Summary
NIKE, Inc. reported results for the quarter ended August 31, 2001, reflecting a slight decline in revenues and net income compared to the prior year's first quarter. Total revenues decreased by 0.9% to $2.61 billion, primarily due to lower sales in the United States, particularly in footwear, and the unfavorable impact of foreign currency exchange rates on reported international revenues. Net income saw a 2.9% decrease to $199.2 million. The company experienced a 1.1 percentage point decline in gross margin, influenced by the weakening Euro and lower margins in U.S. licensed team apparel. Despite these top-line pressures, NIKE highlighted an increase in worldwide futures orders, signaling potential future revenue growth. The company is actively managing its financial position, with cash from operations increasing and a strategic focus on debt reduction and inventory/cost management, especially in light of the post-September 11th economic uncertainty. The adoption of SFAS 133 regarding derivative accounting also impacted the financial statements.
Key Highlights
- 1Total revenues for the quarter decreased slightly by 0.9% to $2.61 billion compared to the prior year.
- 2Net income declined by 2.9% to $199.2 million, impacted by lower revenues and a decrease in gross margin percentage.
- 3The U.S. market saw a 3.5% revenue decline, driven by a 7.0% drop in footwear sales, partly attributed to supply chain disruptions.
- 4International revenues grew 1.4% as reported, but would have increased by 10.2% in constant dollars, showing underlying international strength.
- 5Worldwide futures orders for the upcoming season increased by 6%, suggesting positive future demand.
- 6The company adopted SFAS 133 for accounting for derivative instruments, resulting in a one-time $5.0 million charge to net income.
- 7Cash flow from operations improved significantly, up to $235.4 million from $175.9 million in the prior year's quarter.