8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

December 18, 2020

Date of Report (date of earliest event reported)

NIKE, Inc.

(Exact name of registrant as specified in its charter)

Oregon	1-10635	93-0584541
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

ONE BOWERMAN DRIVE

BEAVERTON, OR 97005-6453

(Address of principal executive offices and zip code)

(503) 671-6453

Registrant's telephone number, including area code

NO CHANGE

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Class B Common Stock	NKE	New York Stock Exchange
(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Item 2.02 Results of Operations and Financial Condition

Today NIKE, Inc. issued a press release disclosing financial results for the fiscal quarter ended November 30, 2020. The text of the release is furnished herewith as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

The following exhibit is furnished with this Form 8-K:

Exhibit No.	Exhibit
99.1	NIKE, Inc. Press Release dated December 18, 2020
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

NIKE, Inc.<br>(Registrant)
Date:	December 18, 2020	By:	/s/   Matthew Friend
			Matthew Friend
			Executive Vice President and Chief Financial Officer

Document

Investor Contact:	Media Contact:
Andy Muir	KeJuan Wilkins
(971) 473-3143	(971) 473-2556

NIKE, INC. REPORTS FISCAL 2021 SECOND QUARTER RESULTS

BEAVERTON, Ore., Dec. 18, 2020 — NIKE, Inc. (NYSE:NKE) today reported fiscal 2021 financial results for its second quarter ended November 30, 2020.

•Second quarter reported revenues were $11.2 billion, up 9 percent compared to prior year and up 7 percent on a currency-neutral basis* driven by growth across all geographies, led by Greater China reported revenue growth of 24 percent

•NIKE Direct sales were $4.3 billion, up 32 percent on a reported basis, and up 30 percent on a currency-neutral basis, with double-digit growth across all geographies

•NIKE Brand digital sales increased 84 percent, or 80 percent on a currency-neutral basis, with triple-digit growth in North America and strong double-digit increases in EMEA, Greater China and APLA

•Diluted earnings per share for the quarter was $0.78, up 11 percent

•Inventories declined 2 percent versus prior year and have returned to healthy levels globally

“NIKE’s strong results during a dynamic environment show the power of staying on the offense,” said John Donahoe, President and CEO, NIKE, Inc. “Fueled by compelling innovative product and global brand momentum, we continue to extend our leadership. Our strategy is working, and we are excited for what’s ahead.”**

Our second quarter revenue performance was impacted by strong NIKE Brand digital growth of 84 percent, offset by lower revenue in our wholesale business and NIKE-owned stores. During the quarter, we experienced temporary door closures in geographies affected by rising COVID-19 cases; however, more than 90% of our owned stores are open today, with some operating on reduced hours. We continue to experience year-over-year declines in physical retail traffic in North America, EMEA and APLA due to COVID-19 impacts and safety-related measures, partially offset by higher conversion rates.

“With healthy inventory positions across all geographies, our return to growth is a testament to our digital strength, as well as our disciplined marketplace and financial management,” said Matt Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. “As we look ahead, we are focused on moving even faster against our strategic vision of Consumer Direct Acceleration and fueling sustainable, long-term growth and profitability.”**

Second Quarter Income Statement Review

•Revenues for NIKE, Inc. increased 9 percent to $11.2 billion compared to the prior year, up 7 percent on a currency-neutral basis.

◦Revenues for the NIKE Brand were $10.7 billion, an increase of 8 percent to prior year on a currency-neutral basis driven by strong double-digit growth in NIKE Direct, as well as growth in Sportswear and the Jordan Brand, slightly offset by mid single-digit declines in our wholesale business.

◦Revenues for Converse were $476 million, down 4 percent on a currency-neutral basis, as double-digit growth in digital and growth in Asia were more than offset by declines in Europe and North America primarily due to tighter supply and strategic distribution shifts.

