The company announced its 2021 quarterly report (2020.6.1-2020.8.31).NikeQ1 achieved total revenue of US$10.6 billion, a year-on-year decrease of 0.6%, and realized net profit of US$1,518 billion, an increase of 11.1% year-on-year. The company's gross profit margin for the period was 44.8%, down 0.9 pct from the previous year. The decline in gross margin was mainly due to promotions brought about by excess inventory, but was offset by an increase in the share of full-price products and the cancellation of reserves (20Q4) for partial cancellation of purchase orders. The period fee rate was 28.1%, down 0.03 pct year on year; net profit margin was 14.3%, up 1.51 pct year on year. At the end of the first quarter, Nike had $9 billion in cash or short-term investments.
The number of Nike inventory turnover days in the first quarter was 108.1 days, an increase of 15.85 days over year, mainly due to a 14.9% year-on-year increase in inventory at the end of the quarter. The number of receivable turnover days was 41.51 days, an increase of 0.33 days over the same period last year, which is basically the same as the same period last year.
Look at it by brand. Nike's main brand 21Q1 achieved revenue of 10 billion US dollars, which was basically the same as the previous year. It was mainly due to the double-digit growth in e-commerce revenue and the sharp increase in the Jordan series, but the wholesale business declined. The Converse brand achieved revenue of US$563 million, an increase of about 2% over the previous year, mainly due to strong demand for Converse brands in Europe and high growth in e-commerce revenue for the global Converse brand.
Watch it by channel. Nike Group's Q1 direct revenue increased 13% year on year. This was mainly due to the 83% year-on-year increase in e-commerce revenue. E-commerce accounted for more than 30% of total revenue, an increase of 10 pct over the previous year. The number of active members of the company in Q1 increased by nearly 60% year over year.
Look at it by region. (1) Greater China region: Q1 Nike Greater China achieved revenue of 1.78 billion US dollars, an increase of 6.0% over the previous year, accounting for 16.8% of the Group's revenue, becoming one of the main drivers of the Group's growth. This is mainly due to the fact that epidemic prevention and control is in place in China, e-commerce continues to grow at a high rate, and physical stores are recovering rapidly. Nike's direct revenue increased by more than 20% year on year; among them, e-commerce increased by nearly 30% year on year, and offline sales increased 10% + year on year. Greater China remains the leader in global market growth. The share of full-price product sales across all channels has increased, and the flow of people in offline stores is close to last year's level. (2) North America: Q1 North America's revenue was US$4.23 billion, down 1.6% year on year, accounting for 39.9% of the Group's revenue. Among them, e-commerce increased by nearly 100% year on year. (3) Pan-Europe: Q1 Pan-Europe achieved revenue of US$2.91 billion, a year-on-year increase of 4.9%, accounting for 27.5% of the Group's revenue. Among them, e-commerce increased by more than 100% year on year. (4) Asia Pacific and Latin America:
In Q1, Asia Pacific and Latin America achieved revenue of US$1.1 billion, a year-on-year decrease of 18.2%, accounting for 10.37% of the Group's revenue. Among them, e-commerce increased by more than 90% year on year.
Performance outlook. (1) Revenue: Management expects revenue for FY21 H1 (June-November 2020) to be the same year over year, while revenue for the full year of FY2021 is expected to grow by high single digits to low double digits year over year. (2) Gross profit margin: Management expects full-year gross margin to remain the same year over year and Q2 gross margin to return to normal, but factory stores will continue to carry out promotional activities to maintain customer conversion rates during periods of low traffic. The increase in the share of H2 full-price products is expected to drive improvements in gross margin. (3) E-commerce: In normal times, the gross margin of e-commerce business is usually about 10 pct higher than that of wholesale. In the future, the company will continue to increase the share of e-commerce business through predictive modeling tools, personalized management, inventory installment, etc., which is expected to drive continuous improvement in profit margins.
Risk warning: Inventory pressure continues; cash flow continues to be under pressure; terminal sales fall short of expectations.