-
Revenues up 5 percent to $8.4 billion; 14 percent growth excluding
currency changes
-
Diluted earnings per share up 23 percent to $1.34
-
Worldwide futures orders up 9 percent; 17 percent growth excluding
currency changes
-
Inventories as of August 31, 2015 up 10 percent
BEAVERTON, Ore.--(BUSINESS WIRE)--
NIKE, Inc. (NYSE:NKE) today reported financial results for its first
quarter ended August 31, 2015. Diluted earnings per share increased 23%
due to broad-based revenue growth, gross margin expansion, selling and
administrative expense leverage, a lower effective tax rate and a lower
average share count.
“Fiscal 2016 is off to a great start,” said Mark Parker, President and
CEO of NIKE, Inc. “Our relentless pace of growth is driven by our proven
strategy of putting the consumer first, obsessing innovation in
everything we do and leveraging our powerful portfolio. We’re
well-positioned to continue to deliver long-term growth that is both
sustainable and profitable.”*
First Quarter Income Statement Review
-
Revenues for NIKE, Inc. increased 5 percent to
$8.4 billion, up 14 percent on a currency-neutral basis.
-
Revenues for the NIKE Brand were $7.9 billion, up 15 percent on a
currency-neutral basis driven by growth in every geography and
nearly every key category.
-
Revenues for Converse were $555 million, up 3 percent on a
currency-neutral basis, mainly driven by strong growth in the
United States, partially offset by a decline in the United Kingdom.
-
Gross margin expanded 90 basis points to 47.5 percent.
The increase was primarily attributable to higher average selling
prices and continued growth in the higher margin Direct to Consumer
(DTC) business, partially offset by higher product input and
warehousing costs.
-
Selling and administrative expense increased 4 percent
to $2.6 billion. Demand creation expense was $832 million, down 7
percent, reflecting favorable comparisons against higher investment in
support of the World Cup in the first quarter of fiscal 2015.
Operating overhead expense increased 10 percent to $1.7 billion,
reflecting continued growth in the DTC business and targeted
investments in infrastructure and consumer-focused digital
capabilities.
-
Other income, net was $31 million, comprised primarily
of net foreign currency exchange gains. For the quarter, the Company
estimates the year-over-year change in foreign currency-related gains
and losses included in other income, net, combined with the impact of
changes in exchange rates on the translation of foreign
currency-denominated profits, decreased pretax income by approximately
$151 million.
-
The effective tax rate was 18.4 percent, compared to 21.7
percent for the same period last year, primarily due to an increase in
the proportion of earnings from operations outside of the United
States, which are generally subject to a lower tax rate, as well as
certain non-recurring items recognized in the quarter.
-
Net income increased 23 percent to $1.2 billion while diluted
earnings per share increased 23 percent to $1.34, reflecting
strong revenue growth, gross margin expansion, selling and
administrative expense leverage, a lower tax rate and a decrease in
the weighted average diluted common shares outstanding.
August 31, 2015 Balance Sheet Review
-
Inventories for NIKE, Inc. were $4.4 billion, up 10
percent from August 31, 2014, driven primarily by an 8 percent
increase in NIKE Brand wholesale unit inventories. Increases in
average product cost per unit, as well as higher inventories
associated with growth in DTC, were largely offset by changes in
foreign currency rates.
-
Cash and short-term investments were $5.4 billion, $829
million higher than last year primarily as a result of growth in net
income and collateral received from counterparties as a result of
hedging activities more than offsetting share repurchases and higher
dividends.
Share Repurchases
During the first quarter, NIKE, Inc. repurchased a total of 5.5 million
shares for approximately $588 million as part of the four-year, $8.0
billion program approved by the Board of Directors in September 2012. As
of the end of the first quarter, a total of 86.4 million shares had been
repurchased under this program for approximately $6.5 billion, at an
average cost of $75.70 per share.
