Nike (NKE, Financial), 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. It is one of the leading athletic apparel and footwear enterprises, and has its presence in approximately 190 countries around the world.
Fourth Quarter Results
Revenues for NIKE, Inc. rose 11 percent to $7.4 billion, up 13 percent on a currency neutral basis. Revenues for the Nike Brand were $7.0 billion, up 13 percent on a currency neutral basis powered by growth in every key category and geography except Japan, where revenues were in line with the fourth quarter last year. Revenues for Converse were $410 million, up 15 percent on a currency neutral basis, mainly driven by strong performance in our largest direct distribution markets: the United States, China and the United Kingdom.
Gross margin expanded 170 basis points to 45.6 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 costs and unfavorable foreign exchange rates.
Net income increased 1 percent to $698 million while diluted earnings per share increased 3 percent to $0.78, reflecting a decrease in the weighted average diluted common shares outstanding.
Share Repurchases
During the recent quarter, NKE repurchased shares $912 million ( a total of 12.3 million shares). As of the end of fiscal 2014, a total of 51.9 million shares had been repurchased under this program for approximately $3.4 billion, at an average cost of $65.83 per share.
Growth Prospects
Nike is currently concentrating on an expansion in Europe after making its presence felt in the United States. The momentum gained by the company surrounding the World Cup will help the company to grow forward throughout 2015. The incline towards stylish and comfortable clothing, rise in disposable levels of income and a sudden increase in fitness-conscious people will boost the company’s growing popularity. The next few years may see the company shifting its focus towards other stylish accessories like sunglasses, etc. Innovation has always played a key role in Nike’s success.
“The NIKE Brand is expected to deliver nearly $10 billion in incremental revenue by Fiscal 2017 and our apparel, women’s, and e-commerce businesses will support this growth,” said Trevor Edwards, president of the NIKE Brand. “Over the last three years, the NIKE Brand has grown close to 40 percent and we will continue to innovate and grow by focusing on products and services that capture the imagination of our consumer and help athletes perform at their highest potential.”
The company expects its emerging markets geography to grow at a mid-teens average annual growth rate and for Greater China to return to growth, reaching an average low double-digit rate of annual growth for fiscal year 2014 through fiscal 2017.
Converse is projected to grow at a mid-teens average annual growth rate, to $3 billion in revenues by the end of fiscal 2017.
Final Thoughts
Today, Nike continues to seek new and innovative ways to develop superior athletic products and creative methods to communicate directly with their consumers. NKE is a hit among the brand-conscious consumers, and customers don’t mind paying extra for this brand. It definitely lives up to its slogan “Just Do It.” Nike’s tremendous financial performance will help the company stay a step ahead of its competitors.
It has already witnessed tremendous success in the North American region. The Asian countries hold tremendous opportunities for this company. With robust innovation, continuing research and development activities Nike is bound to create shareholder returns.
(The above data is based on extracts taken from company’s website)
