NIKE, Inc. Reports Fiscal 2024 Third Quarter Results
-
Third quarter revenues were slightly up on both a reported and currency-neutral basis* at
$12.4 billion -
NIKE Direct revenues were$5.4 billion , slightly up on a reported and currency-neutral basis -
NIKE Brand Digital sales decreased 3 percent on a reported basis and 4 percent on a currency-neutral basis -
Wholesale revenues were
$6.6 billion , up 3 percent on a reported and currency-neutral basis - Gross margin increased 150 basis points to 44.8 percent, including a detriment of 50 basis points due to restructuring charges
-
Selling and administrative expense increased 7 percent to
$4.2 billion , including$340 million of restructuring charges -
Diluted earnings per share was
$0.77 , including$0.21 of restructuring charges. Excluding these charges, Diluted earnings per share would have been$0.98 *
“We are making the necessary adjustments to drive NIKE’s next chapter of growth,” said
Third Quarter Income Statement Review
-
Revenues
for
NIKE, Inc. were slightly up on both a reported and currency-neutral basis at$12.4 billion .-
Revenues for the
NIKE Brand were$11.9 billion , up 2 percent on a reported and currency-neutral basis, as currency-neutral growth inNorth America ,Greater China and APLA was offset by declines in EMEA. -
Revenues for Converse were
$495 million , down 19 percent on a reported basis and down 20 percent on a currency-neutral basis, primarily due to declines inNorth America andEurope .
-
Revenues for the
- Gross margin increased 150 basis points to 44.8 percent, primarily driven by strategic pricing actions and lower ocean freight and logistics costs, partially offset by higher product input costs and restructuring charges.
-
Selling and administrative expense
increased 7 percent to
$4.2 billion .-
Demand creation expense was
$1.0 billion , up 10 percent, reflecting an increase in marketing expense. -
Operating overhead expense increased 6 percent to
$3.2 billion , primarily due to restructuring charges, partially offset by lower wage-related expenses.
-
Demand creation expense was
- The effective tax rate was 16.5 percent compared to 16.0 percent for the same period last year.
-
Net income
was
$1.2 billion , down 5 percent, and Diluted earnings per share was$0.77 , decreasing 3 percent.
-
Inventories
for
NIKE, Inc. were$7.7 billion , down 13 percent compared to the prior year, reflecting a decrease in units. -
Cash and equivalents and short-term investments
were
$10.6 billion , down approximately$0.2 billion from last year, as cash generated by operations was more than offset by share repurchases, cash dividends, capital expenditures and bond repayment.
Shareholder Returns
-
Dividends
of
$562 million , up 6 percent from the prior year. -
Share repurchases
of
$866 million , reflecting 7.9 million shares retired as part of the Company’s four-year,$18 billion program approved by the Board of Directors inJune 2022 . As ofFebruary 29, 2024 , a total of 73.8 million shares have been repurchased under the program for a total of approximately$8.0 billion .