Futures Orders
As of the end of the quarter, worldwide futures orders for NIKE Brand
athletic footwear and apparel scheduled for delivery from September 2015
through January 2016 were 9 percent higher than orders reported for the
same period last year, and 17 percent higher on a currency-neutral
basis.*
Conference Call
NIKE, Inc. management will host a conference call beginning at
approximately 2:00 p.m. PT on September 24, 2015, to review fiscal first
quarter results. The conference call will be broadcast live over 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, October 1,
2015.
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. Wholly-owned NIKE, Inc. subsidiary brands include
Converse, which designs, distributes and licenses casual sneakers,
apparel and accessories; and Hurley, which designs and distributes a
line of action sports and youth lifestyle 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
and individuals can follow @Nike.
* 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 Securities and Exchange
Commission (SEC), including Forms 8-K, 10-Q, and 10-K. Some
forward-looking statements in this release concern changes in futures
orders that are not necessarily indicative of changes in total revenues
for subsequent periods due to the mix of futures and “at once” orders,
exchange rate fluctuations, order cancellations, discounts and returns,
which may vary significantly from quarter to quarter, and because a
portion of the business does not report futures orders.
|
NIKE, Inc.
|
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
%
|
(Dollars in millions, except per share data)
|
|
|
|
8/31/2015
|
|
|
8/31/2014
|
|
|
Change
|
Revenues
|
|
|
|
$
|
8,414
|
|
|
|
$
|
7,982
|
|
|
|
5%
|
Cost of sales
|
|
|
|
|
4,419
|
|
|
|
|
4,261
|
|
|
|
4%
|
Gross profit
|
|
|
|
|
3,995
|
|
|
|
|
3,721
|
|
|
|
7%
|
Gross margin
|
|
|
|
|
47.5
|
%
|
|
|
|
46.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand creation expense
|
|
|
|
|
832
|
|
|
|
|
897
|
|
|
|
-7%
|
Operating overhead expense
|
|
|
|
|
1,745
|
|
|
|
|
1,583
|
|
|
|
10%
|
Total selling and administrative expense
|
|
|
|
|
2,577
|
|
|
|
|
2,480
|
|
|
|
4%
|
% of revenue
|
|
|
|
|
30.6
|
%
|
|
|
|
31.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (income), net
|
|
|
|
|
4
|
|
|
|
|
9
|
|
|
|
-
|
Other (income) expense, net
|
|
|
|
|
(31
|
)
|
|
|
|
3
|
|
|
|
-
|
Income before income taxes
|
|
|
|
|
1,445
|
|
|
|
|
1,229
|
|
|
|
18%
|
Income tax expense
|
|
|
|
|
266
|
|
|
|
|
267
|
|
|
|
0%
|
Effective tax rate
|
|
|
|
|
18.4
|
%
|
|
|
|
21.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
|
$
|
1,179
|
|
|
|
$
|
962
|
|
|
|
23%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
1.38
|
|
|
|
$
|
1.11
|
|
|
|
24%
|
Diluted
|
|
|
|
$
|
1.34
|
|
|
|
$
|
1.09
|
|
|
|
23%
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
854.5
|
|
|
|
|
864.9
|
|
|
|
|
Diluted
|
|
|
|
|
877.3
|
|
|
|
|
886.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
|
|
$
|
0.28
|
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NIKE, Inc.
