BEAVERTON, Ore.--(BUSINESS WIRE)--NIKE, Inc. (NYSE:NKE) today reported fiscal 2021 financial results for its second quarter ended November 30, 2020.

Second quarter reported revenues were $11.2 billion, up 9 percent compared to prior year and up 7 percent on a currency-neutral basis* driven by growth across all geographies, led by Greater China reported revenue growth of 24 percent
NIKE Direct sales were $4.3 billion, up 32 percent on a reported basis, and up 30 percent on a currency-neutral basis, with double-digit growth across all geographies
NIKE Brand digital sales increased 84 percent, or 80 percent on a currency-neutral basis, with triple-digit growth in North America and strong double-digit increases in EMEA, Greater China and APLA
Diluted earnings per share for the quarter was $0.78, up 11 percent
Inventories declined 2 percent versus prior year and have returned to healthy levels globally

“NIKE’s strong results during a dynamic environment show the power of staying on the offense,” said John Donahoe, President and CEO, NIKE, Inc. “Fueled by compelling innovative product and global brand momentum, we continue to extend our leadership. Our strategy is working, and we are excited for what’s ahead.”**

Our second quarter revenue performance was impacted by strong NIKE Brand digital growth of 84 percent, offset by lower revenue in our wholesale business and NIKE-owned stores. During the quarter, we experienced temporary door closures in geographies affected by rising COVID-19 cases; however, more than 90% of our owned stores are open today, with some operating on reduced hours. We continue to experience year-over-year declines in physical retail traffic in North America, EMEA and APLA due to COVID-19 impacts and safety-related measures, partially offset by higher conversion rates.

“With healthy inventory positions across all geographies, our return to growth is a testament to our digital strength, as well as our disciplined marketplace and financial management,” said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. “As we look ahead, we are focused on moving even faster against our strategic vision of Consumer Direct Acceleration and fueling sustainable, long-term growth and profitability.”**

Second Quarter Income Statement Review

Revenues for NIKE, Inc. increased 9 percent to $11.2 billion compared to the prior year, up 7 percent on a currency-neutral basis.
- Revenues for the NIKE Brand were $10.7 billion, an increase of 8 percent to prior year on a currency-neutral basis driven by strong double-digit growth in NIKE Direct, as well as growth in Sportswear and the Jordan Brand, slightly offset by mid single-digit declines in our wholesale business.
- Revenues for Converse were $476 million, down 4 percent on a currency-neutral basis, as double-digit growth in digital and growth in Asia were more than offset by declines in Europe and North America primarily due to tighter supply and strategic distribution shifts.
Gross margin decreased 90 basis points to 43.1 percent, primarily driven by higher promotional activity to reduce excess inventory resulting from COVID-19 impacts and restructuring-related costs for the previously announced reorganization, both partially offset by favorable full-price product margins.
Selling and administrative expense decreased 2 percent to $3.3 billion.
- Demand creation expense was $729 million, down 17 percent due primarily to lower marketing spend on brand and sports events as a result of COVID-19, slightly offset by continued investments in digital marketing to support higher digital demand.
- Operating overhead expense increased 4 percent to $2.5 billion primarily due to approximately $135 million of restructuring-related costs and continued investments in digital capabilities to support the Consumer Direct Acceleration strategy. These costs were slightly offset by disciplined expense management.
The effective tax rate was 14.1 percent compared to 10.7 percent for the same period last year, primarily due to changes in earnings mix and an increase in tax associated with recently finalized U.S. tax regulations. This increase was offset, in part, by a more favorable impact from stock-based compensation.
Net income was $1.3 billion, up 12 percent driven by strong revenue growth and lower selling and administrative expense, slightly offset by lower gross margin.
Diluted earnings per share was $0.78, increasing 11 percent as weighted average common shares outstanding increased slightly.

November 30, 2020 Balance Sheet Review

Inventories for NIKE, Inc. were $6.1 billion, down 2 percent compared to the prior year period, returning to healthy levels globally.
Cash and equivalents and short-term investments were $11.8 billion, $8.3 billion higher than last year primarily due to proceeds from a corporate bond issuance in March and positive free cash flow, partially offset by cash dividends and share repurchases. Total liquidity as of November 30^th was $15.8 billion which includes cash and equivalents, short-term investments and committed credit facilities which remain undrawn.

