10-QPeriod: Q3 FY2021

NIKE, Inc. Quarterly Report for Q3 Ended Feb 28, 2021

Filed April 2, 2021For Securities:NKE

Summary

NIKE, Inc. reported solid financial results for the third quarter and the first nine months of fiscal year 2021, demonstrating resilience despite ongoing challenges from the COVID-19 pandemic. For the third quarter, revenues increased by 3% year-over-year to $10.4 billion, with net income surging by 71% to $1.45 billion. Diluted earnings per share also saw a significant rise of 70% to $0.90. The company's strategic focus on digital transformation continued to pay off, with NIKE Direct revenues growing 16% currency-neutral and digital sales reaching $2.2 billion in the third quarter. Despite supply chain disruptions affecting North America and ongoing COVID-19 related lockdowns impacting EMEA, NIKE's performance was bolstered by strong growth in Greater China, which saw a 42% currency-neutral revenue increase in the third quarter. The company also reported improved gross margins for the quarter, driven by higher full-price product margins. While demand creation expenses were reduced, operating overhead also saw a slight decrease, contributing to overall profitability. NIKE ended the period with a strong liquidity position, holding $12.5 billion in cash and short-term investments.

Financial Highlights

48 data points
Beta

Revenue

$10.36B

45.6% Gross Margin

Net Income

$1.45B

14.0% Net Margin

EPS (Diluted)

$0.90

Total Assets

$36.19B

Cash & Equivalents

$8.52B

Free Cash Flow

$1.11B

Financial Statements
Beta
Revenue$10.36B
Cost of Revenue$5.64B
Gross Profit$4.72B
SG&A Expenses$3.04B
Net Income$1.45B
EPS (Basic)$0.92
EPS (Diluted)$0.90
Shares Outstanding (Basic)1.58B
Shares Outstanding (Diluted)1.62B

Key Highlights

  • 1Total revenues for the third quarter of fiscal 2021 increased by 3% to $10.36 billion compared to the prior year.
  • 2Net income for the third quarter surged by 71% to $1.45 billion, with diluted EPS rising 70% to $0.90.
  • 3NIKE Direct revenue grew 16% on a currency-neutral basis in Q3, with digital sales reaching $2.2 billion.
  • 4Greater China demonstrated robust growth, with currency-neutral revenues up 42% in Q3.
  • 5Gross margin improved by 130 basis points in Q3, driven by higher NIKE Brand full-price product margins.
  • 6Selling and administrative expenses decreased by 7% for both the quarter and the nine-month period.
  • 7The company maintained a strong liquidity position, ending the period with $12.5 billion in cash and short-term investments.

Frequently Asked Questions

NIKE's revenue increased by 3% to $10.36 billion in the third quarter of fiscal year 2021, compared to $10.10 billion in the same period last year. Net income saw a substantial increase of 71%, reaching $1.45 billion, up from $847 million in the prior year's third quarter. Diluted earnings per share also grew significantly by 70% to $0.90.

NIKE's digital strategy, particularly its NIKE Direct business, continued to be a strong growth driver. On a currency-neutral basis, NIKE Direct revenues increased by 16% in the third quarter. Digital sales alone reached $2.2 billion for the quarter, highlighting the effectiveness of the company's investment in its direct-to-consumer channels.

Yes, there were notable regional differences. Greater China showed strong performance with a 42% currency-neutral revenue increase in the third quarter. However, North America and EMEA experienced revenue declines on a currency-neutral basis, primarily due to supply chain disruptions and COVID-19 related impacts such as store closures. The Asia Pacific & Latin America region also saw a currency-neutral revenue decrease.

Supply chain disruptions, including container shortages and transportation delays, impacted inventory flow and led to delayed shipments, particularly affecting North America's revenue growth. In EMEA, COVID-19 related lockdowns resulted in temporary store closures, impacting both NIKE-owned stores and wholesale partners. Despite these challenges, the company managed its operations to maintain profitability and liquidity.