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31,
|
|
|
August 31,
|
|
|
|
(Dollars in millions)
|
|
|
|
2015
|
|
|
2014
|
|
|
% Change
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
|
|
$
|
3,246
|
|
|
$
|
2,303
|
|
|
41%
|
Short-term investments
|
|
|
|
|
2,162
|
|
|
|
2,276
|
|
|
-5%
|
Accounts receivable, net
|
|
|
|
|
3,288
|
|
|
|
3,587
|
|
|
-8%
|
Inventories
|
|
|
|
|
4,414
|
|
|
|
4,030
|
|
|
10%
|
Deferred income taxes
|
|
|
|
|
377
|
|
|
|
348
|
|
|
8%
|
Prepaid expenses and other current assets
|
|
|
|
|
1,751
|
|
|
|
996
|
|
|
76%
|
Total current assets
|
|
|
|
|
15,238
|
|
|
|
13,540
|
|
|
13%
|
Property, plant and equipment, net
|
|
|
|
|
3,112
|
|
|
|
2,895
|
|
|
7%
|
Identifiable intangible assets, net
|
|
|
|
|
281
|
|
|
|
282
|
|
|
0%
|
Goodwill
|
|
|
|
|
131
|
|
|
|
131
|
|
|
0%
|
Deferred income taxes and other assets
|
|
|
|
|
2,004
|
|
|
|
1,673
|
|
|
20%
|
TOTAL ASSETS
|
|
|
|
$
|
20,766
|
|
|
$
|
18,521
|
|
|
12%
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
|
$
|
106
|
|
|
$
|
6
|
|
|
1,667%
|
Notes payable
|
|
|
|
|
23
|
|
|
|
146
|
|
|
-84%
|
Accounts payable
|
|
|
|
|
1,933
|
|
|
|
1,970
|
|
|
-2%
|
Accrued liabilities
|
|
|
|
|
3,139
|
|
|
|
2,441
|
|
|
29%
|
Income taxes payable
|
|
|
|
|
75
|
|
|
|
250
|
|
|
-70%
|
Total current liabilities
|
|
|
|
|
5,276
|
|
|
|
4,813
|
|
|
10%
|
Long-term debt
|
|
|
|
|
1,079
|
|
|
|
1,195
|
|
|
-10%
|
Deferred income taxes and other liabilities
|
|
|
|
|
1,517
|
|
|
|
1,408
|
|
|
8%
|
Redeemable preferred stock
|
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
Shareholders' equity
|
|
|
|
|
12,894
|
|
|
|
11,105
|
|
|
16%
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
$
|
20,766
|
|
|
$
|
18,521
|
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
NIKE, Inc.
|
DIVISIONAL REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
%
|
|
|
Currency
|
(Dollars in millions)
|
|
|
|
8/31/2015
|
|
|
8/31/20141
|
|
|
Change
|
|
|
Changes2
|
North America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
|
|
$
|
2,366
|
|
|
|
$
|
2,183
|
|
|
|
8
|
%
|
|
|
9
|
%
|
Apparel
|
|
|
|
|
1,247
|
|
|
|
|
1,104
|
|
|
|
13
|
%
|
|
|
13
|
%
|
Equipment
|
|
|
|
|
186
|
|
|
|
|
226
|
|
|
|
-18
|
%
|
|
|
-17
|
%
|
Total
|
|
|
|
|
3,799
|
|
|
|
|
3,513
|
|
|
|
8
|
%
|
|
|
9
|
%
|
Western Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
|
|
|
1,128
|
|
|
|
|
1,127
|
|
|
|
0
|
%
|
|
|
19
|
%
|
Apparel
|
|
|
|
|
434
|
|
|
|
|
497
|
|
|
|
-13
|
%
|
|
|
3
|
%
|
Equipment
|
|
|
|
|
79
|
|
|
|
|
89
|
|
|
|
-11
|
%
|
|
|
4
|
%
|
Total
|
|
|
|
|
1,641
|
|
|
|
|
1,713
|
|
|
|
-4
|
%
|
|
|
14
|
%
|
Central & Eastern Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
|
|
|
238
|
|
|
