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Nike, Inc. reported revenue of $12.2 billion for the quarter ending May 31, 2022 (down just 1 percent on a year-over-year basis) and $46.7 billion for the fiscal year ending on the same date (up 6 percent from 2021), with President and CEO John Donahoe pointing to “the unmatched strength of our brands and our deep connection with consumers” as helping to drive the sportswear titan’s strong results. “Our competitive advantages, including our pipeline of innovative product and expanding digital leadership, prove that our strategy is working as we create value through our relentless drive to serve the future of sport,” Donahoe further stated. 

In connection with the Q4 and full-year revenue reports, Nike management emphasized the success of the company’s Consumer Direct Acceleration, the Swoosh’s strategy that puts greater emphasis on getting products to market quickly and through direct sales channels, such as Nike’s apps and stores. Nike, Inc. Executive Vice President and Chief Financial Officer Matt Friend said the DTC initiative has helped the company to be “better positioned than ever to drive long-term growth while serving consumers directly at scale” even in light of the “dynamic environment,” including declines in China. 

Q4 results, in particular, took a hit, with the 25 percent growth in EMEA, 43 percent growth in APLA and 5 percent growth in North America being “partially offset by a decline in Greater China.” Margins were also impacted during Q4, per Nike, which reported that gross margin decreased 80 basis points to 45 percent, “primarily due to higher inventory obsolescence reserves in Greater China and elevated freight and logistics costs, partially offset by strategic pricing actions, favorable changes in net foreign currency exchange rates, including hedges, and margin expansion in our NIKE Direct business.” 

Margin pressure is expected to continue throughout the rest of 2022 thanks to increased freight and production costs, and enduring discounting to clear-out inventory. The Beaverton, Oregon-based company said its inventories rose 23 percent to $8.4 billion at the end of May as “more of its products remain in transit due to supply disruptions.” 

For the year, gross margin increased 120 basis points to 46 percent, per Nike, “primarily due to margin expansion in our NIKE Direct business, a higher mix of full-price sales and favorable changes in net foreign currency exchange rates,” etc. 

In a corresponding conference call on Monday, Nike management touched on the group’s enduring DTC efforts and its endeavors in the virtual world. Primarily, Donahoe stated that Nike, Inc. started its “journey through connected inventory to provide better allocation, extend product choice for consumers and reduce friction, such as products being out of stock,” and noted that “increasingly, we’re moving beyond inventory to a broader approach of knowing and serving our consumers as NIKE members particularly when shopping through our retail partners,” such as Dick’s Sporting Goods, which it has been working with to connect member accounts. 

“With clear success thus far in knowing our shared members better,” Donahoe said that Nike’s strategy expanded in Q4 to “serving our shared members one-to-one through connected data … [and] at the same time, our growing participation in new digital platforms continues to expand access points to NIKE across the digital ecosystem.” After the “first official NIKE NFT collaboration with RTFKT” during Q3, Donahoe stated that Nike “took another step in our journey to serve our community with innovative virtual products in Q4.” He is referring to the company’s first co-branded virtual sneaker, the RTFKT x Nike Dunk Genesis CRYPTOKICKS, which “continues our connection with an audience that will help shape the future of sport and culture.”

As for its digital business as a whole, Friend asserted that “a more digitally connected NIKE is a more valuable NIKE,” noting that “today, our own digital business, [which] represents over $10 billion in revenue, is more than double in size versus pre-pandemic levels.” After increasing market share and gaining three percentage points from the prior year, NIKE Digital now represents 24 percent of total brand revenue.