01—Abstract
Summary
Summary of the 10-K filed July 25, 2014. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc.'s 2014 10-K filing highlights a strong financial performance with a 10% increase in revenues to $27.8 billiona and a 10% rise in net income from continuing operations to $2.7 billion, achieving diluted earnings per share of $2.97, an 11% increase year-over-year.
This growth was driven by robust demand across key product categories and geographies, particularly in North America, Western Europe, and Emerging Markets. The company's strategy continues to focus on delivering innovative products, building deep consumer connections through marketing and endorsements, and enhancing the consumer experience across its Direct to Consumer (DTC) channels, which saw significant growth. The company's financial health remains solid, supported by strong cash flow from operations.
NIKE also actively returned capital to shareholders through share repurchases and dividends, demonstrating a commitment to shareholder value. While facing currency headwinds, NIKE's diversified global portfolio and strategic focus on key growth drivers position it well for continued success, though potential risks include intense competition, changing consumer preferences, and global economic uncertainties.
02—Key points
Key Highlights
- Reported revenues of $27.8 billion, a 10% increase year-over-year, with 11% growth on a currency-neutral basis.
- Net income from continuing operations reached $2.7 billion, a 10% increase, leading to diluted EPS of $2.97, up 11%.
- Direct to Consumer (DTC) revenue grew by 22% on a currency-neutral basis, comprising 20% of total NIKE Brand revenues.
- Futures orders for NIKE Brand footwear and apparel increased by 11% (12% excluding currency changes), signaling strong future demand.
- Gross margin improved by 120 basis points to 44.8%, driven by higher average selling prices and the contribution of the higher-margin DTC business.
- The company repurchased $2.6 billion of its common stock in fiscal year 2014 under an $8 billion share repurchase program.
- Converse segment showed strong performance with revenue and EBIT growth of 16% and 17%, respectively.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Nike, Inc. kept $0.10.
- Revenue$27.80B100.0%
- Cost of revenue−$15.35B55.2%
- Gross profit$12.45B44.8%
- Operating costs−$9.75B35.1%
- Operating income$2.69B9.7%
- Interest, other & tax$-00.0%
- Net income$2.69B9.7%
Where FY2014 revenue went
$27.80B- Cost of revenue: $15.35B, 55% of revenue
- SG&A: $8.77B, 32% of revenue
- Net income: $2.69B, 9.7% of revenue
- Other operating costs: $987.0M, 3.6% of revenue
Kept 9.7% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed July 25, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $27.80B$25.31B | +9.8% |
| Cost of Revenue | $15.35B$14.28B | +7.5% |
| Gross Profit | $12.45B$11.03B | +12.8% |
| SG&A Expenses | $8.77B$7.80B | +12.4% |
| Operating Income | $2.69B$2.45B | +9.9% |
| Net Income | $2.69B$2.47B | +8.9% |
| EPS (Basic) | $1.52$1.38 | +10.1% |
| EPS (Diluted) | $1.49$1.35 | +10.4% |
| Shares Outstanding (Basic) | 1.77B1.79B | −1.6% |
| Shares Outstanding (Diluted) | 1.81B1.83B | −1.2% |
05—Questions
Frequently Asked Questions
What were NIKE's key financial performance indicators for fiscal year 2014?
For fiscal year 2014, NIKE reported revenues of $27.8 billion, a 10% increase year-over-year. Net income from continuing operations grew 10% to $2.7 billion, resulting in diluted earnings per share of $2.97, an 11% increase. Gross margin improved to 44.8%.
How did NIKE's Direct to Consumer (DTC) business perform?
NIKE's DTC operations demonstrated strong growth, with revenues increasing by 22% on a currency-neutral basis. This channel represented 20% of total NIKE Brand revenues for the fiscal year, driven by comparable store sales growth of 10% and expansion of e-commerce.
What are the main risks and challenges facing NIKE, as outlined in the filing?
Key risks include intense competition in the athletic footwear, apparel, and equipment industry, the need to anticipate and respond to changing consumer preferences and design trends, maintaining brand image and reputation, currency exchange rate fluctuations, global economic conditions, and reliance on independent contract manufacturers for production.
How is NIKE managing its foreign currency exposure?
NIKE manages its foreign currency risk centrally through a portfolio approach, utilizing natural offsets and currency correlations. Where practical and material, they employ hedging strategies using derivative instruments such as forward contracts and options to mitigate the impact of exchange rate fluctuations on consolidated results.
06—Continue