|
|
223
|
|
|
|
7
|
%
|
|
|
32
|
%
|
Apparel
|
|
|
|
|
133
|
|
|
|
|
135
|
|
|
|
-1
|
%
|
|
|
22
|
%
|
Equipment
|
|
|
|
|
30
|
|
|
|
|
35
|
|
|
|
-14
|
%
|
|
|
7
|
%
|
Total
|
|
|
|
|
401
|
|
|
|
|
393
|
|
|
|
2
|
%
|
|
|
26
|
%
|
Greater China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
|
|
|
599
|
|
|
|
|
440
|
|
|
|
36
|
%
|
|
|
36
|
%
|
Apparel
|
|
|
|
|
246
|
|
|
|
|
202
|
|
|
|
22
|
%
|
|
|
22
|
%
|
Equipment
|
|
|
|
|
41
|
|
|
|
|
37
|
|
|
|
11
|
%
|
|
|
11
|
%
|
Total
|
|
|
|
|
886
|
|
|
|
|
679
|
|
|
|
30
|
%
|
|
|
30
|
%
|
Japan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
|
|
|
122
|
|
|
|
|
100
|
|
|
|
22
|
%
|
|
|
47
|
%
|
Apparel
|
|
|
|
|
43
|
|
|
|
|
46
|
|
|
|
-7
|
%
|
|
|
12
|
%
|
Equipment
|
|
|
|
|
14
|
|
|
|
|
14
|
|
|
|
0
|
%
|
|
|
27
|
%
|
Total
|
|
|
|
|
179
|
|
|
|
|
160
|
|
|
|
12
|
%
|
|
|
35
|
%
|
Emerging Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
|
|
|
670
|
|
|
|
|
628
|
|
|
|
7
|
%
|
|
|
23
|
%
|
Apparel
|
|
|
|
|
238
|
|
|
|
|
252
|
|
|
|
-6
|
%
|
|
|
9
|
%
|
Equipment
|
|
|
|
|
58
|
|
|
|
|
54
|
|
|
|
7
|
%
|
|
|
24
|
%
|
Total
|
|
|
|
|
966
|
|
|
|
|
934
|
|
|
|
3
|
%
|
|
|
19
|
%
|
Global Brand Divisions3
|
|
|
|
|
26
|
|
|
|
|
29
|
|
|
|
-10
|
%
|
|
|
5
|
%
|
Total NIKE Brand
|
|
|
|
|
7,898
|
|
|
|
|
7,421
|
|
|
|
6
|
%
|
|
|
15
|
%
|
Converse
|
|
|
|
|
555
|
|
|
|
|
575
|
|
|
|
-3
|
%
|
|
|
3
|
%
|
Corporate4
|
|
|
|
|
(39
|
)
|
|
|
|
(14
|
)
|
|
|
-
|
|
|
|
-
|
|
Total NIKE, Inc. Revenues
|
|
|
|
$
|
8,414
|
|
|
|
$
|
7,982
|
|
|
|
5
|
%
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total NIKE Brand
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footwear
|
|
|
|
$
|
5,123
|
|
|
|
$
|
4,701
|
|
|
|
9
|
%
|
|
|
18
|
%
|
Apparel
|
|
|
|
|
2,341
|
|
|
|
|
2,236
|
|
|
|
5
|
%
|
|
|
12
|
%
|
Equipment
|
|
|
|
|
408
|
|
|
|
|
455
|
|
|
|
-10
|
%
|
|
|
-3
|
%
|
Global Brand Divisions3
|
|
|
|
|
26
|
|
|
|
|
29
|
|
|
|
-10
|
%
|
|
|
5
|
%
|
1 Certain prior year amounts have been reclassified to
conform to fiscal 2016 presentation. These changes had no impact
on previously reported results of operations or shareholders'
equity.
|
2 Fiscal 2016 results have been restated using fiscal
2015 exchange rates for the comparative period to enhance the
visibility of the underlying business trends excluding the impact
of translation arising from foreign currency exchange rate
fluctuations.
|
3 Global Brand Divisions revenues are primarily
attributable to NIKE Brand licensing businesses that are not part
of a geographic operating segment.
|
4 Corporate revenues primarily consist 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 our central foreign exchange risk
management program.
|
|
|
NIKE, Inc.