Conference Call
About
* |
Non-GAAP financial measures. See additional information in the accompanying Divisional Revenues table and Diluted earnings per share table. |
|
** |
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 |
|
||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|||||||||||
|
THREE MONTHS ENDED |
% |
NINE MONTHS ENDED |
% |
||||||||||||
(In millions, except per share data) |
|
|
Change |
|
|
Change |
||||||||||
Revenues |
$ |
12,429 |
|
$ |
12,390 |
|
0 |
% |
$ |
38,756 |
|
$ |
38,392 |
|
1 |
% |
Cost of sales |
|
6,867 |
|
|
7,019 |
|
-2 |
% |
|
21,503 |
|
|
21,695 |
|
-1 |
% |
Gross profit |
|
5,562 |
|
|
5,371 |
|
4 |
% |
|
17,253 |
|
|
16,697 |
|
3 |
% |
Gross margin |
|
44.8 |
% |
|
43.3 |
% |
|
|
44.5 |
% |
|
43.5 |
% |
|
||
|
|
|
|
|
|
|
||||||||||
Demand creation expense |
|
1,011 |
|
|
923 |
|
10 |
% |
|
3,194 |
|
|
2,968 |
|
8 |
% |
Operating overhead expense |
|
3,215 |
|
|
3,036 |
|
6 |
% |
|
9,294 |
|
|
9,035 |
|
3 |
% |
Total selling and administrative expense |
|
4,226 |
|
|
3,959 |
|
7 |
% |
|
12,488 |
|
|
12,003 |
|
4 |
% |
% of revenues |
|
34.0 |
% |
|
32.0 |
% |
|
|
32.2 |
% |
|
31.3 |
% |
|
||
|
|
|
|
|
|
|
||||||||||
Interest expense (income), net |
|
(52 |
) |
|
(7 |
) |
— |
|
|
(108 |
) |
|
22 |
|
— |
|
Other (income) expense, net |
|
(16 |
) |
|
(58 |
) |
— |
|
|
(101 |
) |
|
(283 |
) |
— |
|
Income before income taxes |
|
1,404 |
|
|
1,477 |
|
-5 |
% |
|
4,974 |
|
|
4,955 |
|
0 |
% |
Income tax expense |
|
232 |
|
|
237 |
|
-2 |
% |
|
774 |
|
|
916 |
|
-16 |
% |
Effective tax rate |
|
16.5 |
% |
|
16.0 |
% |
|
|
15.6 |
% |
|
18.5 |
% |
|
||
|
|
|
|
|
|
|
||||||||||
NET INCOME |
$ |
1,172 |
|
$ |
1,240 |
|
-5 |
% |
$ |
4,200 |
|
$ |
4,039 |
|
4 |
% |
|
|
|
|
|
|
|
||||||||||
Earnings per common share: |
|
|
|
|
|
|
||||||||||
Basic |
$ |
0.77 |
|
$ |
0.80 |
|
-4 |
% |
$ |
2.76 |
|
$ |
2.59 |
|
7 |
% |
Diluted |
$ |
0.77 |
|
$ |
0.79 |
|
-3 |
% |
$ |
2.74 |
|
$ |
2.57 |
|
7 |
% |
|
|
|
|
|
|
|
||||||||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
||||||||||
Basic |
|
1,513.2 |
|
|
1,543.8 |
|
|
|
1,520.8 |
|
|
1,556.7 |
|
|
||
Diluted |
|
1,526.5 |
|
|
1,564.8 |
|
|
|
1,534.0 |
|
|
1,574.4 |
|
|
||
|
|
|
|
|
|
|
||||||||||
Dividends declared per common share |
$ |
0.370 |
|
$ |
0.340 |
|
|
$ |
1.080 |
|
$ |
0.985 |
|
|
|
||||||
CONSOLIDATED BALANCE SHEETS |
||||||
(Unaudited) |
||||||
|
|
|
|
|||
|
|
|
% Change |
|||
(Dollars in millions) |
2024 |
2023 |
||||
ASSETS |
|
|
|
|||
Current assets: |
|
|
|
|||
Cash and equivalents |
$ |
8,960 |
$ |
6,955 |
29 |
% |
Short-term investments |
|
1,613 |
|
3,847 |
-58 |
% |
Accounts receivable, net |
|
4,526 |
|
4,513 |
0 |
% |
Inventories |
|
7,726 |
|
8,905 |
-13 |
% |
Prepaid expenses and other current assets |
|
1,928 |
|
1,815 |
6 |
% |
Total current assets |
|
24,753 |
|
26,035 |
-5 |
% |
Property, plant and equipment, net |
|
5,082 |
|
4,939 |
3 |
% |
Operating lease right-of-use assets, net |
|
2,856 |
|
2,834 |
1 |
% |
Identifiable intangible assets, net |
|
259 |
|
277 |
-6 |
% |
|
|
240 |
|
281 |
-15 |
% |
