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NIKE : Q1FY22 EARNINGS CALL UNOFFICIAL TRANSCRIPT

The following material represents prepared remarks for NIKE, Inc.’s earning conference call and is not an official transcript. These remarks are provided only for reference purposes until an official transcript is made available. These prepared remarks do not reflect questions asked by p articipants in the conference call or responses from NIKE, Inc. management, and information presented by NIKE, Inc. during the conference call may differ materially from these prepared remarks. Information contained in these remarks was current only as of the date of the conference call and may have subsequently changed materially. NIKE, Inc. does not update or delete outdated information contained in these prepared remarks and disclaims any obligation to do so.

UNOFFICIAL TRANSCRIPT – Q1FY22 NIKE, INC

SEPTEMBER 23, 2021

Operator:

Good afternoon, everyone. Welcome to NIKE, Inc.’s fiscal 2022 first quarter conference call. For those who want to reference today’s press release you’ll find it at http://investors.nike.com. Leading today’s call is Paul Trussell, VP of Investor Relations and Strategic Finance. Before I turn the call over to Mr. Trussell, let me remind you that participants on this call will make forward- looking statements based on current expectations and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in the reports filed with the SEC including the annual report filed o n Form 10-K.

Some forward-looking statements may concern expectations of future revenue growth or gross margin. In addition, participants may discuss non-GAAP financial measures, including references to constant-dollar revenue. References to constant-dollar revenue are intended to provide context as to the performance of the business eliminating foreign exchange fluctuations. Participants may also make references to other non-public financial and statistical information and non-GAAP financial measures. To the extent non-public financial and statistical information is discussed, presentations of comparable GAAP measures and quantitative reconciliations will be made available at NIKE’s website, http://investors.nike.com.

Now I would like to turn the call over to Paul Trussell.

Paul Trussell

Thank you, operator.

Hello everyone and thank you for joining us today to discuss NIKE, Inc.’s fiscal 2022 first quarter results.

The following material represents prepared remarks for NIKE, Inc.’s earning conference call and is not an official transcript. These remarks are provided only for reference purposes until an official transcript is made available. These prepared remarks do not reflect questions asked by p articipants in the conference call or responses from NIKE, Inc. management, and information presented by NIKE, Inc. during the conference call may differ materially from these prepared remarks. Information contained in these remarks was current only as of the date of the conference call and may have subsequently changed materially. NIKE, Inc. does not update or delete outdated information contained in these prepared remarks and disclaims any obligation to do so.

As the operator indicated, participants on today’s call may discuss non-GAAP financial measures. You will find the appropriate reconciliations in our press release, which was issued about an hour ago, or at our website: investors.nike.com.

Joining us on today’s call will be NIKE, Inc. President and CEO John Donahoe, and our Chief Financial Officer, Matt Friend.

Following their prepared remarks, we will take your questions. We would like to allow as many of you to ask questions as possible in our allotted time. So, we would appreciate you limiting your initial questions to one. Thanks for your cooperation on this.

I’ll now turn the call over to NIKE, Inc. President and CEO John Donahoe.

John Donahoe

Thank you, Paul, and hello to everyone on today’s call.

Nike creates value through our relentless drive to serve the future of sport. As we saw again in Q1, our strategy is working, with business results that reflect our deep connection to consumers around the world. Thanks to our brand momentum, culture of innovation, commitment to purpose and proven operational playbook, we stay at the front of the pack.

Q1 was another strong quarter for Nike, with revenue growth of 16%. And even as we saw physical retail traffic return across much of the portfolio, Digital continued its momentum with 25% currency-neutral growth, led by North America at over 40%. Our Digital success is evidence of the product innovation, brand strength and scale that drives our meaningful relationships with consumers, as we continue to show momentum against our biggest growth opportunities.

As has been the case since the start of the pandemic, I’m proud of the way our entire NIKE, Inc. team has delivered through macro volatility. Over the past 18 months, we’ve demonstrated our ability to manage through turbulence to emerge even better positioned – and that’s what we’ll

The following material represents prepared remarks for NIKE, Inc.’s earning conference call and is not an official transcript. These remarks are provided only for reference purposes until an official transcript is made available. These prepared remarks do not reflect questions asked by p articipants in the conference call or responses from NIKE, Inc. management, and information presented by NIKE, Inc. during the conference call may differ materially from these prepared remarks. Information contained in these remarks was current only as of the date of the conference call and may have subsequently changed materially. NIKE, Inc. does not update or delete outdated information contained in these prepared remarks and disclaims any obligation to do so.

continue to do as we navigate through these current supply chain issues. We focus on what we can control, while leveraging the many levers at our disposal. You will hear Matt walk through our mitigation efforts in a few minutes.

Today, we’re in a stronger position relative to our competition than we were prior to the pandemic. Why? Because the changes happening in the market work in our favor. Consumer shifts to Digital that might have taken five years will now take only two. That plays to Nike’s advantage.

And our Consumer Direct Acceleration strategy is capitalizing on this marketplace transformation. We know that when we get to the other side of this, we’ll be in even better shape. We’ll be more agile … more direct … more Digital.

