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NIKE creates value through our relentless drive to serve the future of sport and as we saw again in Q1, our strategy is working with business results that reflect our deep connection to consumers around the world.
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 evident 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 priorities.
As has been the case since the start of pandemic, I'm proud of the way our entire NIKE team has delivered through macro volatility.
Over the past 18 months, we've demonstrated our ability to manage through turbulence to emerge even stronger and better positioned.
And that's what we'll continue to do as we navigate through these current supply chain issues.
We'll focus on what we can control, while leveraging the many levers.
You'll 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.
Because the changes happening in the market work in our favor.
Consumers shift to digital that might have taken five years, will now only take 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 stronger shape.
We'll be more agile, more direct and 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.
And 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 continue to innovate and connect to the consumer.
In 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 are a few examples of what excited us most this summer.
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 signed 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 five of the six medals, including both golds.
And we continued our great legacy in track and field with NIKE athletes winning more individual medals in track and field events than all other brands combined.
And at the same time, the European championships brought incredible energy to football in Q1 with England making it to the final.
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.
And the summer sport also saw Giannis in the Milwaukee Bucks win the NBA title after an electrifying finals against Chris Paul, Devin Booker in 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 response to the Zoom Freak and we're excited by what we're seeing with our growing Giannis business.
And speaking it 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 NIKE Inc's family, including U.S. Open winner Emma Raducanu and Manchester United's Jadon Sancho.
At the end of the quarter, the summer sport gave way to back-to-school season.
So far this fall, 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, our new consumer construct through that we are connecting with families more authentically than ever before.
We're creating kid-specific designs and leveraging new channel for us to connect with these consumers.
Take, for example, Playlist, which is a just for kid series on nike.com and YouTube.
It's filled with games, challenges and exclusive athlete content, all aligned to our mission of encouraging movement in 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 well above our expectations.
And our kids business remains an important connection point for us, an organic incubator of the brand across multiple generations as we look long term.
We're the largest kids' athletic footwear brand in the world, but we know that there is still so much potential ahead.
And as I've said before, at NIKE, everything starts with innovation.
Our culture of innovation is our most profound competitive advantage.
In 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 is continued proof of NIKE's leadership in sports science.
We expect this facility to act as an accelerant as it helps extend our advantage in innovation even further.
And looking at our innovation agenda, the two areas that I'd like to touch on today where our relentless pipeline of innovative product continues to create separation between us and our competition, apparel and sustainability.
First, let's take a look at 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 parallel growth for women, 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.
Another key apparel story for us in Q1 was our bras business.
This quarter, we maintained our number one market share in sports bras in North America and introduced the NIKE Dri-FIT ADV Swoosh bra.
Dri-FIT ADV combines the ultimate in cooling fabrics with highly engineered methods to make.
it's an innovation that's connected with consumers as we scale this technology across our line.
And now to take a look at sustainability, look at what we've done with Space Hippie.
Space Hippie as you may recall is quite literally made from trash and it was originally introduced at our 2020 Future Forum and debuted four separate sustainable material innovations for us including crater foam and space waste yarn.
Now since then we have strategically grown this franchise to global scale and what's more, we've also scaled these individual material innovations across our entire portfolio.
So today, one year after that initial launch, there are more than 43 styles using Space Hippie innovations across four sports, three brands and our full consumer construct.
For instance, you could see it come to life and iconic franchises such as the Air Force 1 Crater.
New performance innovation platforms like Cosmic Unity and even in our hands-free accessibility line with styles like Glide FlyEase.
By driving new dimensions across platforms, our work to scale Space Hippies innovations catalyze growth.
Consumers are clearly responding to sustainability as we're seeing very strong full price sell-through for this family of product, with vast opportunity to drive continued consumer and business value still ahead.
And this is just one example of how we lead with platforms and not just products.
Our deliberate franchise and innovation management create scalable and sustainable impacts on our business and I'm excited by the upcoming new innovation platforms we'll be introducing soon.
Next, let's discuss NIKE's increasing digital advantage.
