01—Abstract
Summary
Summary of the 10-K filed July 22, 2011. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc. reported robust growth in its fiscal year ended May 31, 2011, with revenues increasing by 10% to $20.9 billiona 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%b 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.
02—Key points
Key Highlights
- Revenue growth of 10% to $20.9 billion in fiscal year 2011.
- Diluted earnings per share increased by 14% to $4.39.
- Strong performance in North America, Emerging Markets, and Greater China geographies.
- Direct to Consumer (DTC) revenues grew 16% on a currency-neutral basis, indicating a successful expansion of direct sales channels.
- Gross margin slightly decreased by 70 basis points to 45.6% due to higher input and transportation costs.
- The company repurchased 23.8 million shares for $1.9 billion under its $5 billion share repurchase program.
- Diversified revenue streams across NIKE Brand products (footwear, apparel, equipment) and Other Businesses (Cole Haan, Converse, Hurley, Umbro, NIKE Golf).
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Nike, Inc. kept $0.11.
- Revenue$20.12B100.0%
- Cost of revenue−$10.91B54.3%
- Gross profit$9.20B45.7%
- Operating costs−$7.03B34.9%
- Operating income$2.17B10.8%
- Interest, other & tax−$39.0M0.2%
- Net income$2.13B10.6%
Where FY2011 revenue went
$20.12B- Cost of revenue: $10.91B, 54% of revenue
- SG&A: $6.36B, 32% of revenue
- Net income: $2.13B, 11% of revenue
- Other operating costs: $669.0M, 3.3% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed July 22, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $20.12B$19.01B | +5.8% |
| Cost of Revenue | $10.91B$10.21B | +6.9% |
| Gross Profit | $9.20B$8.80B | +4.6% |
| SG&A Expenses | $6.36B$6.33B | +0.6% |
| Operating Income | $2.17B— | — |
| Net Income | $2.13B$1.91B | +11.9% |
| EPS (Basic) | $1.12$0.98 | +14.0% |
| EPS (Diluted) | $1.10$0.96 | +14.0% |
| Shares Outstanding (Basic) | 1.90B1.94B | −2.0% |
| Shares Outstanding (Diluted) | 1.94B1.98B | −1.7% |
05—Questions
Frequently Asked Questions
What were the key drivers of NIKE's revenue growth in fiscal year 2011?
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.
How did the Direct to Consumer (DTC) business perform?
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.
What factors impacted NIKE's gross margin in fiscal year 2011?
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.
How is NIKE returning capital to shareholders?
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.
06—Continue