So, we remain focused and confident in our long-term business outlook. Our competitive advantages including our innovative product, brand strength fueled by compelling storytelling, our roster of the world’s best athletes, and increasingly our industry-leading digital experiences at retail will continue to create separation. As we drive strong, sustained consumer demand, our confidence remains undiminished.

We’ve just wrapped up an incredible summer of sport, highlighted of course by the Olympics and Paralympics. Moments like these are exciting for our company because sport energizes our roughly 75,000 employees around the world. You can just feel it. And it’s through that passion for sport that we connect to the consumer.

This summer in Tokyo, our leadership as the world’s most innovative sports brand was demonstrated once again. If Nike were a country, we would have eclipsed the competition, capturing 226 medals, including 85 golds.

Here’s a few examples of what excited us most this summer:

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The following material represents prepared remarks for NIKE, Inc.’s earning conference call and is not an official transcript. These remarks are provided only for reference purposes until an official transcript is made available. These prepared remarks do not reflect questions asked by p articipants in the conference call or responses from NIKE, Inc. management, and information presented by NIKE, Inc. during the conference call may differ materially from these prepared remarks. Information contained in these remarks was current only as of the date of the conference call and may have subsequently changed materially. NIKE, Inc. does not update or delete outdated information contained in these prepared remarks and disclaims any obligation to do so.

  • We saw the emergence of Gen Z as a powerful next generation of athletes, led by a pair of 13-year-old skateboarders who showed us the joy in the expansion of the definition of sport.
  • We shined in key team sports, including Football, where Nike teams took home gold in both Men’s and Women’s, and Basketball, where Nike and Jordan teams combined to take 5 of the 6 medals including both golds.
  • And we continued our great legacy in Track & Field, with Nike athletes winning more individual medals in Track & Field events than all other brands combined.

At the same time, the European Championships brought incredible energy to football in Q1, with England making it to the Final. Our brand anthem “The Land of New Football” brought a fresh approach to the sport, representing Nike’s vision that in this game everyone is welcome. The film saw more than 800 million impressions across all channels, as more than half of EMEA’s Gen Z population viewed it at least once.

This summer of sport also saw Giannis and the Milwaukee Bucks win the NBA title after an electrifying Finals against Chris Paul, Devin Booker and the Phoenix Suns. Days later we released Giannis’ latest signature shoe, the Zoom Freak 3, which is built to support the dominant physicality that defines his style of play. We continue to see strong consumer response to the Zoom Freak, and we’re excited by what we’re seeing with our growing Giannis business.

Speaking of Devin Booker, Q1 was a great reminder of how we’re investing in the next generation of superstars as we continue to build our roster of athletes. Jordan Brand signed the NFL’s Dak Prescott in the quarter, joining emerging global icons in the NIKE, Inc. family like U.S. Open winner Emma Raducanu and Manchester United’s Jaden Sancho.

At the end of the quarter, the summer of sport gave way to back-to-school season. So far this season, we’ve seen sell-through in our Kids business up almost 30%, led by Digital with growth

of almost 70%. As we focus on the Kids opportunity in our new consumer construct, we are

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The following material represents prepared remarks for NIKE, Inc.’s earning conference call and is not an official transcript. These remarks are provided only for reference purposes until an official transcript is made available. These prepared remarks do not reflect questions asked by p articipants in the conference call or responses from NIKE, Inc. management, and information presented by NIKE, Inc. during the conference call may differ materially from these prepared remarks. Information contained in these remarks was current only as of the date of the conference call and may have subsequently changed materially. NIKE, Inc. does not update or delete outdated information contained in these prepared remarks and disclaims any obligation to do so.

connecting with families more authentically than ever before.

We’re creating Kids-specific designs and leveraging new channels for us to connect with these consumers. Take for instance Playlist, which is a just-for-kid’s series on Nike.com and YouTube. It’s filled with games, challenges and exclusive athlete content, all aligned to our mission of encouraging movement and play. Its latest season began a few months back with a new video starring LeBron James and some of his co-stars from their movie, Space Jam: A New Legacy. Playlist has been a hit with kids and parents alike with viewership numbers above our expectations.

The Kids business remains an important connection point for us, an organic incubator of the brand across multiple generations as we look long-term. We are the largest Kids athletic footwear brand in the world, but we know there’s still so much potential ahead.

As we’ve said before, at Nike, everything starts with innovation. Our culture of innovation is our most profound competitive advantage. And this week, I toured our new LeBron James Innovation Center here at our World Headquarters with LeBron. At over 750,000 square feet, this new home for our innovation teams is five times the size of our previous lab and continued proof of Nike’s leadership in sport science. We expect this facility to act as an accelerant, as it helps extend our advantage in innovation even further.

Looking at our innovation agenda, there are two areas I’d like to touch on where our relentless pipeline of innovative product continues to create separation between us and our competition: Apparel and Sustainability.

First, apparel. We’re seeing strong, over-indexing growth of 16% in this key growth driver. And the investments we’re making in our new consumer construct are fueling higher Apparel growth for Women’s, led by our yoga business. Our yoga collection today features multiple industry – leading innovations including Dri-FIT and Infinalon. These innovations are resonating with

consumers and have helped us nearly quadruple our yoga business over the past two years.

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Nike Inc. published this content on 23 September 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 September 2021 23:11:08 UTC.

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