NIKE direct revenues grew 7% on a year-on-year reported basis and 11% on a currency-neutral basis to US$4.8bn.

This was led by a 25% growth in EMEA, a 43% growth in APLA and a 5% growth in North America, partially offset by a decline in Greater China.

“In this dynamic environment, Nike’s unrivalled strengths continue to fuel our momentum,” said Matt Friend, executive vice president and chief financial officer, Nike, Inc. “Two years into executing our Consumer Direct Acceleration, we are better positioned than ever to drive long-term growth while serving consumers directly at scale.

Nike Q4 in brief

  • Nike Brand Digital grew 15% on a reported basis and 18% on a currency-neutral basis, driven by double-digit growth in APLA, North America and EMEA.
  • Nike-owned stores declined 2% on a reported basis and increased 1% on a currency-neutral basis
  • Nike Inc revenues declined 1% to US$12.2bn versus the prior year. They were up 3% on a currency-neutral basis.
  • Revenues for the Nike Brand were $11.7bn, down 1% on a reported basis and up 3% on a currency-neutral basis, led by 20% growth in EMEA.
  • Revenues for Converse were $593m, down 1% on a reported basis and up 3% on a currency-neutral basis, due to wholesale revenue declines offset by growth in the direct-to-consumer business.
  • Net income was $1.4bn, down 5%, and diluted earnings per share was $0.90.

Nike Fiscal 2022 in brief

  • Revenues for Nike, Inc. increased 5% to $46.7bn , up 6% on a currency-neutral basis. Revenues for the Nike Brand were $44.4bn, up 5% on a reported basis and 6% on a currency-neutral basis, driven by double-digit growth in Nike Direct, partially offset by slight declines in wholesale revenues.
  • Nike Direct revenues were $18.7bn, up 14% on a reported basis and up 15% on a currency-neutral basis, led by Nike Brand digital growth of 18% and Nike-owned stores were up 10%.
  • Revenues for Converse were $2.3bn, up 6% on a reported basis and up 7% on a currency-neutral basis, led by double-digit growth in the direct to consumer business, partially offset by lower wholesale revenues.
  • Net income was $6bn, up 6%, and diluted earnings per share was $3.75, up 5% compared to prior year.

“NIKE’s results this fiscal year are a testament to the unmatched strength of our brands and our deep connection with consumers,” said John Donahoe, President and CEO, NIKE, Inc. “Our competitive advantages, including our pipeline of innovative product and expanding digital leadership, prove that our strategy is working as we create value through our relentless drive to serve the future of sport.”

Analyst reaction

Emily Salter, apparel analyst at Global Data says: Outperforming throughout the pandemic, sportswear specialist Nike has released another good set of results. Its sportswear offer and direct-to-consumer (DTC) focus has been key to its success, and this will continue into FY2022/23, with the brand forecasting currency-neutral revenue growth of low double digits. Nike recently announced that it was permanently pulling out of Russia, after halting operations in the country at the start of its invasion of Ukraine, and it should gain reputational benefits by doing so — especially as it is one of the first apparel players to do so.

Since Nike’s last update in March, the situation in terms of inflation has worsened, with consumers’ discretionary incomes increasingly squeezed. However, Nike is in a better position than many apparel players to survive this turbulent period, with its sportswear and athleisure proposition highly relevant to consumers globally, and its core base of young shoppers will still want to purchase from Nike due to the strength of its brand image. This resilience will be aided by the connection that the brand has forged with consumers through its focus on DTC. This enables stronger shopper loyalty through Nike’s multiple touchpoints with consumers, such as through its apps, podcast, direct marketing, and now in the metaverse.

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Nike’s performance in China has been a concern throughout the year, with FY currency-neutral sales declining by 13%. The country is experiencing continued turbulence due to its zero-Covid policy, with the prolonged lockdown in Shanghai muting demand in Nike’s Q4, and disrupting global supply due to China’s importance as an exporter. The concerns run deeper than this though, with worries about whether Nike has lost its connection with Chinese consumers, which are increasingly preferring domestic brands, such as Li Ning and Anta, despite Western brands’ hefty investments in the country. Nike’s position in China looks uncertain and its performance in the region will likely continue to dull the shine of its otherwise solid results, so it should double down on investment to regain relevance and appeal among Chinese shoppers.”

Meanwhile, Neil Saunders, managing director of Global Data added the results were a “reasonably good outcome” showing Nike has has held on to most of its pandemic gains but has also successfully navigated a tough final quarter which was littered with various challenges from supply chains snafus to lockdowns in China.

But, he says, as reasonable as the overall top line figure is, there are some devils in the detail which put Nike’s performance in a slightly negative light and could impact results going forward. These include higher freight costs compressing margins, inflationary pressures on consumers and further uncertainty around China and its lockdown policies.

Overall, he believes Nike remains in an excellent place.

Saunders concludes: “Its direct-to-consumer strategy is working well, its brands have enormous equity, and it is part of the market that remains of significant interest to consumers. However, some of the very favourable dynamics that have powered the company over the past 18 or so months are now fading. They are doing so at a time when the competitive landscape is becoming somewhat tougher with Under Armour on the front foot and players like Lululemon making more of a play in footwear. Individually, none of these things are a major threat to Nike; however, collectively they mean it will need to work harder to gain share. In our view, this more difficult outlook will act as a drag as Nike enters is new fiscal year.”