Nike Reports Killer Q3 2022 Earnings Reaching $10.9 B in Revenue

Nike's Q3 2022 earnings show growth in revenue/sales, profitability, and returns to shareholders as Nike CEO John Donahoe credits Consumer Direct Acceleration strategy. Here are some key takeaways.

Nike Reports Killer Q3 2022 Earnings Reaching $10.9 B in Revenue
Nike

NIKE, Inc. (NYSE:NKE) Q3 FY2022 results have again secured the company’s position as the apparel industry’s global leader. Ending February 28, 2022 , Q3 revenues totaled $10.9 billion, advancing by 5% compared to the prior year.

NIKE, Inc. President and CEO, John Dohahoe, credits much of the strong results to the success of their Consumer Direct Acceleration strategy, which is discussed later in the sales breakdown. In news details released for investors, the company’s March 21 press release also lends credibility to Nike’s innate ability to “navigate volatility and create value through our relentless drive to serve the future of sport” by way of product innovation, digital advantage, and deep connections with its consumer base. Let’s dive into the financials…

Factors Driving Revenue Growth

NIKE, Inc. owns both the NIKE and Converse brands, and both contributed to the company’s total financial earnings. NIKE’s sales increased by 8% compared to the year prior, and Converse’ sales increased by 2%, both reported on a currency-neutral basis.

NIKE’s latest press release breaks down the total $10.9 billion sales by NIKE Direct and NIKE Brand Digital sales, which both contributed to the increase in revenue.

Sales Breakdown

In 2017, Nike announced a new Consumer Direct Acceleration strategy focused on driving sales through its own resources, such as NIKE stores, and cutting down on wholesale customer relationships. By cutting off the “middle man”, the strategy enables Nike to make higher margins. Sales made by this medium are referred to as “Direct sales.” In Q3 2022, Direct sales hit $4.6 billion, advancing by 15% on a reported level basis.

NIKE Brand Digital, which refers to digital sales predominantly made via the SNKRS app, saw a 130% increase in demand during Q1 2023. Nike has forecasted 50% of total sales to be driven by NIKE Brand Digital by 2025. Judging by NIKE’s acquisition of digital fashion brand RTFKT, it’s clear that Nike knows what its doing in regards to Web3 and is willing to invest in its future.

Profitability

Captured by a 1% increase (100 basis points), Nike’s gross margin rose to 46.6%. Nike stated that the increase was driven by a marginal expansion in its NIKE Direct business, which had been impacted by markdowns, currency exchange rates, and an increase in the sales of full-priced items.

Shareholder Returns

Nike’s notability of driving value for its stakeholders doesn’t look to be going away anytime soon, as returns to shareholders saw increased payouts for the 20th consecutive year. A total of $485 million dividends were paid out, having increased a considerable 12% from the year prior.

In short, Nike is seeing significant growth in both sales and revenue. Nike’s emphasized focus on its Direct business contributed to increased profitability, and we can plan this to continue as they continue aiming attention towards their Consumer Direct Acceleration strategy. While continuing to reinvest portions of its earnings into new initiatives and fund corporate growth, they continue to keep investors happy with increasing dividends to shareholders.

All of NIKE, Inc.’s earnings, press releases, and other financials are available at investors.nike.co for further analysis.