01—Abstract
Summary
Summary of the 10-K filed July 23, 2013. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc.'s 2013 10-K filing showcases robust revenue growth and profitability, driven by strong performance across its core NIKE Brand and its other businesses like Converse and Hurley.
The company reported a 15%a increase in revenue on a currency-neutral basis, demonstrating resilience and effective brand management in a competitive global market. Key growth drivers included innovation in product technology, strong brand connections through endorsements and marketing, and expanding Direct to Consumer (DTC) channels, which saw a 24% currency-neutral revenue increase. Operationally, NIKE focused on improving gross margins through higher average selling prices and manufacturing efficiency, though this was partially offset by increased product costs and currency headwinds.
The company also strategically divested non-core brands like Cole Haan and Umbro to sharpen its focus on key growth areas. Financially, NIKE strengthened its balance sheet through debt issuance and continued its share repurchase program, signaling confidence in its future growth and commitment to shareholder returns. The filing also highlights proactive risk management, particularly concerning foreign currency exposures and supply chain operations, underscoring the company's global operational complexity and strategic approach to mitigating potential challenges.
02—Key points
Key Highlights
- NIKE achieved record revenues of $25.3 billion, an 8% increase year-over-year, with an 11% increase on a currency-neutral basis.
- Diluted earnings per share from continuing operations increased by 11% to $2.69, demonstrating strong profit growth.
- Direct to Consumer (DTC) revenue grew significantly, up 23% year-over-year (24% currency-neutral), reaching 19% of total NIKE Brand revenues, indicating a successful shift towards higher-margin sales channels.
- The company strategically divested Cole Haan and Umbro businesses to focus resources on core brands, impacting reported net income with gains and losses on sales.
- NIKE continued its capital allocation strategy by completing a $5 billion share repurchase program and initiating an $8 billion program, returning value to shareholders.
- Futures orders for NIKE Brand footwear and apparel, a key leading indicator, increased by 8% year-over-year (8% currency-neutral), suggesting continued demand.
- Gross margin saw a slight improvement to 43.6% from 43.5% in the prior year, driven by higher average selling prices, despite increased product costs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Nike, Inc. kept $0.10.
- Revenue$25.31B100.0%
- Cost of revenue−$14.28B56.4%
- Gross profit$11.03B43.6%
- Operating costs−$8.58B33.9%
- Operating income$2.45B9.7%
- Interest, other & tax$21.0M0.1%
- Net income$2.47B9.8%
Where FY2013 revenue went
$25.31B- Cost of revenue: $14.28B, 56% of revenue
- SG&A: $7.80B, 31% of revenue
- Operating income: $2.45B, 9.7% of revenue
- Other operating costs: $787.0M, 3.1% of revenue
Kept 9.7% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed July 23, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $25.31B$23.33B | +8.5% |
| Cost of Revenue | $14.28B$13.18B | +8.3% |
| Gross Profit | $11.03B$10.15B | +8.7% |
| SG&A Expenses | $7.80B$7.08B | +10.1% |
| Operating Income | $2.45B$2.26B | +8.6% |
| Net Income | $2.47B$2.21B | +11.8% |
| EPS (Basic) | $1.38$1.20 | +15.0% |
| EPS (Diluted) | $1.35$1.18 | +14.9% |
| Shares Outstanding (Basic) | 1.79B1.84B | −2.5% |
| Shares Outstanding (Diluted) | 1.83B1.88B | −2.5% |
05—Questions
Frequently Asked Questions
What were NIKE's key financial performance indicators in fiscal year 2013?
NIKE reported record revenues of $25.3 billion, an 8% increase year-over-year. Diluted earnings per share from continuing operations grew 11% to $2.69. Gross margin improved slightly to 43.6%. Direct to Consumer (DTC) revenue saw substantial growth of 23% (24% currency-neutral).
How did NIKE manage its brand portfolio and what strategic moves were made?
NIKE continued its strategy to focus on high-potential brands by divesting the Cole Haan and Umbro businesses during the fiscal year. This allowed the company to concentrate resources on driving growth for the NIKE, Jordan, Converse, and Hurley brands.
What is the outlook for NIKE's growth based on forward-looking indicators mentioned in the report?
Futures orders for NIKE Brand footwear and apparel, scheduled for delivery in the upcoming period, increased by 8% year-over-year (8% currency-neutral). This, along with the strong performance of DTC channels and key product categories, suggests a positive outlook for continued revenue growth.
What are the main risks and challenges highlighted by NIKE?
Key risks include intense competition, the need to anticipate and respond to changing consumer preferences and design trends, maintaining brand image and reputation, reliance on global supply chains with independent contractors, and exposure to foreign currency exchange rate fluctuations and global economic conditions. The company also emphasizes the importance of innovation and product quality.
06—Continue