10-KPeriod: FY2011

NIKE, Inc. Annual Report, Year Ended May 31, 2011

Filed July 22, 2011For Securities:NKE

Summary

NIKE, Inc. reported robust growth in its fiscal year ended May 31, 2011, with revenues increasing by 10% to $20.9 billion and diluted earnings per share rising by 14% to $4.39. This performance was driven by broad-based demand across most NIKE Brand geographies, particularly in North America, Emerging Markets, and Greater China, supported by innovative product lines and strong retail execution. The company's Direct to Consumer (DTC) business also showed significant expansion, with DTC revenues growing 16% on a currency-neutral basis, representing 16% of total NIKE Brand revenues. This highlights the increasing importance of direct engagement with consumers through owned retail stores and e-commerce. While gross margins saw a slight decline due to increased input and transportation costs, the company is focusing on operational excellence, cost reduction, and effective capital deployment to drive sustained, profitable long-term growth. Investors should note the company's commitment to returning capital to shareholders through share repurchases and dividends.

Financial Highlights

52 data points
Beta

Revenue

$20.12B

45.7% Gross Margin

Net Income

$2.13B

10.6% Net Margin

EPS (Diluted)

$1.10

Total Assets

$15.00B

Cash & Equivalents

$1.88B

Free Cash Flow

$1.38B

Financial Statements
Beta
Revenue$20.12B
Cost of Revenue$10.91B
Gross Profit$9.20B
SG&A Expenses$6.36B
Operating Income$2.17B
Net Income$2.13B
EPS (Basic)$1.12
EPS (Diluted)$1.10
Shares Outstanding (Basic)1.90B
Shares Outstanding (Diluted)1.94B

Key Highlights

  • 1Revenue growth of 10% to $20.9 billion in fiscal year 2011.
  • 2Diluted earnings per share increased by 14% to $4.39.
  • 3Strong performance in North America, Emerging Markets, and Greater China geographies.
  • 4Direct to Consumer (DTC) revenues grew 16% on a currency-neutral basis, indicating a successful expansion of direct sales channels.
  • 5Gross margin slightly decreased by 70 basis points to 45.6% due to higher input and transportation costs.
  • 6The company repurchased 23.8 million shares for $1.9 billion under its $5 billion share repurchase program.
  • 7Diversified revenue streams across NIKE Brand products (footwear, apparel, equipment) and Other Businesses (Cole Haan, Converse, Hurley, Umbro, NIKE Golf).

Frequently Asked Questions

Revenue growth was driven by increased demand for NIKE Brand footwear and apparel across most geographies, particularly in North America, Emerging Markets, and Greater China. This was supported by innovative products, strong category-focused retail presentations, and the expansion of Direct to Consumer (DTC) channels, including comparable store sales growth.

NIKE's DTC operations showed strong growth, with revenues increasing by 16% on a currency-neutral basis in fiscal year 2011. This channel represented approximately 16% of the total NIKE Brand revenues, up from 15% in the prior year, highlighting the company's successful strategy of expanding its store network and e-commerce business.

The consolidated gross margin percentage decreased by 70 basis points to 45.6%. This was primarily due to higher product input costs, increased transportation expenses (including air freight), and a lower mix of licensee revenue as certain markets transitioned to NIKE-owned distribution. These factors were partially offset by growth in the DTC business, a higher mix of full-price sales, and ongoing product cost reduction initiatives.

NIKE is actively returning capital to shareholders through share repurchases and dividends. In fiscal year 2011, the company purchased 23.8 million shares for $1.9 billion under its $5 billion share repurchase program. Dividends declared per common share also increased to $1.20 from $1.06 in the prior year.