Congested ports and factory closures in Q1 due to COVID related issues have negatively impacted the flow of products to stores, fulfillment centers and wholesale partners. All footwear factories in Vietnam are still closed due to government mandates relating to COVID related issues resulting in a ten week slow down in production. As a result of these issues, Nike has readjusted its forward looking statements for the second half of the year to single digit increases. And I might just build on that, Kimberly, to say, both Matt and I wish we had a crystal ball, but we don’t.
Hello, everyone, and thank you for joining us today to discuss NIKE Inc’s fiscal 2022 first quarter results. As the operator indicated, participants on today’s call may discuss non-GAAP financial measures. You will find the appropriate reconciliations in our press release, which was issued about an hour ago or at our website investors.nike.com. The effective tax rate for the quarter was 10.9 percent compared to 14.1 percent for the same period last year, due to a shift in our earnings mix and the effects of stock-based compensation. Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.
And I might just build on that, Kimberly to say, both Matt and I wish we had a crystal ball, but we don’t. And one of the things that I think we are demonstrating through this very dynamic phase is regardless of what the future holds, we’re capitalizing on it. We’re doing what great sports teams do, which is making — confronting the reality, making adjustments, showing agility and executing in a way where we emerge stronger.
Nike Misses Q1 Revenue Estimates, Shares Fall
The P/E ratio of NIKE is 33.26, which means that it is trading at a more expensive P/E ratio than the Consumer Discretionary sector average P/E ratio of about 12.38. 3) Oberlo reported that 63% of shopping occasions begin online. 2) Fit Small Business announced that nearly three-quarters of in-store shoppers search online before visiting stores. Our experts picked 7 Zacks Rank #1 Strong Buy stocks with the best chance to skyrocket within the next days. WallStreetZen does not provide financial advice and does not issue recommendations or offers to buy stock or sell any security.
- And then Matt anyway just to parse out the change in wholesale performance this quarter between the undifferentiated partners and then the strategic partners that you’re continuing to support?
- So, through this week, that means we’ve already lost 10 weeks of production, and that gap will continue until factories are able to reopen and produce product at normal capacity.
- The market-implied outlooks for NKE are slightly bullish to mid-2022 but slightly bearish for the next 12 months.
- Our effective tax rate for the quarter was 11% compared to 11.5% for the same period last year.
- Despite continued inventory constraints and supply chain challenges, NIKE Direct grew 8 percent, led by North America Direct growth of 30 percent, including record Black Friday week results.
Earnings for NIKE are expected to grow by 23.66% in the coming year, from $3.72 to $4.60 per share. NIKE has not formally confirmed its next earnings publication date, but the company’s estimated earnings date is Thursday, June 23rd, 2022 based off prior year’s report dates. Even as physical retail revenue approach pre-pandemic levels, our digital business this quarter grew double digits. This is the result of an unwavering focus on our strategy and the investments we’ve made against our end-to-end digital transformation. And so, we continue to expect digital to be our leading channel for growth in fiscal ‘22. NIKE Direct declined 3% on a currency neutral basis, partially impacted by retail closures.
Thanks to our brand momentum, culture of innovation, commitment to purpose and proven operational playbook, we stay at the front of the pack. I think we’re stronger today than we were 18 months ago and we’ll be stronger 18 months from now than we are today. And in the process, we’re building that capability, where we’re leveraging our strengths and we’re leveraging the leadership position.
Nearly all of the NIKE-owned physical doors were open during the quarter across North America, EMEA and Greater China with approximately 90 percent of doors open in APLA. EMEA returned to growth of 5 percent on a reported basis, led by triple-digit growth in digital. Greater China revenue increased by 6 percent on a reported basis and 8 percent on a currency-neutral basis, led by digital and NIKE Factory Stores. This quarter, we exceeded our 65% full price sales realization goal, which reflects the expectations that we put forward at our last Investor Day. As we accelerate our consumer-led digital transformation, we are developing and refining new capabilities that are transforming our operating model, quickly becoming a competitive advantage for NIKE. Central to these capabilities is scaling our digital-first supply chain to enable NIKE’s digital growth while optimizing service, cost, convenience and sustainability.
