Good afternoon, everyone. Welcome to NIKE, Inc.’s Fiscal 2021 Fourth Quarter Conference Call. For those who want to reference today’s press release, you will find it at http://investors.nike.com. Leading today’s call is Andy Muir, VP, Investor Relations. Before I turn the call over to Ms. Muir, 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 on 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 reference 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 Andy Muir, VP, Investor Relations.

Thank you, operator. Hello, everyone and thank you for joining us today to discuss NIKE, Inc.’s fiscal 2021 fourth quarter results. 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.’s 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 if possible in our allotted time. So we would appreciate you limiting your initial questions to one. In the event, you have additional questions that are not covered by others, please feel free to re-queue and we will do our best to come back to you Thanks for your cooperation on this. I will now turn the call over to NIKE, Inc.’s President and CEO, John Donahoe.

Thanks Andy, and hello to everyone on today’s call. Looking at Q4 and the full fiscal year we just concluded, our strong business results proved yet again NIKE’s unique competitive advantage. Our relentless focus on our objectives is clear and our strategy is working. We are excited by the momentum we continue to see. In Q4, we saw growth of over 95%, which translates to 19% growth for the fiscal year. This full-year growth was led by our own digital business, which has now more than doubled versus fiscal ‘19 prior to the pandemic. I’ve said before that these are times when strong brands can get stronger. And each quarter, this reality becomes even more clear. Today, we are better positioned to drive sustainable long-term growth than we were before the pandemic. Our team has proven their ability to be unrelenting and executing against the macro complexities while also building the future. We saw broad-based growth this quarter led by North America at over 140%. Greater China’s currency-neutral growth of 9% was impacted amidst marketplace dynamics with improving trends as we exited the quarter. One of NIKE’s strengths is our diverse global portfolio. And through the power of that portfolio, we once again over delivered on our expectations for the quarter. As we look ahead to fiscal ‘22, the opportunity ahead of us is significant. We remain very confident in our long-term strategy and our growth outlook. The structural tailwinds we’ve discussed before, including the return to sport and permanent shifts in consumer behavior toward digital and health and wellness continue to create energy for us. And we remain focused on our largest growth drivers, including our women’s business, apparel, Jordan, and international. NIKE sets the pace through a continuous flow of new innovation, the world’s greatest roster of athletes…

Thank you, John, and hello to everyone on the call today. Before I begin my prepared remarks, I too want to take a moment to thank our incredible team. They have delivered extraordinary results over the past year. I also want to take a moment and recognize Andy Muir. This will be her last earnings call as Vice President of Investor Relations after recently becoming CFO of our Jordan Brand. Thank you, Andy, for your leadership and specifically for your support in my transition to CFO last year. I wish you the best of luck in your new role. I know you’ll do great. And backfilling Andy in this role is Paul Trussell, who many of you already know. Paul joins us from Deutsche Bank, and we’re excited to welcome him to the NIKE team. Now I’d like to begin today’s call with a baseline on where we are in our recovery. Just as we anticipated, NIKE is emerging from the pandemic stronger and better positioned to serve the consumer. And the reason for this is clear, NIKE’s Consumer Direct Acceleration is fueling a deeper consumer connection with our brands and driving business results, all while highlighting greater strategic and financial opportunity ahead. Over the past 15 months, we have navigated through this challenging environment with outstanding execution of our operational playbook. We have faced every challenge head-on, focused on what we could control, all while keeping the consumer at the center. These actions have helped set a strong foundation for sustainable growth and profitability, with business performance now exceeding pre-pandemic levels. In the fourth quarter, we delivered over $12 billion of reported revenue, our largest quarter ever. Our NIKE Direct business is now approaching 40% of total NIKE Brand revenue. NIKE Digital represents 21% of total NIKE Brand revenue,…

Your first question comes from the line of Bob Drbul with Guggenheim Securities.

Yes. Good afternoon, and Paul Trussell, congratulations. And Andy, best of luck, and thanks for all the information today. I guess the first question that I have, can you spend a little more time on China? Exactly – I mean you gave us a lot of detail around how it’s progressing. I guess I would be curious just to hear, when you think about the inventories and you think about how you are planning the next few quarters from a flow perspective, if you could give us a little more color just how you would plan China on the revenues, I guess either quarterly or just for the year based on the trends? Thanks.

