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Nike Inc (NYSE:NKE)
Gross Margin
45.93% (As of Feb. 2016)

Gross Margin is calculated as gross profit divided by its revenue. Nike Inc's gross profit for the three months ended in Feb. 2016 was $3,689 Mil. Nike Inc's revenue for the three months ended in Feb. 2016 was $8,032 Mil. Therefore, Nike Inc's Gross Margin for the quarter that ended in Feb. 2016 was 45.93%.

NKE' s Gross Margin Range Over the Past 10 Years
Min: 43.4   Max: 46.28
Current: 46.24

43.4
46.28

During the past 13 years, the highest Gross Margin of Nike Inc was 46.28%. The lowest was 43.40%. And the median was 44.82%.

NKE's Gross Margin is ranked higher than
69% of the 730 Companies
in the Global Footwear & Accessories industry.

( Industry Median: 35.20 vs. NKE: 46.24 )

Nike Inc had a gross margin of 45.93% for the quarter that ended in Feb. 2016 => Durable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Nike Inc was -0.20% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Nike Inc's Gross Margin for the fiscal year that ended in May. 2015 is calculated as

Gross Margin (A: May. 2015 )=Gross Profit (A: May. 2015 ) / Revenue (A: May. 2015 )
=14067 / 30601
=(Revenue - Cost of Goods Sold) / Revenue
=(30601 - 16534) / 30601
=45.97 %

Nike Inc's Gross Margin for the quarter that ended in Feb. 2016 is calculated as

Gross Margin (Q: Feb. 2016 )=Gross Profit (Q: Feb. 2016 ) / Revenue (Q: Feb. 2016 )
=3689 / 8032
=(Revenue - Cost of Goods Sold) / Revenue
=(8032 - 4343) / 8032
=45.93 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Nike Inc had a gross margin of 45.93% for the quarter that ended in Feb. 2016 => Durable competitive advantage


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Nike Inc Annual Data

May07May08May09May10May11May12May13May14May15May16
Gross Margin 43.8645.0344.8746.2845.5843.4043.5944.7745.9746.24

Nike Inc Quarterly Data

Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16May16
Gross Margin 44.5145.5946.6245.0845.9246.1947.4845.5545.9345.92
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