Nike's profit surges 196% as it posts best annual performance ever

Nike's annual profit soars 196%

Nike announced its fourth quarter (Q4) and annual results for the 2020 fiscal year ending May 31, 2021. Notably, Nike's annual profits soared 196% from last year and 42% from 2019 before the COVID-19 pandemic . Revenues for the fiscal year grew 19%, with a 96% increase in the fourth quarter (Q4), which includes March , April and May.

Nike's CEO said: " Fiscal 2021 is a critical year for Nike as we bring our consumer direct-to-consumer acceleration strategy to the entire market. Driven by growth momentum, we will continue to invest in innovation and digital leadership to lay the foundation for Nike's long-term growth.

Among them, direct sales in Nike's own stores (including digital stores) increased by 32% to more than $16 billion, accounting for 37% of total revenue. Last year, Nike Direct accounted for 33% of total revenue. Digital growth reached $9 billion in sales, accounting for more than 20% of total revenue, and Donahoe promised that digital business will reach 50% by 2025.

Donahoe believes the priorities for 2022 are aligned with consumers, focusing on direct-to-consumer and digital strategies (Consumer Direct Acceleration Plan), and said on the earnings call, "That's how we stay ahead and extend our lead."

Gross margin also increased from 43.4% in 2019 to 44.8% in 2021. Profit margins in the fourth quarter were close to 46% as the company continued to shift more of its business to a direct - to -consumer model. Higher wholesale shipments helped reduce supply chain costs, which had a positive impact on profit margins. Key performance contributors included Nike's women's apparel business growth of 22% and Jordan brand growth of 31%. Nike's wholesale business grew 17%. Nike is the world's largest women's sports brand, valued at more than $8.5 billion.

US market gains traction

U.S. retail sales for the same period in the fourth quarter ( March, April and May 2021) were up 26%, minus cars and gasoline. Compared to the same period last year when many non-essential stores were closed due to the pandemic, digital sales were up 13% and apparel, accessories and shoes were up 229%.

Nike's North American market, which accounts for 41% of Nike's global sales , saw sales increase by 142% in the fourth quarter and 29% compared to 2019. Nike's North American digital growth continues to be strong, increasing by 54% compared to last year and 177% compared to the fourth quarter of 2019 .

Nike's Q3 was plagued by supply chain issues but rebounded strongly in Q4

Nike's third-quarter results in North America were plagued by supply chain issues, resulting in a 10% drop in revenue . The period, which includes December 2020, January and February 2021, was impacted by container shortages, congestion at U.S. ports and inventory flow logistics primarily related to wholesale shipments. Sales in Europe, the Middle East and Africa (EMEA) fell 4% as 45% of Nike-owned stores were closed due to the COVID-19 pandemic. Total sales in the third quarter increased 3%, driven primarily by digital and direct-to-consumer.

However, in the fourth quarter, revenues were up 96% compared to last year and 21% compared to the fourth quarter of 2019. Nike's direct sales increased 73% in the fourth quarter. The company ended the year on a strong note, setting the tone for the first quarter of 2022.

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