Nike fy22q2’s revenue was US $11.357 billion, flat year-on-year, with a decrease of 24% in Greater China
Nike fy22q2 (2021 / 9 / 1-11 / 30) had a revenue of US $11.357 billion (about RMB 72.451 billion), which was basically flat year-on-year after excluding the impact of exchange rate, mainly due to the impact of supply chain; the net profit was US $1.337 billion (about RMB 8.529 billion), an increase of 7% at the same time.
By brand, the revenue of Nike brand was USD 10.816 billion, basically the same as that of the same period last year (excluding the impact of exchange rate, the same below); the revenue of converse was USD 557 million, an increase of 16%.
By product, the revenue of Nike brand footwear was USD 6.78 billion, with a decrease of 1%; Clothing revenue was $3.648 billion, an increase of 1% at the same time; Equipment revenue was $382 million, an increase of 9%.
By region, the revenue of Nike brand Greater China was US $1.844 billion, a decrease of 24% at the same time, mainly due to the shortage of inventory due to the shutdown of factories affected by the epidemic. Among them, the footwear revenue was USD 1.235 billion, with a decrease of 25%; Clothing category 564 million US dollars, with a decrease of 21%; Equipment was $45 million, a decrease of 15%.
The revenue of North America was $4.477 billion, an increase of 12%, of which the revenue of black five increased by nearly 40% in the same week; EMEA (Europe, Middle East and Africa, the same below) revenue was $3.142 billion, an increase of 6%; APLA (Asia Pacific and Latin America, the same below) revenue was $1.347 billion, a decrease of 6%.
In terms of channels, Nike’s direct sales channels increased by 8%, including 30% in North America, including the revenue of the black five shopping week. One of the reasons for the overall growth is the stable and normal development of direct physical stores. The number of Nike direct physical stores in fy22q2 increased by 4%, and the in store traffic and conversion rate increased significantly; Wholesale channels decreased by 6%. Nike brand e-commerce channels increased by 11% at the same time, accounting for 25%, with a year-on-year increase of 3PCT. North America and APLA showed double-digit rapid growth, partially offsetting the decrease in Greater China.
Focusing on all channels in Greater China, Nike’s direct sales decreased by 21%, including e-commerce and physical retail; Wholesale channels decreased by 27%. Nike e-commerce in Greater China decreased by 27%, partly affected by the delayed product release on snkrsapp; During the “double 11” period, the number of members increased by 13 million, and the customer unit price increased. During this period, the sales of tmall platform ranked first among sports brands.
The gross profit margin of fy22q2 increased by 2.8pct at 45.9%, and the marketing expenses in Greater China increased by more than 40%
The company’s fy22q2 gross profit margin increased by 2.8pct at the same time by 45.9%, mainly due to the decrease in the price reduction of Nike’s direct channels and the increase in the proportion of products sold at full price, which led to the increase in gross profit margin, partially offsetting the impact of the rise in Logistics costs.
The rate of sales and administrative expenses was 33.1%, with a year-on-year increase of 4pct. The marketing expense rate was 9.0%, with a year-on-year increase of 2.5pct, mainly due to the normalization of brand activity expenditure and continuous investment in digital marketing; Among them, the marketing expenses in Greater China increased by more than 40% at the same time. The company extended joyofsport brand marketing activities and used the influence of local online celebrities and athletes to enhance the brand popularity; Jordan Brand announced the signing of Chinese basketball player Yang Shuyu, the company’s first female player in Asia.
The operating expense ratio was 24.1%, with a year-on-year increase of 1.6pct, mainly due to the increase of strategic science and technology investment and salary related expenditure.
Fy22q2 company’s global ebit15 $5.6 billion, an increase of 2%
Nike brand ebit19 USD 2.7 billion, with a decrease of 11%, including EBIT of Greater China of 5.5% $6.9 billion, a decrease of 36% over the same period, the largest decrease, and $1.235 billion in North America, an increase of 21% over the same period; Converse brand ebit1 US $3.2 billion, an increase of 52% over the same period.
The overall inventory of the company increased by 7%, but the inventory supply in Greater China was insufficient
As of November 30, 2021, the company’s fy22q2 inventory was USD 6.506 billion, a year-on-year increase of 7%. In terms of inventory, Greater China and APLA are more affected by factory closures during the epidemic, and the inventory supply is insufficient; In North America and EMEA, the supply recovered due to the arrival of in transit inventory in Q2.
Maintain the growth expectation of units in fy22’s annual revenue
The company expects fy22q3 revenue to increase in low units, mainly due to the continuous impact of the epidemic in Vietnam on production capacity. Previously, the closure of Vietnamese factories led to a total loss of about 130 million pieces of production, including the loss of production capacity during the three months of plant closure and the recovery of climbing in a few months. As of December 21, all Vietnamese factories of the company have been put into operation, and the attendance rate of employees has increased. Now the weekly production capacity of footwear and clothing has recovered to 80% before the closure, and the output needs to be fully restored.
With regard to Nike’s financial performance in the current period, we believe that:
On the one hand, although it partially hinders the overall performance of China’s sports market, the national brand opportunity will continue to enlarge; Xinjiang cotton plus Vietnam epidemic will bring an important development window period to the national brand, increase the exposure of brand product channels and improve the business scale.
On the other hand, the brand should properly disperse the production capacity layout, resist the risk of epidemic in a single region, and improve the overall production stability, or it is a medium and long-term trend; China’s supply chain takes this opportunity to enter the big brand supply chain, show its manufacturing advantages and increase its share.
It is suggested to pay attention to: (brands) Li Ning, Anta sports, Tebu international, Bosideng, etc.; (supply chain) Zhejiang Weixing Industrial Development Co.Ltd(002003) , Shenzhou International, Huali Industrial Group Company Limited(300979) , Zhejiang Sunrise Garment Group Co.Ltd(605138) , virgin, etc.
Risk warning: repeated global epidemic has caused terminal retail to be less than expected; Continuous supply chain problems; The price fluctuation of raw materials in the industry has increased, and the labor cost has increased.
