01—Abstract
Summary
Summary of the 10-K filed July 23, 2015. Cited figures are marked; the original filing is the authoritative source.
NIKE, Inc.'s 10-K filing for the fiscal year ending May 31, 2015, reveals a robust performance characterized by significant revenue growth and expanding gross margins.
The company reported record revenues of $30.6 billiona, a 10% increase year-over-year, driven by strong demand across its NIKE Brand geographies and categories, particularly in footwear and apparel. Despite facing headwinds from foreign currency fluctuations, NIKE demonstrated resilience, with net income from continuing operations rising 22% to $3.3 billion and diluted earnings per share increasing 25% to $3.70. Key growth drivers included innovative product offerings utilizing proprietary technologies, strong brand connections fostered through athlete endorsements and marketing campaigns, and an expanding Direct to Consumer (DTC) channel, which saw a 29% currency-neutral revenue increase.
The company also highlighted its commitment to operational excellence, margin expansion, and effective capital deployment, including a significant share repurchase program. While risks related to competition, consumer preferences, currency exchange rates, and global economic conditions are acknowledged, NIKE's financial results indicate a strong operational footing and a positive outlook for continued growth.
02—Key points
Key Highlights
- Record revenues of $30.6 billion in fiscal year 2015, a 10% increase year-over-year, with a 14% increase excluding currency changes.
- Net income from continuing operations increased 22% to $3.3 billion, and diluted earnings per common share grew 25% to $3.70.
- Gross margin expanded by 120 basis points to 46.0%, driven by higher average selling prices and growth in higher-margin DTC businesses.
- Direct to Consumer (DTC) revenue grew 29% on a currency-neutral basis, representing 23% of total NIKE Brand revenues.
- NIKE Brand footwear revenues increased 17% (currency-neutral), driven by strong performance in Sportswear, Basketball, Running, and Football (Soccer) categories.
- The company repurchased approximately 29.0 million shares of Class B Common Stock for $2.5 billion during fiscal year 2015.
- Converse brand demonstrated strong growth, with revenue and EBIT increasing by 18% and 4% respectively.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Nike, Inc. kept $0.11.
- Revenue$30.60B100.0%
- Cost of revenue−$16.53B54.0%
- Gross profit$14.07B46.0%
- Operating costs−$10.79B35.3%
- Operating income$3.27B10.7%
- Interest, other & tax$-00.0%
- Net income$3.27B10.7%
Where FY2015 revenue went
$30.60B- Cost of revenue: $16.53B, 54% of revenue
- SG&A: $9.89B, 32% of revenue
- Net income: $3.27B, 11% of revenue
- Other operating costs: $902.0M, 2.9% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed July 23, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $30.60B$27.80B | +10.1% |
| Cost of Revenue | $16.53B$15.35B | +7.7% |
| Gross Profit | $14.07B$12.45B | +13.0% |
| SG&A Expenses | $9.89B$8.77B | +12.8% |
| Operating Income | $3.27B$2.69B | +21.5% |
| Net Income | $3.27B$2.69B | +21.5% |
| EPS (Basic) | $1.90$1.52 | +25.0% |
| EPS (Diluted) | $1.85$1.49 | +24.2% |
| Shares Outstanding (Basic) | 1.72B1.77B | −2.4% |
| Shares Outstanding (Diluted) | 1.77B1.81B | −2.4% |
05—Questions
Frequently Asked Questions
What was NIKE's overall revenue growth in fiscal year 2015?
NIKE reported record revenues of $30.6 billion for the fiscal year ended May 31, 2015, representing a 10% increase compared to the prior year. Excluding the impact of currency changes, revenues grew by 14%.
How did NIKE's Direct to Consumer (DTC) business perform?
The Direct to Consumer (DTC) business showed strong growth, with revenues increasing 29% on a currency-neutral basis in fiscal year 2015. DTC sales constituted approximately 23% of total NIKE Brand revenues, up from 20% in the prior year, driven by comparable store sales growth and significant online sales growth.
What were the key factors contributing to the gross margin expansion?
Gross margin expanded by 120 basis points to 46.0% in fiscal year 2015. This improvement was primarily driven by higher NIKE Brand average net selling prices, partly due to shifts to higher-priced products and price increases, and the favorable impact of growth in higher-margin DTC businesses. These factors were partially offset by increased product input costs and labor cost inflation.
What is NIKE's strategy for future growth?
NIKE's strategy focuses on delivering value to shareholders by building a profitable portfolio of branded businesses. This includes creating innovative 'must-have' products, building deep consumer connections through brand affinity and marketing, and delivering compelling consumer experiences across both DTC and wholesale channels. The company aims for high single-digit revenue growth and mid-teens earnings per share growth.
06—Continue