The NIKE Brand remains distinctive and deeply connected in our key cities around the world. From New York to Paris, Shanghai to Tokyo, NIKE continues to be consumers’ number one cool and favorite brand with a position that has gained strength as we’ve navigated through the pandemic. The operator indicated, participants on today’s call may discuss non-GAAP financial measures. You will find the appropriate reconciliations in our press release, which was issued about an hour ago, or at our website, investors.nike.com.
Once its products are produced, Nike is also running into shipping delays. According to Friend, transit times in North America are double pre-pandemic levels, taking an average of 80 days to move goods from Asia to Nike’s home turf. “We’ve already lost 10 weeks of production, and that gap will continue. … It’s going to take several months to ramp back to full production,” he told analysts.
Over the past year, Tesla’s shares have provided atotal returnof 35.8%, below the S&P 500’s total return of 7.9%. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Shoes and Retail Apparel is currently in the top 10% of the 250 plus Zacks industries.
Also, using the ratio of NKE’s footwear revenue to total revenue from 2Q to 2Q 2022, I estimate 3Q 2022 total revenue of $11.9 billion for the company; up 4.9% QoQ and 15% YoY . Shares of the company declined 3.9% after the close of the trading session on Sep 23. The negative investor sentiment can be attributed to the company’s commentary on its position amid supply-chain woes and the closure of factories in Vietnam and Indonesia, and the consequent lowering of the fiscal 2022 guidance. You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.
Nike Shares Fall As Supply Chain Havoc Leads Retailer To Slash Revenue Forecast
The Nike app has spurred the convergence of digital and physical shopping for consumers. The app provides endless aisles of products and eliminates friction points in the shopping journey. Digital sales are positively impacted by the growth of the Nike app. Conversely, Greater China, which has lower levels of in-transit inventory and shorter transit times because it’s closer to the factories, is going to experience the impact of the lost production earlier in Q2. And I really appreciate the update on what you’re seeing real-time in the supply chain. I guess, my question relatedly is, are there any — if you look to the fall and back half — or holiday season, are there any key footwear franchises that are being more impacted than others?
NIKE Direct grew 10% on a currency-neutral basis, led by our NIKE-owned stores. Following a full reopening, we saw traffic increase by double digits versus the prior year with better-than-expected conversion rates. In EMEA, while NIKE Digital grew 2% in the quarter, demand for full-price products grew nearly 30% as we compare to higher liquidation levels in the prior year. NIKE-owned inventory declined 14% on a reported basis with closeout inventory down double digits.
Q1 was another strong quarter for NIKE with revenue growth of 16%. And even as we saw physical retail traffic return across much of the portfolio, digital continued its momentum with 25% currency-neutral growth led by North America at over 40%. NIKE ended first-quarter fiscal 2022 with cash and short-term investments of $13,695 million, up $4.2 billion from the last year.
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And obviously, that line is just another example of how NIKE is unparalleled in our ability to create real innovative, stylish, heat and connection with the consumer. Our deliberate franchise and innovation management create scalable and sustainable impacts on our business, and I’m excited by the upcoming new innovation platforms we’ll be introducing soon. And now, to take a look at sustainability, look at what we’ve done with Space Hippie.
How is the consumer engaging with our brand across the marketplace? And we’re going to continue to focus on prioritizing our product availability for those locations where the consumer is shopping, and that will continue to be within NIKE’s own channels and our most strategic wholesale partners. And that’s what we’re going to continue to do to serve that demand. But, NIKE and our partners will continue to try to create the best consumer https://xcritical.com/ experience that we can throughout the remainder of that — of this fiscal year. And Erinn, to the second part of your question on — in that context investment, we’re doing what strong companies do during periods of time like this. We’re going to continue to invest in innovation and product creation, in brand and storytelling and support of sport being back and our strong sports marketing portfolio and our digital transformation.
And, we saw Q1 results that were roughly in line with our expectations. And as Matt said, supply constraints will impact our second quarter performance. We’re blessed to have a really strong local team, and I am so proud of that team, how they’re navigating through. As we’ve said many times before, they have led us in the sort of pandemic playbook and they continue to be very responsive on the ground there. And then, we always have been and will continue to be, very respectful and responsible corporate citizens, promoting sport and the wellbeing through activity and promoting sustainability and other important societal themes. And so, we’ll continue to stay on that playbook and invest with consistency and longevity during this period of time.
