Summary
NIKE, Inc. reported a solid increase in net income for the second quarter of fiscal year 2002, up 8.3% to $129.3 million, or $0.48 per diluted share, compared to the same period last year. This growth was primarily driven by a 6.3% increase in consolidated revenues to $2,336.8 million, fueled by strong performance in international markets, particularly Europe, the Middle East, and Africa (EMEA), and the Asia Pacific region. While U.S. revenues saw modest growth, there was a notable decline in U.S. footwear sales, which is an area investors will want to monitor. Despite a decrease in gross margin and higher other expenses, the company managed to improve profitability through effective cost management, including lower selling and administrative expenses as a percentage of revenue and reduced interest expense. A lower effective tax rate also contributed to the bottom line. The company continues to expect earnings growth for the full fiscal year, even amidst broader economic uncertainties post-September 11th. The balance sheet shows a healthy increase in cash and equivalents, coupled with strategic management of debt and inventory.
Key Highlights
- 1Net income increased by 8.3% to $129.3 million for the second quarter of FY2002.
- 2Diluted earnings per share rose by 9.1% to $0.48, outpacing net income growth due to share repurchases.
- 3Consolidated revenues grew by 6.3% to $2,336.8 million, driven by strong international performance (+11.6% reported, +14.6% in constant dollars).
- 4EMEA region showed robust growth with a 13.8% reported revenue increase (10.6% constant dollars), led by footwear.
- 5Asia Pacific region also experienced strong growth, up 11.2% reported (22.5% constant dollars), indicating increasing demand.
- 6U.S. revenues grew by 2.5%, but U.S. NIKE brand footwear sales declined by 2.2%, a point of attention for investors.
- 7Gross margin decreased from 39.6% to 38.3%, while selling and administrative expenses as a percentage of revenue were lower.