Shareholder Returns

NIKE continues a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 19 consecutive years of increasing dividend payouts. In the second quarter, the Company paid dividends of $385 million to shareholders, up 12 percent from the prior year.

During its FY20 fourth quarter, NIKE, Inc. temporarily suspended share repurchase activity in March to maximize liquidity during the COVID-19 pandemic. Prior to the temporary suspension of the share repurchase program, a total of 45.2 million shares had been repurchased for approximately $4.0 billion, resulting in approximately $11.0 billion in remaining capacity under the 2018 share repurchase program.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on December 18, 2020, to review fiscal second quarter results. The conference call will be broadcast live via the Internet and can be accessed at http://investors.nike.com. For those unable to listen to the live broadcast, an archived version will be available at the same location through 9:00 p.m. PT, January 8, 2021.

About NIKE, Inc.

NIKE, Inc., based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Converse, a wholly-owned NIKE, Inc. subsidiary brand, designs, markets and distributes athletic lifestyle footwear, apparel and accessories. For more information, NIKE, Inc.’s earnings releases and other financial information are available on the Internet at http://investors.nike.com. Individuals can also visit http://news.nike.com and follow @NIKE.

*	See additional information in the accompanying Divisional Revenues table regarding this non-GAAP financial measure.
**	The marked paragraphs contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed from time to time in reports filed by NIKE with the U.S. Securities and Exchange Commission (SEC), including Forms 8-K, 10-Q and 10-K.

NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


	THREE MONTHS ENDED						%		SIX MONTHS ENDED						%
(In millions, except per share data)	11/30/2020			11/30/2019			Change		11/30/2020			11/30/2019			Change
Revenues	$	11,243		$	10,326		9	%	$	21,837		$	20,986		4	%
Cost of sales	6,396			5,782			11	%	12,249			11,571			6	%
Gross profit	4,847			4,544			7	%	9,588			9,415			2	%
Gross margin	43.1		%	44.0		%			43.9		%	44.9		%

Demand creation expense	729			881			-17	%	1,406			1,899			-26	%
Operating overhead expense	2,538			2,443			4	%	4,836			4,753			2	%
Total selling and administrative expense	3,267			3,324			-2	%	6,242			6,652			-6	%
% of revenues	29.1		%	32.2		%			28.6		%	31.7		%

Interest expense (income), net	70			12			—		135			27			—
Other (income) expense, net	54			(41)			—		40			(74)			—
Income before income taxes	1,456			1,249			17	%	3,171			2,810			13	%
Income tax expense	205			134			53	%	402			328			23	%
Effective tax rate	14.1		%	10.7		%			12.7		%	11.7		%

NET INCOME	$	1,251		$	1,115		12	%	$	2,769		$	2,482		12	%

Earnings per common share:
Basic	$	0.80		$	0.71		13	%	$	1.77		$	1.59		11	%
Diluted	$	0.78		$	0.70		11	%	$	1.73		$	1.56		11	%

Weighted average common shares outstanding:
Basic	1,573.0			1,560.6					1,567.4			1,561.5
Diluted	1,609.5			1,594.4					1,601.9			1,596.0

Dividends declared per common share	$	0.275		$	0.245				$	0.520		$	0.465

NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)


	November 30,		November 30,		% Change
(Dollars in millions)	2020		2019
ASSETS
Current assets:
Cash and equivalents	$	8,635	$	3,070	181	%
Short-term investments	3,177		432		635	%
Accounts receivable, net	3,713		4,792		-23	%
Inventories	6,090		6,199		-2	%
Prepaid expenses and other current assets	1,992		1,876		6	%
Total current assets	23,607		16,369		44	%
Property, plant and equipment, net	4,959		4,668		6	%
Operating lease right-of-use assets, net	3,086		2,882		7	%
Identifiable intangible assets, net	270		277		-3	%
Goodwill	223		224		0	%
Deferred income taxes and other assets	2,691		2,182		23	%
TOTAL ASSETS	$	34,836	$	26,602	31	%
LIABILITIES AND SHAREHOLDERS’ EQUITY

NIKE, Inc. Reports Fiscal 2021 Second Quarter Results