10-QPeriod: Q3 FY2010

NIKE, Inc. Quarterly Report for Q3 Ended Feb 28, 2010

Filed April 7, 2010For Securities:NKE

Summary

NIKE, Inc. (NKE) reported its unaudited financial results for the third quarter and the first nine months of fiscal year 2010, ending February 28, 2010. The company demonstrated significant year-over-year growth in net income and diluted earnings per share for the third quarter. Revenues increased by 7% to $4.7 billion in Q3 FY10, driven by growth in Emerging Markets and Greater China, as well as a strong performance from 'Other Businesses' like Converse and Hurley. Gross margin also saw a notable improvement, expanding by 300 basis points to 46.9% due to better product margins and reduced discounting. Despite a slight increase in selling and administrative expenses, largely due to higher demand creation spending and investments in owned retail, the company's profitability surged. Excluding a significant impairment charge from the prior year's comparable period (related to Umbro), net income and diluted EPS still showed positive growth. The company also reported a 9% increase in worldwide futures and advance orders for the upcoming season, signaling continued demand. NIKE's liquidity remains strong, with substantial cash and investments, and the company continues its share repurchase program.

Financial Highlights

47 data points
Beta

Revenue

$4.73B

46.9% Gross Margin

Net Income

$497.00M

10.5% Net Margin

EPS (Diluted)

$0.25

Total Assets

$13.58B

Cash & Equivalents

$2.23B

Free Cash Flow

$445.00M

Financial Statements
Beta
Revenue$4.73B
Cost of Revenue$2.52B
Gross Profit$2.22B
SG&A Expenses$1.56B
Net Income$497.00M
EPS (Basic)$0.26
EPS (Diluted)$0.25
Shares Outstanding (Basic)1.94B
Shares Outstanding (Diluted)1.97B

Key Highlights

  • 1Third quarter fiscal 2010 revenues increased 7% year-over-year to $4.7 billion.
  • 2Diluted earnings per share for Q3 FY10 rose 102% to $1.01 compared to Q3 FY09.
  • 3Gross margin percentage improved significantly, up 300 basis points to 46.9% in Q3 FY10.
  • 4Emerging Markets and Greater China showed strong revenue growth.
  • 5Worldwide futures and advance orders increased by 9% for the period March-July 2010.
  • 6The company repurchased approximately 5.1 million shares of common stock during the quarter.
  • 7Cash flow from operations was robust at $1.89 billion for the first nine months of fiscal 2010.

Frequently Asked Questions

NIKE's revenue for the third quarter of fiscal year 2010 increased by 7% to $4.7 billion, compared to $4.4 billion in the same period of fiscal year 2009.

The significant increase in net income and EPS was driven by revenue growth, a substantial improvement in gross margin (up 300 basis points), and favorable comparisons to the prior year, which included a large impairment charge related to Umbro's assets.

NIKE manages foreign currency risks centrally using a portfolio approach, employing derivative instruments such as forward contracts and options to hedge probable forecasted future cash flows and to manage translational exposures on investments in foreign subsidiaries.

Worldwide futures and advance orders for footwear and apparel, scheduled for delivery from March through July 2010, were up 9% compared to the prior year. Excluding currency impacts, this growth was driven by increases in unit sales volume for footwear and growth in average unit price for both apparel and footwear.