Sure, Bob. And hello, and thanks for the question. As we think about the dynamics that we are managing through in China right now, we are optimistic as we continue to see improvement sequentially each month. As we think about fiscal ‘22 and the guidance we provided, we are planning for continued recovery throughout fiscal year ‘22, but we don’t expect it to be linear. And what I would say is, longer term, we are optimistic given our history of operating in China and our connections and relationship with consumers that over the long term we will be able to deliver low-to-mid teens growth.

Great. And I just have a question sort of – I guess it will be a North American question as a follow-up. But with LeBron out and KD out, you still have Giannis, and I just wondered if you think this is his year and you think he can bring the trophy home.

Well, we certainly hope so. If not LeBron, Devin Booker and if not Devin Booker, Paul George or many of the other NIKE athletes, and what’s been one of the – just one of the great NBA Playoffs, I know we have all enjoyed the game. It’s so great the sport is back. It’s so great that the stands are full. So, the excitement that we feel with the entire NBA and frankly, all the great sport going on right now is palpable.

Great. Thank you very much.

Thanks Bob.

Your next question comes from the line of Kimberly Greenberger with Morgan Stanley.

Great. Thanks so much, and thanks so much for the outlook here through 2025. There is a noticeable sort of inflection in the business that you are calling for here, and I can just hear the enthusiasm. So, I wanted to just ask about what are the sort of key underpinnings that’s giving you confidence in the acceleration in the growth rate. And where do you see basically the support for this level of acceleration? What’s driving that?

Sure, Kimberly. Well, as we have talked about throughout this year, we have continued to see the way that we have gotten closer to the consumer creating deeper connections, and as we look at how our brand is positioned around the world, we continue to be very optimistic with what we see. That’s translated into very strong retail sales growth throughout the year. And in many circumstances, we have seen demand outstripping supply. As we think about the future, especially as we exit ‘21 and we move forward to ‘22, there are definitely specific things that give us optimism and confidence. John just mentioned one of them, which is the return to sport, and we are already starting to see an acceleration in our sport performance business. We are excited about the connections that we are driving from a digital perspective, especially as physical retail reopens. We believe that is a sticky shift that will continue, and that’s embedded in our guidance for ‘22 and also the longer-term outlook that I provided for you. And that shift of – a 20-point mix shift in direct is definitely an inflection from a revenue – it creates an inflection from a revenue perspective. And then lastly, I would say that we continue to talk about the significant opportunities that we see more broadly in the marketplace. And while we have had momentum, and we continue to see those dimensions of business outstrip the growth of the rest of the business, the opportunity is still significant relative to our share in those specific areas. And so, what I am referring to there is our women’s business and the opportunity we see in front of us, the apparel business and the opportunities that we see there, and then the momentum that we have with the Jordan Brand, in particular, and the opportunities that we see for that brand both in North America, but in international markets as well.

Very clear and so exciting. Thank you.

Your next question comes from the line of Matthew Boss with JPMorgan.

Great. Thanks. Congrats on a really nice quarter and a really great hire. So John, maybe on the digital transformation, could you help outline what you think most differentiates your digital strategy to continue to build the marketplace leadership? And Matt, maybe with that, could you just help walk through the profitability of the digital channel as it relates to the algorithm that you outlined and maybe which line items it’s most impacting?

Well, sure, Matthew. The first thing, never look a wonderful tailwind in the eye or look away from one. So, we have got a – there is a fundamental shift in consumer behavior toward digital. And that’s been happening, but the pandemic has simply accelerated that. And that provides the opportunity for us to have a direct connection with consumers, which is increasingly important in a digital world where consumers, while they are going more digital are focusing on fewer and fewer apps. And we are going to be one of the very few apps that have a direct connection with consumers, and that’s unlocking great growth. That’s unlocking growth in our ability to serve them with more personalized shopping experiences, with recommendations across our vast product portfolio with services and other ways to engage them like NIKE Run Club, NIKE Training Club. So, we think we are one of the very few in our industry that will be able to establish that direct connection with consumers both around commerce, but also engage them on a weekly, monthly, quarterly basis. And then that produces great consumer insight, and that consumer insight has a bit of a virtuous cycle. The more you have of it, the more you can use it. You can use that consumer insight as I said earlier on, personalizing a recommendation or anticipating a need on replenishing a product when you know they are going to need it. It also drives efficiency in our operations, right. We talk about building a digital supply chain. What that’s all about is having the intelligence to know, having the right product in the right place at the right time, so that we can deliver that product at a low-cost, convenient, and speedy and a climate-friendly way. And last, but not least, that insight – consumer insight helps fuel product creation. I mean the more we know about our consumers, the more we can build the kind of compelling product that they want and need. And so, we feel like – as Matt said, there is a virtuous cycle by embracing our digital transformation as aggressive as we are. We think we can create competitive separation. And so – and we still – we think it’s going to be a journey that has continuous improvement and continuous ROI and benefits along the way.

