01—Abstract
Summary
Summary of the 10-K filed July 24, 2012. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc. filed its 2012 10-K report, detailing its financial performance and strategic direction.
The company reported record revenues of $24.1 billiona, a 16% increase year-over-year, driven by strong demand across all NIKE Brand geographies and key product categories. Net income also saw a modest increase of 4% to $2.2 billion, with diluted earnings per share rising 8% to $4.73. Despite facing headwinds from higher product input costs which compressed gross margins, NIKE demonstrated operational efficiency by improving selling and administrative expense as a percentage of revenue.
A significant strategic move announced was the intention to divest the Cole Haan and Umbro businesses to sharpen focus on the core NIKE, Jordan, Converse, and Hurley brands. The company continues to invest in innovation, highlighted by the launch of the NIKE Fuelband and Flyknit technology, and expansion of its NIKE+ platform. NIKE's robust financial health is supported by strong operating cash flow and a significant cash and short-term investments balance, enabling continued capital allocation through share repurchases and dividends.
02—Key points
Key Highlights
- NIKE reported record revenues of $24.1 billion for fiscal year 2012, a 16% increase from the prior year, demonstrating strong top-line growth.
- Diluted earnings per share increased by 8% to $4.73, indicating improved profitability on a per-share basis.
- The company announced its strategic intention to divest the Cole Haan and Umbro businesses, aiming to concentrate resources on high-growth brands.
- Gross margins declined by 2.2 percentage points to 43.4%, primarily due to higher product input costs (materials and labor).
- Selling and administrative expenses as a percentage of revenue decreased by 1.3 percentage points to 30.8%, showing improved operational leverage.
- NIKE continues to invest in innovation, with new product technologies like NIKE Fuelband and Flyknit contributing to brand strength and demand.
- Direct to Consumer (DTC) channels represented 17% of NIKE Brand revenues, with DTC revenue growing 21% on a currency-neutral basis, highlighting the effectiveness of this sales strategy.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Nike, Inc. kept $0.09.
- Revenue$23.33B100.0%
- Cost of revenue−$13.18B56.5%
- Gross profit$10.15B43.5%
- Operating costs−$7.89B33.8%
- Operating income$2.26B9.7%
- Interest, other & tax−$46.0M0.2%
- Net income$2.21B9.5%
Where FY2012 revenue went
$23.33B- Cost of revenue: $13.18B, 57% of revenue
- SG&A: $7.08B, 30% of revenue
- Net income: $2.21B, 9.5% of revenue
- Other operating costs: $812.0M, 3.5% of revenue
Kept 9.5% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed July 24, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $23.33B$20.12B | +16.0% |
| Cost of Revenue | $13.18B$10.91B | +20.8% |
| Gross Profit | $10.15B$9.20B | +10.3% |
| SG&A Expenses | $7.08B$6.36B | +11.3% |
| Operating Income | $2.26B$2.17B | +3.9% |
| Net Income | $2.21B$2.13B | +3.7% |
| EPS (Basic) | $1.20$1.12 | +7.1% |
| EPS (Diluted) | $1.18$1.10 | +6.8% |
| Shares Outstanding (Basic) | 1.84B1.90B | −3.3% |
| Shares Outstanding (Diluted) | 1.88B1.94B | −3.3% |
05—Questions
Frequently Asked Questions
What was NIKE's revenue and profit performance in fiscal year 2012?
NIKE reported record revenues of $24.1 billion, an increase of 16% from fiscal year 2011. Net income grew 4% to $2.2 billion, and diluted earnings per share increased 8% to $4.73.
What strategic divestitures did NIKE announce?
NIKE announced its intention to divest the Cole Haan and Umbro businesses. This move is aimed at focusing resources on the growth potential of the NIKE, Jordan, Converse, and Hurley brands.
What factors impacted NIKE's gross margin in fiscal year 2012?
NIKE's consolidated gross margin decreased by 2.2 percentage points to 43.4%. This decline was primarily attributed to higher product input costs, including materials and labor, which were partially offset by price increases, growth in Direct to Consumer business, and cost reduction initiatives.
How did NIKE's Direct to Consumer (DTC) business perform?
NIKE's DTC channels represented 17% of total NIKE Brand revenues. On a currency-neutral basis, DTC revenues grew 21%, driven by comparable store sales growth of 13%, indicating strong performance and expansion in owned retail and e-commerce.
06—Continue