NIKE(US:NKE)2023-01-04 16:00Financial Performance - For Q2 fiscal 2023, NIKE, Inc. revenues increased 17% to $13.3 billion compared to Q2 fiscal 2022, with a 27% increase on a currency-neutral basis [84]. - Net income for Q2 fiscal 2023 was $1,331 million, with diluted earnings per share at $0.85, compared to $1,337 million and $0.83 in Q2 fiscal 2022 [84]. - Total NIKE, Inc. revenues for the first six months of FY2023 were $26,002 million, an 18% increase compared to the same period in FY2022 [87]. - Earnings before interest and taxes (EBIT) for the total NIKE Brand in Q2 fiscal 2023 were $2.257 billion, a 17% increase from $1.927 billion in Q2 fiscal 2022 [98]. - Corporate revenues for the second quarter of fiscal 2023 showed a loss before interest and taxes of $744 million, an increase of 48% compared to a loss of $503 million in the same quarter of fiscal 2022 [113]. - For the first six months of fiscal 2023, the loss before interest and taxes increased to $1,318 million, a 26% increase from a loss of $1,048 million in the first six months of fiscal 2022 [113]. Revenue Breakdown - NIKE Brand revenues, which account for over 90% of total revenues, rose 18% in Q2 fiscal 2023, with a 28% increase on a currency-neutral basis, driven by growth in North America and EMEA [84]. - NIKE Brand footwear revenues rose 36% in Q2 FY2023, with unit sales increasing by 28% and higher average selling price contributing 8 percentage points to growth [88]. - NIKE Brand apparel revenues increased 14% in Q2 FY2023, with unit sales up 10% and higher average selling price contributing 4 percentage points to growth [88]. - NIKE Brand wholesale revenues increased 19% in Q2 FY2023 compared to the same quarter in FY2022, driven by increased product availability [88]. - The Greater China segment experienced a 3% decline in revenues for Q2 fiscal 2023, totaling $1.788 billion [96]. - The Asia Pacific & Latin America segment saw a 19% increase in revenues, reaching $1.599 billion in Q2 fiscal 2023 [96]. - APLA revenues increased 34% for Q2 fiscal 2023 on a currency-neutral basis, driven by growth in Japan (42%), Korea (37%), and Southeast Asia & India (61%) [106]. Digital and Direct Sales - NIKE Brand digital sales reached $3.4 billion in Q2 FY2023, up from $2.7 billion in Q2 FY2022, reflecting a 34% growth on a currency-neutral basis [88]. - NIKE Direct revenues increased 18%, driven by strong digital sales growth of 25% and comparable store sales growth of 6% [100]. - NIKE Direct revenues in North America rose 23%, supported by a 31% growth in digital sales and a 9% increase in comparable store sales [99]. - NIKE Direct revenues for the first six months of fiscal 2023 increased 30%, driven by digital sales growth of 32% and comparable store sales growth of 28% [107]. Cost and Margin Analysis - Gross margin for Q2 fiscal 2023 decreased by 300 basis points to 42.9%, impacted by high promotional activity and increased costs [84]. - Gross margin for Q2 FY2023 was 42.9%, a decrease of 300 basis points compared to the prior year, primarily due to higher promotional activity and unfavorable currency exchange rates [89]. - Reported EBIT increased 21% primarily due to higher revenues, despite a gross margin contraction of approximately 320 basis points [100]. - Reported EBIT for Q2 fiscal 2023 increased 25% due to higher revenues and lower selling and administrative expenses, despite a gross margin contraction of approximately 190 basis points [106]. Inventory and Supply Chain - Inventory levels decreased by 3% in Q2 fiscal 2023 compared to Q1 fiscal 2023, reflecting strong demand and increased promotional activity [83]. - Ongoing supply chain challenges and macroeconomic conditions continue to create volatility in business results, with potential impacts on consumer demand and inventory levels [84]. Tax and Other Expenses - The effective tax rate for Q2 fiscal 2023 was 19.3%, up from 10.9% in Q2 fiscal 2022, due to decreased benefits from stock-based compensation [84]. - Total selling and administrative expenses for Q2 FY2023 were $4,124 million, a 10% increase from $3,759 million in Q2 FY2022 [90]. - Demand creation expense increased 8% in Q2 FY2023, primarily due to higher advertising and marketing expenses [90]. - Other (income) expense, net for Q2 FY2023 was $(79) million, compared to $(102) million in Q2 FY2022, reflecting improved foreign currency conversion results [92]. Share Repurchase and Cash Flow - Share repurchases totaled $2.6 billion for the first six months of fiscal 2023, with an average price of $101.96 per share, compared to $1.7 billion in the same period of fiscal 2022 [121]. - The company expects funding for share repurchases to come from operating cash flows and excess cash, with timing dictated by capital needs and market conditions [121]. - Cash provided by operations was $1,358 million for the first six months of fiscal 2023, a significant decrease from $3,868 million in the same period of fiscal 2022 [119]. - The net change in working capital resulted in a decrease of $2,009 million in cash provided by operations for the first six months of fiscal 2023, driven by higher accounts receivable of $1,421 million and inventories of $1,216 million [119].