10-KPeriod: FY2008

NIKE, Inc. Annual Report, Year Ended May 31, 2008

Filed July 28, 2008For Securities:NKE

Summary

NIKE, Inc. reported robust financial performance for the fiscal year ended May 31, 2008, demonstrating significant revenue growth and increased profitability. Revenues climbed 14% to $18.6 billion, driven by strong demand across all geographic regions and product categories, with international sales now representing 57% of total revenue. The company experienced a notable increase in net income, up 26% to $1.9 billion, and diluted earnings per share grew by 28% to $3.74. This growth was supported by improved gross margins, which rose to 45.0% from 43.9% in the prior year, attributed to strategic pricing, better inventory management, and improved hedge rates. Strategically, NIKE continued to invest in growth drivers, including its brand endorsers and major sporting events like the Olympics and European Football Championships, leading to a 120 basis point increase in selling and administrative expenses as a percentage of revenue. The company also made strategic acquisitions, notably Umbro Plc, and divested non-core assets like the Starter and NIKE Bauer Hockey businesses. NIKE remains committed to returning value to shareholders, repurchasing approximately $1.2 billion in stock and increasing its dividend. The company's financial health is strong, with significant cash flow from operations and ample liquidity to fund future growth and initiatives.

Financial Highlights

27 data points
Beta

Revenue

$18.63B

45.0% Gross Margin

Net Income

$1.88B

10.1% Net Margin

EPS (Diluted)

$0.94

Cash & Equivalents

$2.13B

Free Cash Flow

$1.49B

Financial Statements
Beta
Revenue$18.63B
Cost of Revenue$10.24B
Gross Profit$8.39B
SG&A Expenses$5.95B
Net Income$1.88B
EPS (Basic)$0.95
EPS (Diluted)$0.94

Key Highlights

  • 1Revenues grew 14% to $18.6 billion, with international sales accounting for 57% of total revenue.
  • 2Net income increased by 26% to $1.9 billion, and diluted EPS grew by 28% to $3.74.
  • 3Gross margin improved to 45.0% from 43.9% in the prior year, driven by pricing, inventory management, and hedging.
  • 4Strategic investments in demand creation and operating overhead increased SG&A expenses as a percentage of revenue to 32.0%.
  • 5Acquisition of Umbro Plc strengthened its position in soccer, while divestitures of Starter and NIKE Bauer Hockey streamlined the portfolio.
  • 6The company returned $1.2 billion to shareholders through share repurchases and increased dividends.
  • 7Strong growth was observed in key regions like Asia Pacific (26% revenue growth) and EMEA (19% revenue growth).

Frequently Asked Questions

NIKE reported revenues of $18.6 billion, a 14% increase year-over-year. Net income was $1.9 billion, a 26% increase year-over-year. Diluted earnings per share were $3.74, up 28%.

All four geographic regions and international sales generally showed strong performance. The U.S. region grew 4% to $6.4 billion. The EMEA region saw significant growth of 19% to $5.6 billion. The Asia Pacific region was a strong performer with 26% revenue growth to $2.9 billion. The Americas region grew 21% to $1.2 billion. International sales represented 57% of total revenue.

The gross margin improved to 45.0% from 43.9% due to higher footwear in-line gross pricing margins (strategic price increases), improved currency hedge rates, and better margins on close-out footwear sales. These were partially offset by lower apparel in-line gross pricing margins due to higher product costs and increased apparel close-out sales.

NIKE acquired Umbro Ltd. for approximately $576.4 million on March 3, 2008, to strengthen its position in soccer. The company also divested the Starter brand business for $60 million and NIKE Bauer Hockey Corp. for $189.2 million, streamlining its brand portfolio.