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We’re the largest kids athletic footwear brand in the world, but we know that there is still so much potential ahead. And the summer sport also saw Giannis and the Milwaukee Bucks win the NBA title after an electrifying finals against Chris Paul, Devin Booker and the Phoenix Suns. Days later, we released Giannis’ latest signature shoe, the Zoom Freak 3, which is built to support the dominant physicality that defines his style of play. We continue to see strong response to the Zoom Freak, and we’re excited by what we’re seeing with our growing Giannis business. We saw the emergence of Gen Z as a powerful next generation of athletes led by a pair of 13-year-old skateboarders who showed us the joy in the expansion of the definition of sport.
Earlier on the call, John spoke about the new NIKE Rise retail experience in Seoul. To mark the opening of the store, our Express Lane, SNKRS and NIKE Rise teams created the NIKE Seoul Dunk. This collaboration drove more than half of day one sales and highlight how digital and physical experiences are converging in our own stores, leveraging local insights and a more agile supply model. First quarter revenue grew 31% on a currency-neutral basis and EBIT grew 72% on a reported basis. Revenue growth was led by SOCO, Japan, Mexico and Korea, with more muted growth in Pacific and Southeast Asia and India due to COVID restrictions and government-mandated store closures.
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About 80% of Nike’s footwear factories in southern Vietnam and roughly half of its apparel factories in the area remain closed, Friend said. 2 Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous nike q1 earnings 2022 revenues that are not part of a geographic operating segment. A bottleneck is a point of congestion in a production system that occurs when workloads arrive at a point more quickly than that point can handle them.
Days later, we released Giannis’ latest signature shoe, the Zoom Freak 3, which is built to support the dominant physicality that defines his style of play. We continue to see strong response to the Zoom Freak and we’re excited by what we’re seeing with our growing Giannis business. Revenues for Converse were $557 million, up 16 percent on a currency-neutral basis, led by strong performance across all channels in Europe and North America. It might sound shocking… But did you know… Low-priced, “penny,” stocks like these offer a great way to make money regardless of the direction of the markets as a whole. Click here for the names & ticker symbols of our top 4 penny stocks under $5.
We know that when we get to the other side of this, we’ll be in even stronger shape. These risks and uncertainties are detailed in the reports filed with the SEC, including the Annual Report filed on Form 10-K. Some forward-looking statements may concern expectations of future revenue growth or gross margin. This loss, together with extended transit times, is expected to result in short-term inventory shortages for the company over the next few quarters. 1 The Company evaluates the performance of individual operating segments based on earnings before interest and taxes (commonly referred to as “EBIT”), which represents net income before interest expense , net and income tax expense. EBIT and EBIT margin are considered non-GAAP financial measures and are being provided as management believes this additional information should be considered when assessing the Company’s underlying business performance and trends. EBIT margin is calculated as EBIT divided by total NIKE, Inc.
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Now on a positive note, a few factories have just had their reopening plans approved, like this week. And so we’re optimistic about a phase reopening and ramp of production beginning in October. And as I said in the call — earlier in the call, Indonesia is already operational and they’re ramping back up to capacity. And then in addition to that, there is Vietnam and it’s important to think about these two impacts together. As of today, 80% of our footwear factories located in the South and nearly half of our apparel factories in Vietnam are currently closed. So through this week that means we’ve already lost 10 weeks of production and that gap will continue until factories are able to reopen and produce product at normal capacity.
With that in mind, a neutral market-implied outlook should be interpreted as being slightly bullish. Today, that $150 call is trading at $0.72 and is likely to expire worthless on Jan. 21. This still lags the S&P 500, but the premium from selling the call helped a lot. Along with fundamentals and the analyst consensus, I considered the consensus outlook from the options market, the market-implied outlook.
State Street Corp raised its position in shares of NIKE by 3.6% in the 4th quarter. State Street Corp now owns 56,598,375 shares of the footwear maker’s stock worth $9,433,251,000 after acquiring an additional 1,969,270 shares in the last quarter. Raised its position in shares of NIKE by 6.8% in the 3rd quarter.