Fy2022q2 revenue was basically flat, in line with market expectations
Nike released a performance announcement. Fy2022q2's revenue was US $11.24 billion (+ 1%), excluding the impact of exchange rate, fy2022q2's revenue was flat year-on-year. Fy2022h1's revenue was US $21.84 billion (+ 8%), excluding the impact of exchange rate, fy2022h1's revenue increased by 6% year-on-year, and the performance was in line with the previous expectation of the market.
(1) In terms of revenue by region, fy2022q2 achieved revenue of US $4.48 billion (+ 12%); Europe, the Middle East and Africa achieved cumulative revenue of US $3.14 billion (+ 6%); Greater China achieved revenue of US $1.84 billion (- 20%), a year-on-year decrease of 24% if excluding the impact of exchange rate; Asia Pacific and Latin America achieved revenue of US $1.35 billion (- 8%). (2) In terms of EBIT by region, fy2022q2 North America market / Europe, Middle East and Africa market / Greater China region / Asia Pacific and Latin America market realized EBIT of USD 12.4/8.1/5.7/390 million respectively, with a year-on-year increase of + 21% / + 22% / - 36% / - 8%. Fy2022h1 North America market / Europe, Middle East and Africa market / large and medium China region / Asia Pacific and Latin America market realized EBIT of USD 26.7/16.8/12.7/870 million respectively, with a year-on-year increase of + 1% 5%/+24%/-20%/+23%。 Fy2022q2's EBIT margin is 13.7% (+ 0.1pct) and fy2022h1's EBIT margin is 15.8% (+ 0.7pct). (3) by brand, fy2022q2 / H1 Nike brand revenue is 108.2 (+ 1%) / 22.46 (+ 8%) billion dollars, converse brand revenue is 560 (+ 17%) / 11.9 (+ 14%) billion dollars. (4) by channel, fy2022q2nikedirect (responsible for all Nike DTC businesses, including Nike's official website, Direct stores, etc.) revenue increased by 8% and wholesale channel revenue decreased by 6%.
The supply chain is restored orderly, and fy2023 is expected to return to normal
The resumption of the company's factories in Vietnam was carried out smoothly, and most of them had reopened in October. As of the date of the announcement, all factories were in operation, and the production capacity of footwear and clothing had recovered to 80% of that before the factory was closed. This round of three-month factory closures in Vietnam resulted in the company canceling the production of 130 million products. At present, all the factories have been started. Compared with the end of last quarter, the company is confident that the supply chain will fully return to normal in fy2023.
Remain optimistic about greater China, and inventory supply is the main interference factor at present
Fy2022q2 Nike's shoe revenue in Greater China is $1.24 billion, clothing revenue is $560 million and accessories revenue is $45 million. In fy2022q2, Nike's direct channel revenue in Greater China decreased by 21%, and offline was mainly affected by the impact of the epidemic on passenger flow. Both online and wholesale decreased by 27%, partly due to the delay of snkrs product release. Inventory supply is the main interference factor in Greater China, but the company is optimistic about the long-term development of Greater China. Jordan announced Yang Shuyu, the first female athlete signed in Asia. By signing contracts with Olympic athletes and other athletes, the company carries out sports marketing in Greater China, and its investment in creating demand has increased by more than 40% over the same period in fy2021.
Profitability: both gross profit margin and expense rate have increased
The gross profit margin of fy2022q2 is 45.9% (+ 2.8pct) and that of fy2022h1 is 46.2% (+ 2.3pct). The sales and management expense ratio of fy2022q2 is 33.1% (+ 4.0pct), and the sales and management expense ratio of fy2022h1 is 31.1% (+ 2.8pct). The profit margin before interest and tax of fy2022q2 is 13.7% (+ 0.1pct), the profit margin before interest and tax of fy2022h1 is 15.8% (+ 0.7pct). The effective tax rate of fy2022q2 is 10.9% (- 3.2pct), the effective tax rate of fy2022h1 is 11.0% (- 1.7pct).
Risk tip: the epidemic situation is repeated, and the supply chain recovery is not as expected.