Deferred income taxes and other assets |
|
4,166 |
|
3,928 |
6 |
% |
TOTAL ASSETS |
$ |
37,356 |
$ |
38,294 |
-2 |
% |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|||
Current liabilities: |
|
|
|
|||
Current portion of long-term debt |
$ |
— |
$ |
500 |
-100 |
% |
Notes payable |
|
6 |
|
14 |
-57 |
% |
Accounts payable |
|
2,340 |
|
2,675 |
-13 |
% |
Current portion of operating lease liabilities |
|
474 |
|
435 |
9 |
% |
Accrued liabilities |
|
5,818 |
|
5,594 |
4 |
% |
Income taxes payable |
|
391 |
|
330 |
18 |
% |
Total current liabilities |
|
9,029 |
|
9,548 |
-5 |
% |
Long-term debt |
|
8,930 |
|
8,925 |
0 |
% |
Operating lease liabilities |
|
2,691 |
|
2,692 |
0 |
% |
Deferred income taxes and other liabilities |
|
2,480 |
|
2,598 |
-5 |
% |
Redeemable preferred stock |
|
— |
|
— |
— |
|
Shareholders’ equity |
|
14,226 |
|
14,531 |
-2 |
% |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
37,356 |
$ |
38,294 |
-2 |
% |
|
||||||||||||||||||
DIVISIONAL REVENUES |
||||||||||||||||||
(Unaudited) |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
% Change Excluding Currency Changes 1 |
|
|
|
% Change Excluding Currency Changes 1 |
||||||||||
|
THREE MONTHS ENDED |
% |
NINE MONTHS ENDED |
% |
||||||||||||||
(Dollars in millions) |
|
|
Change |
|
|
Change |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||
Footwear |
$ |
3,460 |
|
$ |
3,322 |
4 |
% |
4 |
% |
$ |
10,950 |
|
$ |
11,090 |
-1 |
% |
-1 |
% |
Apparel |
|
1,408 |
|
|
1,419 |
-1 |
% |
-1 |
% |
|
4,555 |
|
|
4,598 |
-1 |
% |
-1 |
% |
Equipment |
|
202 |
|
|
172 |
17 |
% |
18 |
% |
|
613 |
|
|
565 |
8 |
% |
9 |
% |
Total |
|
5,070 |
|
|
4,913 |
3 |
% |
3 |
% |
|
16,118 |
|
|
16,253 |
-1 |
% |
-1 |
% |
|
|
|
|
|
|
|
|
|
||||||||||
Footwear |
|
1,960 |
|
|
2,011 |
-3 |
% |
-3 |
% |
|
6,406 |
|
|
6,086 |
5 |
% |
3 |
% |
Apparel |
|
994 |
|
|
1,094 |
-9 |
% |
-10 |
% |
|
3,331 |
|
|
3,528 |
-6 |
% |
-8 |
% |
Equipment |
|
184 |
|
|
141 |
30 |
% |
27 |
% |
|
578 |
|
|
454 |
27 |
% |
23 |
% |
Total |
|
3,138 |
|
|
3,246 |
-3 |
% |
-4 |
% |
|
10,315 |
|
|
10,068 |
2 |
% |
0 |
% |
|
|
|
|
|
|
|
|
|
||||||||||
Footwear |
|
1,547 |
|
|
1,496 |
3 |
% |
5 |
% |
|
4,195 |
|
|
4,099 |
2 |
% |
6 |
% |
Apparel |
|
498 |
|
|
461 |
8 |
% |
10 |
% |
|
1,368 |
|
|
1,228 |
11 |
% |
16 |
% |
Equipment |
|
39 |
|
|
37 |
5 |
% |
9 |
% |
|
119 |
|
|
111 |
7 |
% |
11 |
% |
Total |
|
2,084 |
|
|
1,994 |
5 |
% |
6 |
% |
|
5,682 |
|
|
5,438 |
4 |
% |
8 |
% |
|
|
|
|
|
|
|
|
|
||||||||||
Footwear |
|
1,195 |
|
|
1,141 |
5 |
% |
5 |
% |
|
3,639 |
|
|
3,313 |
10 |
% |
9 |
% |
Apparel |
|
390 |
|
|
407 |
-4 |
% |
-3 |
% |
|
1,198 |
|
|
1,255 |
-5 |
% |
-4 |
% |
Equipment |
|
62 |
|
|
53 |
17 |
% |
19 |
% |
|
187 |
|
|
167 |
12 |
% |
12 |
% |
Total |
|
1,647 |
|
|
1,601 |
3 |
% |
4 |
% |
|
5,024 |
|
|
4,735 |
6 |
% |
6 |
% |
Global Brand Divisions 2 |
|
9 |
|
|
12 |
-25 |
% |
-22 |
% |
|
34 |
|
|
44 |
-23 |
% |
-24 |
% |
TOTAL |
|
11,948 |
|
|
11,766 |
2 |
% |
2 |
% |
|
37,173 |
|
|
36,538 |
2 |
% |
2 |
% |
Converse |
|
495 |
|
|
612 |
-19 |
% |
-20 |
% |
|
1,602 |
|
|
1,841 |
-13 |
% |
-14 |
% |
