE, Inc.
DIVISIONAL REVENUES
(Unaudited)
% Change
Excluding
Currency
Changes1
% Change
Excluding
Currency
Changes1
THREE MONTHS
ENDED
%
TWELVE MONTHS
ENDED
%
(Dollars in millions)
5/31/2024
5/31/2023
Change
5/31/2024
5/31/2023
Change
North America
Footwear
$
3,587
$
3,807
-6%
-6%
$
14,537
$
14,897
-2%
-2%
Apparel
1,398
1,349
4%
4%
5,953
5,947
0%
0%
Equipment
293
199
47%
47%
906
764
19%
19%
Total
5,278
5,355
-1%
-1%
21,396
21,608
-1%
-1%
Europe, Middle East &
Africa
Footwear
2,067
2,174
-5%
-2%
8,473
8,260
3%
1%
Apparel
1,049
1,038
1%
3%
4,380
4,566
-4%
-6%
Equipment
176
138
28%
29%
754
592
27%
24%
Total
3,292
3,350
-2%
1%
13,607
13,418
1%
0%
Greater China
Footwear
1,357
1,336
2%
6%
5,552
5,435
2%
6%
Apparel
460
438
5%
9%
1,828
1,666
10%
14%
Equipment
46
36
28%
32%
165
147
12%
17%
Total
1,863
1,810
3%
7%
7,545
7,248
4%
8%
Asia Pacific & Latin
America
Footwear
1,226
1,230
0%
3%
4,865
4,543
7%
7%
Apparel
416
409
2%
5%
1,614
1,664
-3%
-2%
Equipment
63
57
11%
13%
250
224
12%
12%
Total
1,705
1,696
1%
4%
6,729
6,431
5%
5%
Global Brand Divisions2
11
14
-21%
-28%
45
58
-22%
-25%
TOTAL NIKE BRAND
12,149
12,225
-1%
1%
49,322
48,763
1%
1%
Converse
480
586
-18%
-17%
2,082
2,427
-14%
-15%
Corporate3
(23
)
14
—
—
(42
)
27
—
—
TOTAL NIKE, INC. REVENUES
$
12,606
$
12,825
-2%
0%
$
51,362
$
51,217
0%
1%
TOTAL NIKE BRAND
Footwear
$
8,237
$
8,547
-4%
-2%
$
33,427
$
33,135
1%
1%
Apparel
3,323
3,234
3%
4%
13,775
13,843
0%
0%
Equipment
578
430
34%
35%
2,075
1,727
20%
20%
Global Brand Divisions2
11
14
-21%
-28%
45
58
-22%
-25%
TOTAL NIKE BRAND REVENUES
$
12,149
$
12,225
-1%
1%
$
49,322
$
48,763
1%
1%
1 The percent change has been calculated
using actual exchange rates in use during the comparative prior
year period and is provided 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. Management uses this
non-GAAP financial measure when evaluating the Company's
performance, including when making financial and operating
decisions. Additionally, management believes this non-GAAP
financial measure provides investors with additional financial
information that should be considered when assessing the Company's
underlying business performance and trends. References to this
measure 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 revenues include
NIKE Brand licensing and other miscellaneous revenues that are not
part of a geographic operating segment.
3 Corporate revenues primarily consist of
foreign currency hedge gains and losses related to revenues
generated by entities within the NIKE Brand geographic operating
segments and Converse, but managed through the Company's central
foreign exchange risk management program.
NIKE, Inc.
SUPPLEMENTAL NIKE BRAND
REVENUE DETAILS
(Unaudited)
% Change
Excluding
Currency
Changes1
TWELVE MONTHS ENDED
%
(Dollars in millions)
5/31/2024
5/31/2023
Change
NIKE Brand Revenues by:
Sales to Wholesale Customers
$
27,758
$
27,397
1%
2%
Sales through NIKE Direct
21,519
21,308
1%
1%
Global Brand Divisions2
45
58
-22%
-25%
TOTAL NIKE BRAND REVENUES
$
49,322
$
48,763
1%
1%
NIKE Brand Revenues on a Wholesale
Equivalent Basis:3
Sales to Wholesale Customers
$
27,758
$
27,397
1%
2%
Sales from our Wholesale Operations to
NIKE Direct Operations
13,009
12,730
2%
2%
TOTAL NIKE BRAND WHOLESALE EQUIVALENT
REVENUES
$
40,767
$
40,127
2%
2%
NIKE Brand Wholesale Equivalent
Revenues by:3
Men’s
$
20,868
$
20,733
1%
1%
Women’s
8,586
8,606
0%
1%
Kids’
5,111
5,038
1%
1%
Jordan Brand
6,988
6,589
6%
7%
Others4
(786
)
(839
)
6%
6%
TOTAL NIKE BRAND WHOLESALE EQUIVALENT
REVENUES
$
40,767
$
40,127
2%
2%
1 The percent change has been calculated
using actual exchange rates in use during the comparative prior
year period and is provided 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. Management uses this
non-GAAP financial measure when evaluating the Company's
performance, including when making financial and operating
decisions. Additionally, management believes this non-GAAP
financial measure provides investors with additional financial
information that should be considered when assessing the Company's
underlying business performance and trends. References to this
measure 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 revenues include
NIKE Brand licensing and other miscellaneous revenues that are not
part of a geographic operating segment.