Yes. And I would just add that the NIKE App or our app ecosystem continues to have a significant impact, and we are continuing to invest in the consumer experience in order to take advantage of the consumers’ interest and appetite in engaging with our brand in that way. The app actually represents about 40% of our digital business at this point in time, and we are planning to launch the NIKE App in 10 more countries in fiscal year ‘22. As I think about the financial model, Matt as you asked, I sort of answered in my question to Kimberly, which is this shift to digital and that direct sale to the consumer is definitely causing us confidence to inflect our revenue outlook upwards as a first point. The second point I would say is that as we have continued to see over the past several quarters and really, if you sort of look through the pandemic, it’s really over the last 3 years as we have been seeing more and more business being done through direct and digital. We have been talking about how that shift in mix has enabled us to drive and increase our gross margin expansion versus historical levels of gross margin expansion. And so that’s what’s embedded in that high-40s guidance outlook. It’s continuing to shift to more direct business. And then within that direct business, we continue to see opportunities like I referenced, leveraging data and analytical capabilities, so digital transformation-type capabilities to know where to place our inventory, how to fulfill demand closer to the consumer, whether it’s through our stores or through our regional service centers, how to think about pricing based on the way inventory is flowing and then continued demand and supply management. And then I guess the last thing I would say is that the way that we framed our SG&A guidance is that we feel confident that as we look at the transformation that’s taking place in our business over the next 4 years that at that level of SG&A investment, which is better than where we were in the pandemic, we can fund the investments that we need to fuel this growth and sustain the opportunity that we have in front of us.

Congrats on the momentum and the new multiyear model.

Thanks.

Your next question comes from the line of Erinn Murphy with Piper Sandler.

Great. Thanks. Good afternoon. I guess a follow-up question for the team on the China marketplace. Bigger picture, just with the accelerating growth of late and some of the national athletic brands, can you just share how you are thinking about NIKE’s market share potential as you work through the 2025 plan within China specifically? And then secondly, if I could just ask on the women’s business, it hit over $8.5 billion in this fiscal year. Could you just share kind of what your expectation is in the plan by 2025 and just the role you see some of the smaller footprint stores and the suite of apps you have developed playing in the progression there? Thank you so much.

Sure. Matt, why don’t I take the first part and then maybe you take the second part of Erinn’s question?

Sure.

So Erinn, bottom line, we are confident about what we are seeing in China as we drive long-term growth. And we have a long-term view about China. And we have always taken a long-term view. We have been in China for over 40 years. Phil invested significant time and energy in China in the early days. And today, we are the largest sport brand there, and we are a brand of China and for China. And the biggest asset we have in China is the consumer equity. Consumers feel a strong, deep connection to the NIKE, Jordan and Converse brands in China. And it’s real. I saw that in my first week here, can’t wait to get back there. And it’s strong. And that’s brought to life on streets all over China through the over 7,000 mono-brand stores we have in China. So, we have a strong consumer franchise in China, and they feel very connected to our brand. And so we are going to continue to invest. We will continue our long-term investment in China whether it’s through the Express Lane, which allows us to have local product insights, so design and deliver with speed and agility or we are localizing our tech stack. Matt mentioned we are opening a new digital technology center in Shenzhen. And we are going to invest for the long-term, and we are encouraged by the momentum and we have confidence in the future. It’s interesting. We have been the #1 sports brand in Tmall for a decade, and we are still #1 today once we open back up on it. Over the last month, we have added 1 million new members on Tmall through the 6/18 shopping holiday. And so we are focusing on what we can control. We are confident of our momentum and our position. And we will – as Matt outlined, we feel confident about our long-term growth in China.

