#Retail & Brands

2023-10-05

NIKE reports fiscal 2024 first quarter results

“Q1 offered proof of what NIKE can deliver when we connect great innovation, great storytelling and great marketplace experiences to consumers,” said John Donahoe, President & CEO, NIKE, Inc. “Moving forward, we are laser-focused on scaling these successes with greater consistency and speed as we continue to integrate and streamline our business. This is how we’ll extend our leadership position and drive growth over the long-term.”**

• First quarter revenues were $12.9 billion, up 2 percent compared to prior year on a reported and currency-neutral basis*

• NIKE Direct revenues were $5.4 billion, up 6 percent compared to prior year on a reported and currency-neutral basis with growth across all geographies

• NIKE Brand Digital sales increased 2 percent on a reported and currency-neutral basis

• Wholesale revenues were $7.0 billion, flat compared to prior year on a reported basis and up 1 percent on a currency-neutral basis

• Gross margin decreased 10 basis points to 44.2 percent

• Diluted earnings per share was $0.94 for the first quarter, up 1 percent

Matthew Friend, Executive Vice President & Chief Financial Officer, NIKE, Inc. said, “Our first- quarter results demonstrated the impact of staying on the offense over the past fiscal year. With a healthy marketplace and another quarter of brand and business momentum, we are strengthening our foundation for sustainable, profitable, long-term growth.”**

First Quarter Income Statement Review

• Revenues for NIKE, Inc. increased 2 percent on a reported and currency-neutral basis to $12.9 billion compared to the prior year.

• Revenues for the NIKE Brand were $12.4 billion, up 3 percent on a reported and currency-neutral basis, led by currency-neutral growth in EMEA, Greater China and APLA, partially offset by a decline in North America.

• Revenues for Converse were $588 million, down 9 percent on a reported and currency-neutral basis, due to a decline in North America, partially offset by growth in Asia.

• Gross margin decreased 10 basis points to 44.2 percent, primarily driven by higher product costs and unfavorable changes in net foreign currency exchange rates, largely offset by strategic pricing actions.

• Selling and administrative expense increased 5 percent to $4.1 billion.

• Demand creation expense was $1.1 billion, up 13 percent, primarily due to advertising and marketing expense.

• Operating overhead expense increased 2 percent to $3.0 billion, primarily due to wage- related expenses and NIKE Direct variable costs, partially offset by lower technology spend.

• The effective tax rate was 12.0 percent compared to 19.7 percent for the same period last year primarily due to a one-time benefit provided by the recent delay of the effective date of U.S. foreign tax regulations.

• Net income was $1.5 billion, down 1 percent, and Diluted earnings per share was $0.94, increasing 1 percent.

August 31, 2023 Balance Sheet Review

• Inventories for NIKE, Inc. were $8.7 billion, down 10 percent compared to the prior year, primarily driven by a decrease in units, partially offset by product mix and higher product input costs.

• Cash and equivalents and short-term investments were $8.8 billion, down approximately $3.1 billion from last year, as cash generated by operations was more than offset by share repurchases, cash dividends and capital expenditures.

Shareholder Returns

NIKE continues to have a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 21 consecutive years of increasing dividend payouts. In the first quarter, NIKE returned approximately $1.7 billion to shareholders, including:

• Dividends of $524 million, up 9 percent from the prior year.

• Share repurchases of $1.1 billion, reflecting 10.5 million shares retired as part of the Company’s four-year, $18 billion program approved by the Board of Directors in June 2022. As of August 31, 2023, a total of 54 million shares have been repurchased under the program for a total of approximately $5.9 billion.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on September 28, 2023, to review fiscal first quarter results. The conference call will be broadcast live via the internet and can be accessed at https://investors.nike.com. For those unable to listen to the live broadcast, an archived version will be available at the same location through approximately 11:00 p.m. PT, October 19, 2023.

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