We continue to lead the industry by creating a premium consistent and seamless experience that deepens relationships between consumers and our brand.
Our advantage comes to life at retail in both digital as well as at the intersection of digital and physical.
I'll discuss both here.
Even as physical retail revenue approach pre-pandemic levels, our digital business this quarter grew double-digits.
This is the result of an unwavering focus on our strategy and the investments we've made against our end-to-end digital transformation.
And so we continue to expect digital to be our leading channel for growth in fiscal '22.
Now one of the best agents for success in our digital business is how strongly we're connecting with members.
Our digital growth is led by outsized member buying, which has seen a penetration increase of 14 points since last year.
Our membership strategy is working as we increasingly use data and analytics to personalize member product offering and experiences.
And we're seeing this come to life as repeat buying members grew more than 70% in the quarter.
Now part of our success stems from our constant focus on expanding what it means to be a NIKE member.
We brought this to life in Q1 by introducing a new launch experience, exclusive to the SNKRS app that revolutionizes how we serve consumers.
The new experience debuted in one of the year's most highly anticipated launches the Off-White Dunk.
For the launch last month, we rolled out our new elevated SNKRS exclusive access.
This approach sends personalized purchase offers to members based on their engagement with SNKRS past purchase attempts and other criteria using data science to drive digital member targeting.
for example, 90% of the invitees for the Off-White Dunk went to members who have lost out on a prior Off-White collaboration over the past two years.
The result the Off-White Dunk end up in the hands of hundreds of thousands of our most deserving members creating what we call exclusivity at scale.
And this improved consumer experience has a positive impact on the entire business.
We've seen that those who benefit from exclusive access on SNKRS spend more across NIKE, fueled by the energy of their win.
So our increasingly personalized approach to launch, along with benefits like member days an exclusive NIKE By You access highlights how we continue to increase the value proposition of NIKE membership.
We're also leveraging our digital advantage by investing in our brick-and-mortar fleet to create a compelling retail footprint that super charges how we serve consumers across physical and digital.
A couple of weeks ago, I was in Los Angeles and toward some of our great retail there.
I got to see a wide variety of stores including our NIKE Live door in Long Beach, a community door in East LA and more.
And across each and every store what jumped out to me was our team.
Their love for their community and their passion for our product and bringing it to life for consumers was inspiring and just awesome to see.
I also enjoyed visiting a few strategic partner doors,including DICK's and Foot Locker.
What's clear across the marketplace, both owned and partnered is how online to offline is becoming second nature.
We know that higher level of the connectivity across physical and digital are driving better consumer experience and loyalty.
Other services such as buy-online-pick-up-in-store and ship-from-store, as well as the in-store shopping features of the NIKE app drive our premium and seamless consumer experience.
And we're starting to extend these innovative experiences globally.
In Q1, we brought our NIKE Rise, an immersive concept to Seoul.
NIKE Seoul introduces new features to Rise rather including inside track and interactive RFID enabled digital footwear table where shoppers can compare details for any two shoes simply by placing them on the table.
Our digitally connected retail experiences are clearly resonating with consumers.
This quarter our inline fleet grew over 70% in revenue approaching pre-pandemic levels.
We're seeing over index growth from members, not just in digital, but also in physical retail with member buying penetration up double digits since last year.
And so, we'll continue expanding these compelling experiences across our fleet in fiscal '22, driving that interplay between physical and digital retail.
In the end, NIKE is doing what we always do, staying on the offense.
The strength of our consumer demand around the world continues to give us confidence in our playbook and execution.
I said it earlier and I'll say it again, I am proud of our resilient and creative team across NIKE, Jordan and Converse and the work we continue to deliver for consumers.
Our confidence as we look long term has not changed one bit.
We've already gotten stronger through this pandemic and we're going to emerge from it even stronger yet.
NIKE's acceleration to a more direct member-centric business model continues to fuel deep connections between consumers and our portfolio of brands, drawing upon our culture of innovation, unmatched global scale and our industry-leading digital platform, we continue to serve the modern consumer as only NIKE can.
