Nike announced its fourth-quarter (Q4) and annual performance for the fiscal year ending May 31, 2021 with annual profits soaring 196% over last year and 42% over 2019 which was pre-pandemic. Revenues for the fiscal year increased 19% with the fourth quarter (Q4) up 96% which includes March, April and May. John Donahoe, president and CEO, NIKE, Inc., stated, “FY21(full year 2021) was a pivotal year for NIKE as we brought our Consumer Direct Acceleration strategy to life across the marketplace. Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for NIKE’s long-term growth.”
Nike’s Direct sales from its own stores including digital were up 32% reaching over $16 billion and representing 37% of total revenue. Last year Nike Direct was 33% of total revenue. Digital growth reached $9 billion in sales and represents over 20% of total revenue, and Donahoe committed to reaching 50% digital business by 2025. Donahoe is confident that the priorities for 2022 are in line with the consumer, focusing on both direct to consumer and digital strategies (the Consumer Direct Acceleration program), and said in the earnings call, “This is how we stay ahead of the pack and expand the lead.”
Gross profit margins increased from 43.4% in 2019 to 44.8% in 2021. Q4 margins were almost 46% as the company continues to shift more of its business to a direct to consumer model. Higher wholesale shipments helped with the reduction of supply chain costs, positively impacting margins. Key performance contributors include Nike women’s business which was up 22% and the Jordan Brand which was up 31%. Nike’s wholesale business was up 17%. Nike is the largest women’s athletic brand in the world at over $8.5 billion.
The U.S. market gains traction
U.S. retail sales for the same Q4 period (March, April and May 2021) were up 26% minus automobiles and gasoline. Digital sales were up 13% and clothing, accessories and shoes were up 229% compared to the same months last year when many non-essential stores were closed due to the pandemic. Nike’s North American market represents 41% of Nike’s global sales and delivered a 142% increase in Q4 sales and a 29% increase compared to 2019. Nike’s North America digital growth continued to be strong, increasing 54% versus prior year and 177% compared to Q4 of 2019.
Nike Q3 was plagued with supply chain issues but Q4 rebounded strongly
Nike’s North American third-quarter performance was plagued by supply chain issues which resulted in revenue declines of 10%. The period, which includes December 2020, January and February 2021, was impacted by container shortages, U.S. port congestion and logistics of inventory flow mostly related to wholesale shipments. Europe, Middle East and Africa (EMEA) delivered a sales decline of 4% related to the fact that 45% of Nike-owned stores were closed as a result of the COVID-19 pandemic. Total sales increase for Q3 was 3%, primarily driven by digital and direct to consumer.
In Q4, however, revenues were up 96% compared to prior year and increased 21% compared to the Q4 of 2019. Nike’s Direct Q4 sales increased 73%. The company closed the year with a strong performance which set the tone for Q1 of 2022.
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June 25, 2021 at 05:01AM
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Nike Profits Soar 196%, Best In Company History - Forbes
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