3 References to NIKE Brand wholesale
equivalent revenues, which are considered non-GAAP financial
measures, are intended to provide context as to the total size of
the Company's NIKE Brand market footprint if it had no NIKE Direct
operations. NIKE Brand wholesale equivalent revenues consist of 1)
sales to external wholesale customers and 2) internal sales from
the Company’s wholesale operations to its NIKE Direct operations
which are charged at prices comparable to those charged to external
wholesale customers. Management uses this non-GAAP financial
measure when evaluating the Company's performance, including when
making financial and operating decisions. Additionally, management
believes this non-GAAP financial measure provides investors with
additional financial information that should be considered when
assessing the Company’s underlying business performance and trends.
References to this measure 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.
Beginning in fiscal year 2025, with the continued rollout of a new
Enterprise Resource Planning Platform, the Company will replace
wholesale equivalent revenues and gross margin drivers with a
comparable U.S. GAAP metric.
4 Others include products not allocated to
Men's, Women's, Kids' and Jordan Brand, as well as certain
adjustments that are not allocated to products designated by
consumer.
NIKE, Inc.
EARNINGS BEFORE INTEREST AND
TAXES1
(Unaudited)
THREE MONTHS ENDED
%
TWELVE MONTHS ENDED
%
(Dollars in millions)
5/31/2024
5/31/2023
Change
5/31/2024
5/31/2023
Change
North America
$
1,462
$
1,390
5%
$
5,822
$
5,454
7%
Europe, Middle East & Africa
797
781
2%
3,388
3,531
-4%
Greater China
548
529
4%
2,309
2,283
1%
Asia Pacific & Latin America
479
462
4%
1,885
1,932
-2%
Global Brand Divisions2
(1,148
)
(1,268
)
9%
(4,720
)
(4,841
)
2%
TOTAL NIKE BRAND1
2,138
1,894
13%
8,684
8,359
4%
Converse
94
150
-37%
474
676
-30%
Corporate3
(559
)
(826
)
32%
(2,619
)
(2,840
)
8%
TOTAL NIKE, INC. EARNINGS BEFORE
INTEREST AND TAXES1
1,673
1,218
37%
6,539
6,195
6%
EBIT margin1
13.3
%
9.5
%
12.7
%
12.1
%
Interest expense (income), net
(53
)
(28
)
—
(161
)
(6
)
—
TOTAL NIKE, INC. INCOME BEFORE INCOME
TAXES
$
1,726
$
1,246
39%
$
6,700
$
6,201
8%
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, Total NIKE, Inc. EBIT and EBIT margin are
considered non-GAAP financial measures. Management uses these
non-GAAP financial measures when evaluating the Company's
performance, including when making financial and operating
decisions. Additionally, management believes these non-GAAP
financial measures provide investors with additional financial
information that should be considered when assessing the Company's
underlying business performance and trends. EBIT margin is
calculated as total NIKE, Inc. EBIT divided by total NIKE, Inc.
Revenues. References to EBIT and EBIT margin 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 and operating overhead expense, including
product creation and design expenses that are centrally managed for
the NIKE Brand, as well as costs associated with NIKE Direct global
digital operations and enterprise technology. Global Brand
Divisions revenues include NIKE Brand licensing and other
miscellaneous revenues that are not part of a geographic operating
segment.
3 Corporate consists primarily of
unallocated general and administrative expenses, including expenses
associated with centrally managed departments; depreciation and
amortization related to the Company's corporate headquarters;
unallocated insurance, benefit and compensation programs, including
stock-based compensation; and certain foreign currency gains and
losses, including certain hedge gains and losses. For the twelve
months ended May 31, 2024, Corporate includes the restructuring
charges, recognized as a result of the Company taking steps to
streamline the organization. These charges primarily reflect
employee severance costs. An immaterial amount of restructuring
charges was recognized for the three months ended May 31, 2024.
NIKE, Inc.
DILUTED EARNINGS PER
SHARE
(Unaudited)
THREE MONTHS ENDED
TWELVE MONTHS ENDED
5/31/2024
5/31/2024
DILUTED EARNINGS PER SHARE
(GAAP):
$
0.99
$
3.73
Add: Restructuring charges
0.03
0.29
Tax effect of the restructuring
charges1
(0.01
)
(0.07
)
DILUTED EARNINGS PER SHARE EXCLUDING
RESTRUCTURING CHARGES (NON-GAAP):2
$
1.01
$
3.95
1 Tax effect was determined by applying
the tax rate applicable to the specific item.
2 Diluted earnings per share excluding the
restructuring charges is a non-GAAP financial measure. The most
comparable GAAP measure is Diluted earnings per share. The Company
uses Diluted earnings per share excluding the restructuring charges
to facilitate the evaluation of the Company’s performance. The
Company believes that providing Diluted earnings per share
excluding the impacts of the restructuring charges is useful to
investors for comparability between periods and allows investors to
evaluate the impacts of the restructuring charges separately. For
the three and twelve months ended May 31, 2023, there were no
material restructuring charges impacting comparability.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240627955686/en/
Investor Contact: Paul Trussell
investor.relations@nike.com
Media Contact: Virginia
Rustique-Petteni media.relations@nike.com
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