Our first quarter results proved again that our strategy is working and NIKE's Consumer Direct Acceleration is fueling the transformation of our long-term financial model.
Our relentless focus on serving the consumer translated into revenue growth of 16% and EBIT growth of 22% versus the prior year.
The NIKE brand remains distinctive and deeply connected in our key cities around the world from New York to Paris, Shanghai to Tokyo, NIKE continues to be consumers number one cool and favorite brand with a position that has gained strength as we've navigated through the pandemic.
Consumer demand for NIKE, Jordan and Converse remains incredibly high and our first quarter financial results would have been even stronger if not for supply chain congestion resulting in lack of available supply.
Despite these headwinds, retail sales still grew double digits versus the prior year, including a record-setting back-to-school season in North America.
Sneakers has increasingly become an indicator and barometer of brand heat, now being operational at scale in 50 countries around the world.
NIKE Digital is now 21% of total NIKE brand revenue, which is an increase of 2 points versus last year, with strong double-digit growth versus the prior year even with broad reopening of physical retail.
Digital is increasingly becoming a part of everyone's shopping journey and we are well positioned to reach our vision of a 40% owned digital business by fiscal '25.
And coming back to marketplace health for a moment, we delivered strong growth in average selling price this quarter with continued improvement in full price realization.
This performance reflects our intentional efforts to manage the health of our product franchises as demand surges to move available inventory to serve demand in the right channels and to drive a more premium experience for consumers.
This quarter, we exceeded our 65% full price sales realization goal, which reflects the expectations that we put forward at our last Investor Day.
As we accelerate our consumer led digital transformation, we are developing and refining new capabilities that are transforming our operating model, quickly becoming a competitive advantage for NIKE.
Central to these capabilities is scaling our digital first supply chain to enable NIKE's digital growth while optimizing service, cost, convenience and sustainability.
We are evolving our distribution network and forward deploying inventory closer to the consumer, leveraging data and advanced analytics.
These actions will improve service levels, reduce carbon impact and ultimately reduce cost to fulfill an order.
Our regional service center outside of Los Angeles opened one year ago and we're excited with the opening of two more centers in Q1, pne on the East Coast and one in Spain.
Our investments in Odoo services are putting our products in the path of more consumers and more efficiently optimizing our inventory.
Today, we have at least two Odoo services in each of our NIKE owned stores in the U.S. and we are aggressively scaling these services across the globe.
Our Express Lane offense is also creating more and more agility across our portfolio from creating locally relevant product on shorter lead times to leveraging a shared inventory pool across the marketplace.
We are better conserving consumers with more operational flexibility, yielding higher profitability.
This quarter Express Lane grew roughly 20% versus the prior year and it increased its share of overall business.
And last, the NIKE App continues to enable a convergence between physical and digital shopping journeys, eliminating friction for consumers.
From member driven personalization and localization to building an endless aisle through digital integration with our most important wholesale partners, Consumer Direct Acceleration is transforming NIKE's operating model to move at the speed of the consumer.
Now, let me turn to the details of our first quarter financial results and operating segment performance.
NIKE Inc revenue grew 16% and 12% on a currency neutral basis with growth across all marketplace channels.
NIKE Digital grew 25% and NIKE owned stores grew 24%.
Wholesale grew 5% in the quarter, negatively impacted by lower available inventory supply due to worsening transit times.
Gross margin increased 170 basis points versus the prior year, driven primarily by higher NIKE Direct margins and partially offset by increased ocean freight surcharges.
SG&A grew 20% versus the prior year.
This was due to higher wage related expenses, higher levels of brand activity connected to return to sport and strategic technology investments.
Our effective tax rate for the quarter was 11% compared to 11.5% for the same period last year.
This was due to increased benefits from stock-based compensation and discrete items, offset by a shift in our earnings mix.
First quarter diluted earnings per share was $1.16, up 22% versus the prior year.
Now, let's move to our operating segments.
In North America, Q1 revenue grew 15% and EBIT grew 10%.
Demand for NIKE remained incredibly strong for the fifth consecutive season, energized this quarter by back-to-school and the return to sport.
Retail sales for our Performance business grew strong double digits during the fall season, led by running, fitness and basketball, powered by excitement from the Olympics, the new WNBA season and the NBA finals.
NIKE Direct grew more than 45% with NIKE Digital now representing 26% share of business.
Digital continued its momentum and grew more than 40%, increasing market share by outperforming industry trends with strong growth in traffic and repeat buying member activity.
The return to physical retail accelerated NIKE owned store growth of over 50% as we served members with elevated experiences.
NIKE owned inventory increased 12% versus the prior year.
This was driven by highly elevated in-transit inventory levels as transit times in North America deteriorated during the last quarter, now almost twice as long as pre-pandemic levels.
This impacted product availability across the marketplace and our ability to serve strong levels of consumer demand, particularly in the wholesale channels.
Closeout inventory was down double digits versus the prior year.
In EMEA, Q1 revenue grew 8% on a currency neutral basis and EBIT grew 26% on a reported basis.
This region was energized by the EURO this summer, where NIKE players scored more goals than all other brands combined and more than half of those goals were with our Mercurial boots.
We saw a strong consumer response to both the Mercurial boot and replica jerseys during the tournament.
NIKE Direct grew 10% on a currency neutral basis, led by our NIKE owned stores.
Following a full reopening, we saw traffic increase by double digits versus the prior year, with better than expected conversion rates.
In EMEA, while NIKE Digital grew 2% in the quarter, demand for full-priced products grew nearly 30% as we compared to higher liquidation levels in the prior year.
NIKE owned inventory declined 14% on a reported basis with closeout inventory down double-digits.
Transit times to EMEA have also deteriorated over the past 90 days, causing higher levels of in-transit inventory and negatively impacting product availability to serve strong consumer demand.
In Greater China, Q1 revenue grew 1% on a currency neutral basis, EBIT grew 2% on a reported basis as the team delivered in line with our own recovery expectations.
Retail sales were impacted in late July and August due to regional closures and lower levels of foot traffic due to COVID containment.
Prior to late July, physical traffic had been approaching prior year levels.
In July, we engaged with consumers through the launch of our joy of sports local marketing campaign.
This campaign generated over $1 billion local views, demonstrating strong brand connection with Chinese consumers.
NIKE Direct declined 3% on a currency neutral basis, partially impacted by retail closures.
NIKE Digital declined 6% as we compare to higher liquidation in the prior year, partially offset by double-digit improvement in full price sales mix.
We experienced a strong 6.18 consumer moment where we grew nearly 10% versus the prior year and remained the number one sports brand on Tmall.
Demand in our SNKRS app grew more than 130% for the quarter.
Our experienced local team continues to navigate through marketplace dynamics.
we finished the quarter with healthy marketplace weeks of supply and inventory normalization is on plan.
Now moving to APLA.
First quarter revenue grew 31% on a currency neutral basis and EBIT grew 72% on a reported basis.
Revenue growth was led by SOKO, Japan, Mexico and Korea with more muted growth in Pacific and Southeast Asia and India due to COVID restrictions and government-mandated store closures.
NIKE Digital grew more than 60% on a currency neutral basis, highlighted by the expansion of our NIKE app.
in June, the app went live in Mexico and six additional countries across Southeast Asia generating 3 million local downloads during the quarter.
Earlier on the call, John spoke about the new NIKE Rise retail experience in Seoul.
To mark the opening of the store, our Express Lane, SNKRS and NIKE Rise teams created the NIKE Seoul [Phonetic] Dunk.
This collaboration drove more than half of day 1 sales and highlights how digital and physical experiences are converging in our own stores, leveraging local insights and a more agile supply model.
Now, I will turn to our financial outlook.
Consumer demand for NIKE remains at an all time high and we are confident that our deep consumer connections and brand momentum will continue.