|
EARNINGS BEFORE INTEREST AND TAXES1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
%
|
(Dollars in millions)
|
|
|
|
8/31/2015
|
|
|
8/31/20142
|
|
|
Change
|
North America
|
|
|
|
$
|
1,042
|
|
|
|
$
|
970
|
|
|
|
7
|
%
|
Western Europe
|
|
|
|
|
485
|
|
|
|
|
404
|
|
|
|
20
|
%
|
Central & Eastern Europe
|
|
|
|
|
98
|
|
|
|
|
69
|
|
|
|
42
|
%
|
Greater China
|
|
|
|
|
330
|
|
|
|
|
218
|
|
|
|
51
|
%
|
Japan
|
|
|
|
|
36
|
|
|
|
|
11
|
|
|
|
227
|
%
|
Emerging Markets
|
|
|
|
|
258
|
|
|
|
|
156
|
|
|
|
65
|
%
|
Global Brand Divisions3
|
|
|
|
|
(624
|
)
|
|
|
|
(534
|
)
|
|
|
-17
|
%
|
TOTAL NIKE BRAND
|
|
|
|
|
1,625
|
|
|
|
|
1,294
|
|
|
|
26
|
%
|
Converse
|
|
|
|
|
147
|
|
|
|
|
186
|
|
|
|
-21
|
%
|
Corporate4
|
|
|
|
|
(323
|
)
|
|
|
|
(242
|
)
|
|
|
-33
|
%
|
TOTAL EARNINGS BEFORE INTEREST AND TAXES
|
|
|
|
$
|
1,449
|
|
|
|
$
|
1,238
|
|
|
|
17
|
%
|
1 The Company evaluates 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 taxes.
|
2 Certain prior year amounts have been reclassified to
conform to fiscal 2016 presentation. These changes had no impact
on previously reported results of operations or shareholders'
equity.
|
3 Global Brand Divisions primarily represent demand
creation, operating overhead and product creation and design
expenses that are centrally managed for the NIKE Brand. Revenues
for Global Brand Divisions are primarily attributable to NIKE
Brand licensing businesses that are not part of a geographic
operating segment.
|
4 Corporate consists largely 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.
|
|
NIKE, Inc.
|
NIKE BRAND REPORTED FUTURES GROWTH BY GEOGRAPHY1
|
As of August 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Futures
|
|
|
Excluding Currency
|
|
|
|
|
Orders
|
|
|
Changes2
|
North America
|
|
|
|
14%
|
|
|
15%
|
Western Europe
|
|
|
|
6%
|
|
|
22%
|
Central & Eastern Europe
|
|
|
|
-3%
|
|
|
16%
|
Greater China
|
|
|
|
22%
|
|
|
27%
|
Japan
|
|
|
|
12%
|
|
|
26%
|
Emerging Markets
|
|
|
|
-11%
|
|
|
6%
|
Total NIKE Brand Reported Futures
|
|
|
|
9%
|
|
|
17%
|
1 Futures orders for NIKE Brand footwear and apparel
scheduled for delivery from September 2015 through January 2016. The
U.S. Dollar futures orders amount is calculated based upon our
internal forecast of the currency exchange rates under which our
revenues will be translated during this period.
|
The reported futures orders growth is not necessarily indicative of
our expectation of revenue growth during this period. This is due to
year-over-year changes in shipment timing, changes in the mix of
orders between futures and at-once orders and because the
fulfillment of certain orders may fall outside of the schedule noted
above. In addition, exchange rate fluctuations as well as differing
levels of order cancellations, discounts and returns can cause
differences in the comparisons between futures orders and actual
revenues. Moreover, a portion of our revenue is not derived from
futures orders, including sales of at-once and closeout NIKE Brand
footwear and apparel, sales of NIKE Brand equipment, sales from our
DTC operations and sales from Converse, NIKE Golf and Hurley.
|
2 Reported futures have been restated using prior year
exchange rates for the comparative period to enhance the visibility
of the underlying business trends excluding the impact of foreign
currency exchange rate fluctuations.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20150924006383/en/
Source: NIKE, Inc.