Yes. And I will just jump in, Erinn, on women’s. We – this might sound interesting, but we are the largest women’s athletic brand in the world today at $8.5 billion. And we are very bullish on the opportunity for women’s. We have been talking about it for several years. And it starts by what John said on the call, which is that the main purpose of our realigning our organizational structure was to try to amplify the investment at multiples of where we were previously investing against our women’s business. And those investments are end-to-end, from specific innovation and the way we invest in innovation to the way we are investing in product creation, to the way that we are now investing in the marketplace through our NIKE Live concepts. And our NIKE Live stores are almost 50% women’s sales, which are more than 15 points ahead of our other stores in terms of women’s proportion of the revenue. And so it’s definitely embedded and underlying our revenue outlook. And I would tell you that we expect to see women’s outpace other elements of our business as we invest and drive against the long-term opportunity.

Great. That’s super helpful, and congratulations to all.

Our next question comes from the line of Omar Saad with Evercore.

Thanks for taking my question. Great quarter. Congrats to everyone. High-teens operating margin target really is a huge breakout from historical trend and a lot of the long-term guidance that you guys have given over the years. Clearly, technology and NIKE’s digital excellence is really the root of this kind of transformation we have all been talking about. I would love to hear – I saw that Converse continues to improve. I would love to hear you talk about how you are using that digital advantage and applying it at Converse. Is Converse starting to generate some of the benefits of these incredible technologies that you have developed under the Jordan and NIKE halo? I would love to hear more on those lines. Thanks.

Well, the short answer, Omar, is yes. I mean we are blessed with this wonderful portfolio of brands; Nike, Jordan and Converse. And they are additive. That’s what’s so striking is, while there is some consumer overlap, the role that each plays is additive in the eyes of the consumer. And so Scott and the Converse team are doing a great job of connecting with a distinct consumer and expanding – it’s much like the Jordan playbook – expanding beyond just historical icons like the Chuck and bringing new design, new dimension to the product there. In fact, it’s the fastest-growing part of their portfolio. We just had an operating review a couple of weeks ago and was really striking to see how they are extending that brand into both performance product into new ways to leverage that Converse brand and the product line as well as getting into apparel and going global. And so their digital capabilities are growing to have their own, as you know, in addition to being able to get to them on the NIKE website, and get to them on their own website. And their digital business is growing at very comparable levels as NIKEs are and Jordans are around the world. And so we see a lot of upside in the Converse opportunity and the Converse brand.

Yes. And we think that digital is going to play a really important role for Converse as they reshape the composition of their own marketplace. And so that’s what’s been driving growth for the last couple of quarters or for the last eight quarters, and it’s continued to help us as they create that direct connection with consumers as well.

Got it. Thanks.

Operator we have time for one more question.

Thank you. Your last question comes from the line of Adrienne Yih with Barclays.

Good afternoon. Thank you very much. Congratulations on the quarter and congratulations to Andy and Paul. My question is, Matt, on the $50 billion or greater than $50 billion for the out-year for fiscal ‘22, what is the expectation for China in that number? And I guess more specifically, in what quarter can we – or half of the year perhaps – can we expect to see China return to perhaps pre-pandemic trend rate? And which channel is going to be the most predictive: wholesale or direct/digital? Thank you very much.

Well, Adrienne, the – our FY ‘22 guidance reflects the optimism and the momentum that we are seeing across our full portfolio, brands and different geographies. As I mentioned on China, we are optimistic and encouraged based on the sequential improvements that we are seeing, so our business was impacted in April. It was down single digits in May, but improving, and approaching prior year levels in these first 3 weeks of June. Obviously, the 6/18 consumer moment gives us optimism as we continue this recovery. And we are planning for recovery throughout fiscal year ‘22, but we don’t expect it to be linear.

Okay. Thank you very much.

Thank you, Adrienne. Thanks, everyone, for joining us today. We look forward to speaking to you next quarter. Take care and stay safe.

Ladies and gentlemen, this concludes today’s conference call. We thank you for your participation. You may now disconnect.