Corporate3 |
|
(14 |
) |
|
12 |
— |
|
— |
|
|
(19 |
) |
|
13 |
— |
|
— |
|
TOTAL |
$ |
12,429 |
|
$ |
12,390 |
0 |
% |
0 |
% |
$ |
38,756 |
|
$ |
38,392 |
1 |
% |
1 |
% |
|
|
|
|
|
|
|
|
|
||||||||||
TOTAL |
|
|
|
|
|
|
|
|
||||||||||
Footwear |
$ |
8,162 |
|
$ |
7,970 |
2 |
% |
3 |
% |
$ |
25,190 |
|
$ |
24,588 |
2 |
% |
2 |
% |
Apparel |
|
3,290 |
|
|
3,381 |
-3 |
% |
-3 |
% |
|
10,452 |
|
|
10,609 |
-1 |
% |
-2 |
% |
Equipment |
|
487 |
|
|
403 |
21 |
% |
20 |
% |
|
1,497 |
|
|
1,297 |
15 |
% |
14 |
% |
Global Brand Divisions2 |
|
9 |
|
|
12 |
-25 |
% |
-22 |
% |
|
34 |
|
|
44 |
-23 |
% |
-24 |
% |
TOTAL |
$ |
11,948 |
|
$ |
11,766 |
2 |
% |
2 |
% |
$ |
37,173 |
|
$ |
36,538 |
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 |
||||||||||||||||||
2 Global Brand Divisions revenues include |
||||||||||||||||||
3 Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the |
|
||||||||||||||||
EARNINGS BEFORE INTEREST AND TAXES 1 |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|||||||||||
|
THREE MONTHS ENDED |
% |
NINE MONTHS ENDED |
% |
||||||||||||
(Dollars in millions) |
|
|
Change |
|
|
Change |
||||||||||
|
$ |
1,400 |
|
$ |
1,190 |
|
18 |
% |
$ |
4,360 |
|
$ |
4,064 |
|
7 |
% |
|
|
734 |
|
|
785 |
|
-6 |
% |
|
2,591 |
|
|
2,750 |
|
-6 |
% |
|
|
722 |
|
|
702 |
|
3 |
% |
|
1,761 |
|
|
1,754 |
|
0 |
% |
|
|
471 |
|
|
485 |
|
-3 |
% |
|
1,406 |
|
|
1,470 |
|
-4 |
% |
Global Brand Divisions2 |
|
(1,199 |
) |
|
(1,160 |
) |
-3 |
% |
|
(3,572 |
) |
|
(3,573 |
) |
0 |
% |
TOTAL |
|
2,128 |
|
|
2,002 |
|
6 |
% |
|
6,546 |
|
|
6,465 |
|
1 |
% |
Converse |
|
98 |
|
|
164 |
|
-40 |
% |
|
380 |
|
|
526 |
|
-28 |
% |
Corporate3 |
|
(874 |
) |
|
(696 |
) |
-26 |
% |
|
(2,060 |
) |
|
(2,014 |
) |
-2 |
% |
TOTAL |
|
1,352 |
|
|
1,470 |
|
-8 |
% |
|
4,866 |
|
|
4,977 |
|
-2 |
% |
EBIT margin1 |
|
10.9 |
% |
|
11.9 |
% |
|
|
12.6 |
% |
|
13.0 |
% |
|
||
Interest expense (income), net |
|
(52 |
) |
|
(7 |
) |
— |
|
|
(108 |
) |
|
22 |
|
— |
|
TOTAL |
$ |
1,404 |
|
$ |
1,477 |
|
-5 |
% |
$ |
4,974 |
|
$ |
4,955 |
|
0 |
% |
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 |
||||||||||||||||
2 Global Brand Divisions primarily represent demand creation and operating overhead expense, including product creation and design expenses that are centrally managed for the |
||||||||||||||||
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 three and nine months ended |
|
||||||
DILUTED EARNINGS PER SHARE |
||||||
(Unaudited) |
||||||
|
|
|
||||
|
|
|
||||
|
THREE MONTHS ENDED |
NINE MONTHS ENDED |
||||
|
|
|
||||
DILUTED EARNINGS PER SHARE (GAAP): |
$ |
0.77 |
|
$ |
2.74 |
|
Add: Restructuring charges |
|
0.26 |
|
|
0.26 |
|
Tax effect of the restructuring charges1 |
|
(0.05 |
) |
|
(0.05 |
) |
DILUTED EARNINGS PER SHARE EXCLUDING RESTRUCTURING CHARGES (NON-GAAP)2: |
$ |
0.98 |
|
$ |
2.95 |
|
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 nine months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240321992075/en/
Investor Contact:
investor.relations@nike.com
Media Contact:
Virginia Rustique-Petteni
media.relations@nike.com
Source: