01—Abstract
Summary
Summary of the 10-K filed July 20, 2010. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc. reported fiscal year 2010 revenues of $19.0 billiona, a slight decrease of 1% from the prior year, reflecting challenging global economic conditions.
Despite the revenue dip, net income increased by a robust 28% to $1.9 billionb, driven by a significant improvement in gross margin percentage to 46.3% and a lower effective tax rate. This margin expansion was attributed to favorable product mix, cost reduction initiatives, and growth in NIKE-owned retail, which more than offset the revenue decline and increased selling and administrative expenses. The company's financial health remains strong, with a substantial increase in cash flow from operations and a continued commitment to returning capital to shareholders through dividends and share repurchases.
Looking ahead, NIKE anticipates continued revenue growth, supported by a 7%c increase in futures orders for NIKE Brand footwear and apparel. The company remains focused on its long-term strategy of high single-digit revenue growth and mid-teens earnings per share growth, emphasizing operational excellence, innovation, and strong brand connections with consumers. Despite potential headwinds from currency fluctuations and input cost changes, NIKE is well-positioned to navigate the macroeconomic landscape.
02—Key points
Key Highlights
- Revenues for fiscal year 2010 were $19.0 billion, a 1% decrease compared to fiscal year 2009.
- Net income increased by 28% to $1.9 billion, driven by a 140 basis point improvement in gross margin percentage to 46.3%.
- Diluted earnings per share grew by 27% to $3.86, reflecting the strong net income performance.
- Cash flow from operations significantly increased to $3.2 billion, up from $1.7 billion in fiscal year 2009, aided by working capital reductions.
- NIKE returned $1.1 billion to shareholders through share repurchases and dividends in fiscal year 2010, initiating a new $5 billion share repurchase program.
- Worldwide futures and advance orders for NIKE Brand footwear and apparel increased by 7% for delivery in the first six months of fiscal 2011.
- The company saw revenue growth in its 'Other Businesses' segment (Converse, Hurley, etc.) by 4% (excluding currency), offsetting declines in NIKE Golf and Cole Haan.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed July 20, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $19.01B$19.18B | −0.8% |
| Cost of Revenue | $10.21B$10.57B | −3.4% |
| Gross Profit | $8.80B$8.60B | +2.3% |
| SG&A Expenses | $6.33B$6.15B | +2.9% |
| Net Income | $1.91B$1.49B | +28.2% |
| EPS (Basic) | $0.98$0.77 | +28.0% |
| EPS (Diluted) | $0.96$0.76 | +27.4% |
| Shares Outstanding (Basic) | 1.94B1.94B | +0.1% |
| Shares Outstanding (Diluted) | 1.98B1.96B | +0.7% |
05—Questions
Frequently Asked Questions
What was NIKE's overall financial performance in fiscal year 2010?
In fiscal year 2010, NIKE reported revenues of $19.0 billion, a slight 1% decrease from the previous year, attributed to challenging economic conditions. However, net income saw a significant increase of 28% to $1.9 billion, driven by improved gross margins and a lower effective tax rate. Diluted earnings per share also rose by 27% to $3.86.
What drove the improvement in NIKE's gross margin?
NIKE's gross margin improved by 140 basis points to 46.3% in fiscal year 2010. Key drivers included better in-line product margins due to reduced input costs and favorable product mix, improved inventory positions leading to more full-price sales, and growth in the higher-margin NIKE-owned retail business.
How did NIKE manage its cash flow and capital allocation in fiscal year 2010?
NIKE generated strong cash flow from operations, increasing to $3.2 billion, primarily due to effective working capital management, including reduced inventory and faster accounts receivable collections. The company also returned significant capital to shareholders, repurchasing $754 million in common stock and paying $515 million in dividends, initiating a new $5 billion share repurchase program.
What is NIKE's outlook for future revenue growth?
NIKE is optimistic about future revenue growth, supported by a 7% increase in futures orders for NIKE Brand footwear and apparel for delivery in the first half of fiscal year 2011. The company's strategy focuses on high single-digit revenue growth and mid-teens earnings per share growth through innovation and strong consumer connections.
06—Continue