•Gross margin decreased 90 basis points to 43.1 percent, primarily driven by higher promotional activity to reduce excess inventory resulting from COVID-19 impacts and restructuring-related costs for the previously announced reorganization, both partially offset by favorable full-price product margins.

•Selling and administrative expense decreased 2 percent to $3.3 billion.

◦Demand creation expense was $729 million, down 17 percent due primarily to lower marketing spend on brand and sports events as a result of COVID-19, slightly offset by continued investments in digital marketing to support higher digital demand.

◦Operating overhead expense increased 4 percent to $2.5 billion primarily due to approximately $135 million of restructuring-related costs and continued investments in digital capabilities to support the Consumer Direct Acceleration strategy. These costs were slightly offset by disciplined expense management.

•The effective tax rate was 14.1 percent compared to 10.7 percent for the same period last year, primarily due to changes in earnings mix and an increase in tax associated with recently finalized U.S. tax regulations. This increase was offset, in part, by a more favorable impact from stock-based compensation.

•Net income was $1.3 billion, up 12 percent driven by strong revenue growth and lower selling and administrative expense, slightly offset by lower gross margin.

•Diluted earnings per share was $0.78, increasing 11 percent as weighted average common shares outstanding increased slightly.

November 30, 2020 Balance Sheet Review

•Inventories for NIKE, Inc. were $6.1 billion, down 2 percent compared to the prior year period, returning to healthy levels globally.

•Cash and equivalents and short-term investments were $11.8 billion, $8.3 billion higher than last year primarily due to proceeds from a corporate bond issuance in March and positive free cash flow, partially offset by cash dividends and share repurchases. Total liquidity as of November 30th was $15.8 billion which includes cash and equivalents, short-term investments and committed credit facilities which remain undrawn.

Shareholder Returns

NIKE continues a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 19 consecutive years of increasing dividend payouts. In the second quarter, the Company paid dividends of $385 million to shareholders, up 12 percent from the prior year.

During its FY20 fourth quarter, NIKE, Inc. temporarily suspended share repurchase activity in March to maximize liquidity during the COVID-19 pandemic. Prior to the temporary suspension of the share repurchase program, a total of 45.2 million shares had been repurchased for approximately $4.0 billion, resulting in approximately $11.0 billion in remaining capacity under the 2018 share repurchase program.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on December 18, 2020, to review fiscal second quarter results. The conference call will be broadcast live via the Internet and can be accessed at http://investors.nike.com. For those unable to listen to the live broadcast, an archived version will be available at the same location through 9:00 p.m. PT, January 8, 2021.

About NIKE, Inc.

NIKE, Inc., based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Converse, a wholly-owned NIKE, Inc. subsidiary brand, designs, markets and distributes athletic lifestyle footwear, apparel and accessories. For more information, NIKE, Inc.’s earnings releases and other financial information are available on the Internet at http://investors.nike.com. Individuals can also visit http://news.nike.com and follow @NIKE.

*	See additional information in the accompanying Divisional Revenues table regarding this non-GAAP financial measure.
**	The marked paragraphs contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed from time to time in reports filed by NIKE with the U.S. Securities and Exchange Commission (SEC), including Forms 8-K, 10-Q and 10-K.

(Tables Follow)

NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
	THREE MONTHS ENDED						%		SIX MONTHS ENDED						%
(In millions, except per share data)	11/30/2020			11/30/2019			Change		11/30/2020			11/30/2019			Change
Revenues	$	11,243		$	10,326		9	%	$	21,837		$	20,986		4	%
Cost of sales	6,396			5,782			11	%	12,249			11,571			6	%
Gross profit	4,847			4,544			7	%	9,588			9,415			2	%
Gross margin	43.1		%	44.0		%			43.9		%	44.9		%
Demand creation expense	729			881			-17	%	1,406			1,899			-26	%
Operating overhead expense	2,538			2,443			4	%	4,836			4,753			2	%
Total selling and administrative expense	3,267			3,324			-2	%	6,242			6,652			-6	%
% of revenues	29.1		%	32.2		%			28.6		%	31.7		%
Interest expense (income), net	70			12			—		135			27			—
Other (income) expense, net	54			(41)			—		40			(74)			—
Income before income taxes	1,456			1,249			17	%	3,171			2,810			13	%
Income tax expense	205			134			53	%	402			328			23	%
Effective tax rate	14.1		%	10.7		%			12.7		%	11.7		%
NET INCOME	$	1,251		$	1,115		12	%	$	2,769		$	2,482		12	%
Earnings per common share:
Basic	$	0.80		$	0.71		13	%	$	1.77		$	1.59		11	%
Diluted	$	0.78		$	0.70		11	%	$	1.73		$	1.56		11	%
Weighted average common shares outstanding:
Basic	1,573.0			1,560.6					1,567.4			1,561.5
Diluted	1,609.5			1,594.4					1,601.9			1,596.0
Dividends declared per common share	$	0.275		$	0.245				$	0.520		$	0.465
NIKE, Inc.
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CONSOLIDATED BALANCE SHEETS
(Unaudited)
	November 30,		November 30,		% Change
(Dollars in millions)	2020		2019
ASSETS
Current assets:
Cash and equivalents	$	8,635	$	3,070	181	%
Short-term investments	3,177		432		635	%
Accounts receivable, net	3,713		4,792		-23	%
Inventories	6,090		6,199		-2	%
Prepaid expenses and other current assets	1,992		1,876		6	%
Total current assets	23,607		16,369		44	%
Property, plant and equipment, net	4,959		4,668		6	%
Operating lease right-of-use assets, net	3,086		2,882		7	%
Identifiable intangible assets, net	270		277		-3	%
Goodwill	223		224		0	%
Deferred income taxes and other assets	2,691		2,182		23	%
TOTAL ASSETS	$	34,836	$	26,602	31	%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	—	$	6	-100	%
Notes payable	41		300		-86	%
Accounts payable	2,154		2,627		-18	%
Current portion of operating lease liabilities	458		431		6	%
Accrued liabilities	6,030		4,672		29	%
Income taxes payable	188		228		-18	%
Total current liabilities	8,871		8,264		7	%
Long-term debt	9,410		3,462		172	%
Operating lease liabilities	2,896		2,723		6	%
Deferred income taxes and other liabilities	3,019		2,802		8	%
Redeemable preferred stock	—		—		—
Shareholders’ equity	10,640		9,351		14	%
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	34,836	$	26,602	31	%
NIKE, Inc.
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DIVISIONAL REVENUES
(Unaudited)
							% Change Excluding Currency Changes1									% Change Excluding Currency Changes1
	THREE MONTHS ENDED				%			SIX MONTHS ENDED					%
(Dollars in millions)	11/30/2020		11/30/2019		Change			11/30/2020			11/30/2019		Change
North America
Footwear	$	2,512	$	2,426	4	%	4		%	$	5,469	$	5,095	7	%	7	%
Apparel	1,368		1,417		-3	%	-3		%	2,493		2,848		-12	%	-12	%
Equipment	126		139		-9	%	-10		%	269		332		-19	%	-19	%
Total	4,006		3,982		1	%	1		%	8,231		8,275		-1	%	0	%
Europe, Middle East & Africa
Footwear	1,731		1,536		13	%	8		%	3,533		3,294		7	%	5	%
Apparel	1,104		897		23	%	18		%	2,075		1,766		17	%	15	%
Equipment	123		104		18	%	16		%	260		250		4	%	3	%
Total	2,958		2,537		17	%	12		%	5,868		5,310		11	%	8	%
Greater China
Footwear	1,567		1,247		26	%	20		%	2,818		2,411		17	%	15	%
Apparel	681		563		21	%	16		%	1,159		1,028		13	%	11	%
Equipment	50		37		35	%	29		%	101		87		16	%	14	%
Total	2,298		1,847		24	%	19		%	4,078		3,526		16	%	14	%
Asia Pacific & Latin America
Footwear	991		997		-1	%	5		%	1,749		1,927		-9	%	-3	%
