Annual profits

Nike’s annual profits soar 196%, best in company history

Nike announced its fourth quarter (Q4) and annual performance for the fiscal year ending May 31, 2021, with annual profits up 196% from last year and 42% from 2019, which was pre-pandemic. Revenue for the year increased 19% with a fourth quarter (Q4) up 96%, which includes March, April and May. John Donahoe, President and CEO of NIKE, Inc., said, “Fiscal 21 (full year 2021) was a pivotal year for NIKE as we brought to life our Consumer Direct Acceleration strategy on the whole market. Building on our momentum, we continue to invest in innovation and our digital leadership to lay the foundation for NIKE’s long-term growth.

Nike’s direct sales in its own stores, including digital ones, increased by 32%, reaching more than $16 billion and accounting for 37% of total revenue. Last year, Nike Direct accounted for 33% of total revenue. Digital growth has reached $9 billion in sales and represents more than 20% of total revenue, and Donahoe is committed to achieving 50% digital business by 2025. Donahoe believes the priorities for 2022 are in line with the consumer, focusing on both digital strategies (the Consumer Direct Acceleration program), and said on the earnings call: “This is how we stay ahead of the pack and we are expanding our lead.”

Gross profit margins increased from 43.4% in 2019 to 44.8% in 2021. Fourth quarter margins were nearly 46% as the company continued to shift more of its business to a direct model at the consumer. Increased wholesale shipments contributed to lower supply chain costs, which positively impacted margins. Among the top contributors to performance were Nike’s women’s business, which grew 22%, and the Jordan brand, which grew 31%. Nike’s wholesale business grew 17%. Nike is the largest women’s athletics brand in the world with over $8.5 billion.

The US market is gaining ground

U.S. retail sales for the same fourth quarter period (March, April and May 2021) increased 26% minus autos and gasoline. Digital sales were up 13% and apparel, accessories and footwear 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 saw a 142% increase in sales in the fourth quarter and a 29% increase over 2019. Nike’s digital growth in North America remained strong, increasing 54% year-on-year and 177% from Q4 2019.

Nike Q3 Was Plagued With Supply Chain Issues, But Q4 Rebounded Strongly

Nike’s third-quarter performance in North America was plagued by supply chain issues that led to a 10% revenue decline. The period, which includes December 2020, January and February 2021, was affected by container shortages, US port congestion and inventory flow logistics primarily related to wholesale shipments. Europe, the Middle East and Africa (EMEA) saw a 4% drop in sales linked to the fact that 45% of Nike-owned stores were closed following the COVID-19 pandemic. Total sales growth for the third quarter was 3%, mainly driven by digital and direct-to-consumer.

In the fourth quarter, however, revenue was up 96% year-over-year and 21% from the fourth quarter of 2019. Fourth-quarter Nike direct sales were up 73%. The company closed the year with a strong performance that set the tone for the first quarter of 2022.