01—Abstract
Summary
Summary of the 10-K filed July 21, 2022. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc. demonstrated resilience and achieved record revenues of $46.7 billiona for the fiscal year ended May 31, 2022, marking a 5% increase over the prior year.
This growth was primarily driven by strong performance in EMEA, North America, and APLA, despite a decline in Greater China attributed to COVID-19 resurgence and marketplace dynamics. The company's strategic shift towards NIKE Direct, which now accounts for 42%b of total NIKE Brand revenues, continues to be a key growth driver, with NIKE Brand Digital sales increasing by 18%. Despite supply chain disruptions and elevated logistics costs that impacted gross margins, NIKE managed to expand its gross margin by 120 basis points year-over-year, signaling effective cost management and pricing strategies.
The company faced challenges including production losses due to government-mandated shutdowns in Vietnam and Indonesia, contributing to a 23% increase in inventories to $8.4 billionc. However, NIKE is actively managing these impacts through its operational playbook, including inventory balancing and pricing actions. The company also announced a new $18 billion share repurchase program, underscoring its commitment to returning capital to shareholders and its confidence in future performance.
02—Key points
Key Highlights
- Achieved record revenues of $46.7 billion in FY22, a 5% increase year-over-year, driven by strong performance in EMEA, North America, and APLA.
- NIKE Direct revenue grew 14% (15% currency-neutral), now representing 42% of total NIKE Brand revenue, with NIKE Brand Digital sales up 18%.
- Gross margin expanded by 120 basis points to 46.0% due to higher NIKE Direct margins, a greater mix of full-price sales, and favorable currency exchange rates, despite increased freight and logistics costs.
- Inventory levels increased by 23% to $8.4 billion, largely due to supply chain disruptions and elevated transit times impacting product availability.
- Greater China revenue saw a 9% decline (13% currency-neutral) due to COVID-19 resurgence, government restrictions, and marketplace dynamics.
- Announced a new $18 billion share repurchase program, replacing the previous $15 billion program, demonstrating confidence in financial health and commitment to shareholder returns.
- Divestitures of legal entities in Argentina and Uruguay are underway, with expected closure in Q3 FY23, impacting future revenue reporting.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed July 21, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $46.71B$44.54B | +4.9% |
| Cost of Revenue | $25.23B$24.58B | +2.7% |
| Gross Profit | $21.48B$19.96B | +7.6% |
| SG&A Expenses | $14.80B$13.03B | +13.7% |
| Net Income | $6.05B$5.73B | +5.6% |
| EPS (Basic) | $3.83$3.64 | +5.2% |
| EPS (Diluted) | $3.75$3.56 | +5.3% |
| Shares Outstanding (Basic) | 1.58B1.57B | +0.4% |
| Shares Outstanding (Diluted) | 1.61B1.61B | +0.1% |
05—Questions
Frequently Asked Questions
What was NIKE's overall revenue performance in fiscal year 2022?
NIKE reported record revenues of $46.7 billion for the fiscal year ended May 31, 2022, which represents a 5% increase compared to the previous fiscal year. This growth was achieved on a reported basis and a 6% increase on a currency-neutral basis.
How did the NIKE Direct channel perform, and what is its significance to the company's revenue?
NIKE Direct revenues increased by 14% on a reported basis (15% currency-neutral) in fiscal 2022. This channel now represents approximately 42% of total NIKE Brand revenues, highlighting its increasing importance to the company's strategy. NIKE Brand Digital sales, a key component of NIKE Direct, grew by 18%.
What were the main factors impacting NIKE's gross margin in fiscal year 2022?
NIKE's gross margin expanded by 120 basis points to 46.0% in fiscal 2022. This expansion was primarily driven by higher margins within the NIKE Direct business, a greater mix of full-price sales, and favorable changes in net foreign currency exchange rates, including hedges. However, these positive factors were partially offset by elevated freight and logistics costs, as well as an increase in inventory obsolescence reserves recognized in Greater China.
What challenges did NIKE face in its supply chain and inventory management during fiscal year 2022?
NIKE experienced significant supply chain disruptions, including production losses due to COVID-19 related shutdowns in Vietnam and Indonesia, and continued elevated inventory transit times. These factors contributed to a 23% increase in inventories, reaching $8.4 billion. The company is actively managing these challenges through strategies like inventory balancing across geographies and pricing actions.
06—Continue