NIKE(NKE) - 2024 Q4 - Annual Results

Financial & Operational Highlights Overview of NIKE's Q4 and full-year FY2024 financial performance, including revenue, profitability, and management's future outlook Fourth Quarter (Q4) FY2024 Performance NIKE's Q4 FY2024 saw a 2% revenue decrease to $12.6 billion, offset by improved gross margin and a 45% net income increase Q4 FY2024 Key Financial Metrics | Metric | Q4 FY2024 | Change (Reported) | | :--- | :--- | :--- | | Total Revenues | $12.6 billion | -2% | | NIKE Direct Revenues | $5.1 billion | -8% | | Wholesale Revenues | $7.1 billion | +5% | | Gross Margin | 44.7% | +110 bps | | Net Income | $1.5 billion | +45% | | Diluted EPS | $0.99 | +50% | - The decline in total revenue was driven by an 8% decrease in NIKE Direct sales (10% drop in digital), while Wholesale revenues grew by 5%[2][3] Full Year (FY2024) Performance FY2024 revenues remained flat at $51.4 billion, with gross margin expanding and net income increasing by 12% to $5.7 billion Full Year FY2024 Key Financial Metrics | Metric | Full Year FY2024 | Change (Reported) | | :--- | :--- | :--- | | Total Revenues | $51.4 billion | 0% | | NIKE Direct Revenues | $21.5 billion | +1% | | Wholesale Revenues | $27.8 billion | +1% | | Gross Margin | 44.6% | +110 bps | | Net Income | $5.7 billion | +12% | | Diluted EPS | $3.73 | +15% | Management Outlook Management updated the Fiscal '25 outlook, acknowledging near-term challenges and focusing on repositioning for sustainable long-term growth - CEO John Donahoe stated the company is addressing challenges head-on while focusing on innovation, consumer pace, and growing the complete marketplace[2] - CFO Matthew Friend noted that Q4 results highlighted challenges that led to an updated Fiscal '25 outlook and actions to reposition NIKE for sustainable, profitable long-term growth[2] Detailed Financial Analysis In-depth review of NIKE's income statement, balance sheet, and shareholder returns for Q4 and full-year FY2024 Income Statement Analysis Income statement analysis reveals mixed Q4 results with lower revenue but improved profitability, while full-year revenue was flat with net income growth Fourth Quarter (Q4) FY2024 Income Statement Q4 FY2024 income statement shows a 2% revenue decrease to $12.6 billion, offset by a 1% increase in gross profit and a 45% rise in net income Q4 FY2024 Income Statement Summary | Metric | Q4 FY2024 (in millions) | Q4 FY2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Revenues | $12,606 | $12,825 | -2% | | Gross Profit | $5,634 | $5,595 | +1% | | Net Income | $1,500 | $1,031 | +45% | - Gross margin increased 110 basis points to 44.7%, driven by strategic pricing actions and lower ocean freight and logistics costs[3] - Selling and administrative expense decreased 7% to $4.1 billion, primarily due to a 9% reduction in operating overhead expense[3] Full Year (FY2024) Income Statement Full year FY2024 income statement indicates flat revenues at $51.4 billion, with gross profit up 3% and net income increasing 12% to $5.7 billion Full Year FY2024 Income Statement Summary | Metric | FY2024 (in millions) | FY2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Revenues | $51,362 | $51,217 | 0% | | Gross Profit | $22,887 | $22,292 | +3% | | Net Income | $5,700 | $5,070 | +12% | - Selling and administrative expense increased 1% to $16.6 billion, which includes $379 million of restructuring charges[5] - The effective tax rate for the full year was 14.9%, down from 18.2% in the prior year[5] Balance Sheet Analysis NIKE's balance sheet as of May 31, 2024, shows strong liquidity with $11.6 billion in cash and investments, alongside an 11% reduction