However, we are not immune to the global supply chain headwinds that are challenging the manufacturer and movement of product around the world.
Previously, I had shared that we were planning for transit times to remain elevated for the balance of fiscal '22.
Unfortunately, the situation deteriorated even further in the first quarter with North America and EMEA seeing increases in transit times due primarily to port and rail congestion and labor shortages.
Additionally, several of our factory partners in Vietnam and Indonesia were required to abruptly cease operations in the first quarter.
As of today, Indonesia is now fully operational, but in Vietnam nearly all footwear factories remain closed by government mandate.
Our experience with COVID related factory closures suggests that reopening and ramping back to full production scale will take time.
Therefore, we're revising our short-term financial outlook to incorporate the following factors: 10 weeks of production already lost in Vietnam since mid July.
Factory reopening to occur in phases beginning in October with a ramp to full production over several months and elevated transit times consistent with where we are now operating today.
We now expect fiscal '22 revenue to grow mid single digits versus the prior year versus our prior guidance of low double-digit growth due solely to the supply chain impacts that I just described.
Specifically for Q2, we expect revenue growth to be flat to down low-single digits versus the prior year as factory closures have impacted production and delivery times for the holiday and spring seasons.
Lost weeks of production combined with longer transit times will lead to short-term inventory shortages in the marketplace for the next few quarters.
We expect all geographies to be impacted by these factors.
However, those geographies in Asia with less in-transit inventory at the end of the first quarter will experience a disproportionate impact beginning in Q2.
For the balance of fiscal '22, we expect strong marketplace demand to exceed available supply.
We are optimistic inventory supply availability will improve heading into fiscal '23 against the backdrop of a very strong brand and healthy pull market across all geographies.
Turning to the rest of the P&L.
We still expect gross margin to expand 125 basis points versus the prior year, at the low end of our prior guidance, reflecting stronger than expected full price realization, the ongoing shift to our more profitable NIKE Direct business and price increases in the second half.
This more than offsets roughly 100 basis points of additional transportation, logistics and airfreight costs to move inventory in this dynamic environment.
We also expect a lower foreign exchange benefit now estimated to be a tailwind of roughly 60 basis points.
And for the second quarter, we expect gross margin to expand at a rate lower than the full year due to higher planned airfreight investment for the holiday season.
We expect SG&A to grow mid-to-high teens.
We intend to maintain our position as the number one cool and favorite brand and to celebrate the return to sport as we inspire and engage consumers around the world.
We will also maintain pace on our multi-year investment plans in order to transform our business for the future as I've outlined in prior quarters.
NIKE's financial strength is a competitive advantage and it is in moments like these where our competitive strengths and strong balance sheet affords us the ability to remain focused on what's required to win and serve consumers for the long term.
In closing, our vision for NIKE's long-term future remains unchanged.
NIKE is a growth company with unlimited potential.
Despite new short term operational dynamics, our consumer-direct acceleration offense is driving our business forward and transforming our financial model toward the long-term fiscal '25 financial outlook I shared last quarter.
This quarter's impressive results are additional proof that our strategy is right, not only for the moment we find ourselves in, but also for the opportunity to serve the future of athlete and sport like only NIKE can.
I wouldn't trade our position with anyone.
And there is no better team to navigate through volatility and lead long-term transformational change.

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nike q1 earnings per share $1.16.
q1 earnings per share $1.16.
qtrly gross margin increased 170 basis points to 46.5 percent.
qtrly revenues for nike, inc. increased 16 percent to $12.2 billion compared to prior year, up 12 percent on a currency-neutral basis.
qtrly revenues for nike brand were $11.6 billion, an increase of 12 percent to prior year on a currency-neutral basis.
saw growth across all channels, led by nike direct growth of 25 percent during quarter.
contributing to nike direct growth was steady normalization of owned physical retail, which grew 24 percent during quarter.
nike brand digital business continued strong growth, increasing by 25 percent, led by north america growth of 43 percent during quarter.

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