Apparel	432		410		5	%	9		%	733		766		-4	%	0	%
Equipment	48		61		-21	%	-17		%	88		120		-27	%	-22	%
Total	1,471		1,468		0	%	5		%	2,570		2,813		-9	%	-3	%
Global Brand Divisions2	8		10		-20	%	-20		%	12		16		-25	%	-25	%
TOTAL NIKE BRAND	10,741		9,844		9	%	8		%	20,759		19,940		4	%	4	%
Converse	476		480		-1	%	-4		%	1,039		1,035		0	%	-1	%
Corporate3	26		2		—		—			39		11		—		—
TOTAL NIKE, INC. REVENUES	$	11,243	$	10,326	9	%	7		%	$	21,837	$	20,986	4	%	4	%
TOTAL NIKE BRAND
Footwear	$	6,801	$	6,206	10	%	8		%	$	13,569	$	12,727	7	%	7	%
Apparel	3,585		3,287		9	%	7		%	6,460		6,408		1	%	0	%
Equipment	347		341		2	%	1		%	718		789		-9	%	-9	%
Global Brand Divisions2	8		10		-20	%	-20		%	12		16		-25	%	-25	%
TOTAL NIKE BRAND REVENUES	$	10,741	$	9,844	9	%	8		%	$	20,759	$	19,940	4	%	4	%
1 The percent change has been calculated using actual exchange rates in use during the comparative prior year period and is provided to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure. Management uses this non-GAAP financial measure when evaluating the Company's performance, including when making financial and operating decisions. Additionally, management believes this non-GAAP financial measure provides investors with additional financial information that should be considered when assessing the Company’s underlying business performance and trends. References to this measure should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies.
2 Global Brand Divisions revenues include NIKE Brand licensing revenues as well as other miscellaneous revenues that are not part of a geographic operating segment.
3 Corporate revenues consist primarily of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse but managed through the Company’s central foreign exchange risk management program.
NIKE, Inc.
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EARNINGS BEFORE INTEREST AND TAXES1
(Unaudited)
	THREE MONTHS ENDED				%		SIX MONTHS ENDED				%
(Dollars in millions)	11/30/2020		11/30/2019		Change		11/30/2020		11/30/2019		Change
North America	$	1,023	$	875	17	%	$	2,325	$	1,975	18	%
Europe, Middle East & Africa	660		510		29	%	1,352		1,119		21	%
Greater China	891		694		28	%	1,579		1,363		16	%
Asia Pacific & Latin America	424		377		12	%	704		718		-2	%
Global Brand Divisions2	(841)		(872)		4	%	(1,694)		(1,729)		2	%
TOTAL NIKE BRAND1	2,157		1,584		36	%	4,266		3,446		24	%
Converse	87		90		-3	%	255		228		12	%
Corporate3	(718)		(413)		-74	%	(1,215)		(837)		-45	%
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES1	1,526		1,261		21	%	3,306		2,837		17	%
Interest expense (income), net	70		12		—		135		27		—
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	1,456	$	1,249	17	%	$	3,171	$	2,810	13	%
1 The Company evaluates the performance of individual operating segments based on earnings before interest and taxes (commonly referred to as “EBIT”), which represents net income before interest expense (income), net and income tax expense. Total NIKE Brand EBIT and Total NIKE, Inc. EBIT are considered non-GAAP financial measures and are being provided as management believes this additional information should be considered when assessing the Company’s underlying business performance and trends. References to EBIT should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies.
2 Global Brand Divisions consists primarily of demand creation, operating overhead and product creation and design expenses that are centrally managed for the NIKE Brand. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
3 Corporate consists primarily of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company’s corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses. For the three and six months ended November 30, 2020, Corporate included non-recurring employee termination and related costs associated with the previously announced leadership and operating model changes.