in inventories Balance Sheet Summary | Balance Sheet Item | May 31, 2024 (in billions) | May 31, 2023 (in billions) | % Change | | :--- | :--- | :--- | :--- | | Cash & Equivalents | $9.86 | $7.44 | +33% | | Short-term Investments | $1.72 | $3.23 | -47% | | Total Cash & ST Investments | $11.58 | $10.67 | +9% | | Inventories | $7.52 | $8.45 | -11% | | Total Assets | $38.11 | $37.53 | +2% | | Long-term Debt | $7.90 | $8.93 | -11% | Shareholder Returns NIKE returned $6.4 billion to shareholders in FY2024 through dividends and share repurchases, marking 22 consecutive years of dividend increases Shareholder Return Summary | Return Type | Q4 FY2024 | Full Year FY2024 | | :--- | :--- | :--- | | Dividends | $560 million | $2.2 billion | | Share Repurchases | $1.0 billion | $4.3 billion | | Total Returned | $1.6 billion | $6.4 billion | - The company has now achieved 22 consecutive years of increasing dividend payouts[7] - As of May 31, 2024, a total of $9.1 billion has been utilized for share repurchases under the current $18 billion program approved in June 2022[8] Segment & Brand Performance Analysis of NIKE Brand's geographic revenue, Converse brand performance, and revenue breakdown by sales channel and product NIKE Brand Revenue by Geography NIKE Brand's Q4 geographic revenue was mixed, with Greater China and APLA growing, while North America and EMEA declined NIKE Brand Revenue Growth (Currency-Neutral) | Region | Q4 FY24 Growth (CCY) | FY2024 Growth (CCY) | | :--- | :--- | :--- | | North America | -1% | -1% | | EMEA | +1% | 0% | | Greater China | +7% | +8% | | APLA | +4% | +5% | | TOTAL NIKE BRAND | +1% | +1% | Converse Brand Performance Converse brand revenues significantly declined in Q4 and full year FY2024, primarily due to weakness in North America and Western Europe Converse Revenue Performance | Period | Revenue | Change (Reported) | Change (CCY) | | :--- | :--- | :--- | :--- | | Q4 FY2024 | $480 million | -18% | -17% | | Full Year FY2024 | $2.1 billion | -14% | -15% | Revenue by Sales Channel & Product Q4 revenue showed divergence by channel, with NIKE Direct sales down 8% and Wholesale up 5%, while Footwear declined and Apparel/Equipment grew Q4 FY24 Revenue by Channel | Channel | Q4 FY24 Revenue | Change (Reported) | Change (CCY) | | :--- | :--- | :--- | :--- | | NIKE Direct | $5.1 billion | -8% | -7% | | Wholesale | $7.1 billion | +5% | +8% | Q4 FY24 NIKE Brand Revenue by Product | NIKE Brand Product | Q4 FY24 Revenue | % Change (Reported) | | :--- | :--- | :--- | | Footwear | $8,237 million | -4% | | Apparel | $3,323 million | +3% | | Equipment | $578 million | +34% | EBIT by Segment FY2024 EBIT saw North America as the largest contributor, while Converse EBIT declined significantly, leading to a 6% increase in total NIKE, Inc. EBIT FY2024 EBIT by Segment | Segment (in millions) | FY2024 EBIT | % Change YoY | | :--- | :--- | :--- | | North America | $5,822 | +7% | | EMEA | $3,388 | -4% | | Greater China | $2,309 | +1% | | APLA | $1,885 | -2% | | Converse | $474 | -30% | | TOTAL NIKE, INC. EBIT | $6,539 | +6% | Non-GAAP Financial Measures Reconciliation of key non-GAAP financial metrics, specifically diluted EPS, to provide a clearer view of operational results Diluted EPS Reconciliation Diluted EPS reconciliation shows GAAP EPS of $0.99 for Q4 and $3.73 for FY2024, with non-GAAP figures higher after excluding restructuring charges Diluted EPS Reconciliation Summary | EPS Metric | Q4 FY2024 | Full Year FY2024 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $0.99 | $3.73 | | Restructuring Charges | $0.03 | $0.29 | | Tax effect of charges | ($0.01) | ($0.07) | | Diluted EPS (Non-GAAP) | $1.01 | $3.95 |