10-QPeriod: Q2 FY2010

NIKE, Inc. Quarterly Report for Q2 Ended Nov 30, 2009

Filed January 6, 2010For Securities:NKE

Summary

NIKE, Inc.'s quarterly report for the period ending November 29, 2009, indicates a slight revenue decline compared to the previous year, with revenues for the three months ended November 30, 2009, at $4.41 billion, down from $4.59 billion in the prior year's period. Net income also saw a decrease, reporting $375.4 million for the quarter, down from $391.0 million. This performance was impacted by a continued slowdown in consumer spending in major markets, leading to a 4% reduction in overall revenues and a 5% decrease in diluted earnings per share to $0.76. Despite the revenue and profit headwinds, NIKE demonstrated effective cost management. Selling and administrative expenses were reduced by 4% due to lower demand creation spending and personnel costs following fiscal year 2009 restructuring efforts. The company also benefited from a lower effective tax rate. The report highlights the ongoing challenges in mature markets like North America and Western Europe, contrasted with growth in Emerging Markets. The company ended the period with a solid cash position, though short-term investments saw a significant increase.

Financial Statements
Beta

Key Highlights

  • 1Revenues for the three months ended November 30, 2009, were $4.41 billion, a 4% decrease from $4.59 billion in the prior year.
  • 2Net income for the quarter was $375.4 million, a 4% decrease from $391.0 million in the same period last year.
  • 3Diluted earnings per share decreased by 5% to $0.76 from $0.80 in the prior year's quarter.
  • 4Selling and administrative expenses decreased by 4%, largely due to cost-saving measures and restructuring efforts.
  • 5The company experienced revenue declines in key markets such as North America and Western Europe, while Emerging Markets showed growth.
  • 6Cash and cash equivalents stood at $2.04 billion, while short-term investments increased significantly to $1.97 billion.
  • 7Worldwide futures and advance orders for footwear and apparel (December 2009 - April 2010) were 4% higher than the prior year, though this figure is calculated on a currency-neutral basis.

Frequently Asked Questions

For the three months ended November 30, 2009, NIKE reported revenues of $4.41 billion, a decrease of 4% compared to $4.59 billion in the same period last year. Net income for the quarter was $375.4 million, down 4% from $391.0 million in the prior year.

The decline was primarily attributed to a continued slowdown in consumer spending in most major markets. This led to a decrease in revenues and gross margin percentage. However, selling and administrative expenses were reduced by 4%, partially offsetting the impact on profitability.

Foreign currency exchange rates had a minimal impact on revenues for the quarter, but decreased them by 2 percentage points for the six-month period. The effective tax rate was lower year-over-year, positively affecting net income and diluted earnings per share.

Worldwide futures and advance orders for footwear and apparel, scheduled for delivery from December 2009 through April 2010, were 4% higher than the comparable period in fiscal 2009. This growth rate excludes the impact of currency fluctuations and reflects decreases in unit sales volume partially offset by growth in average unit price.