Summary
NIKE, Inc.'s quarterly report for the period ending August 31, 2012, shows a 10% increase in revenue to $6.7 billion, driven by a 15% increase on a currency-neutral basis. Despite revenue growth, net income and diluted earnings per share saw a decrease of 12% and 10% respectively, compared to the prior year's quarter. This decline was attributed to planned increases in selling and administrative expenses, including higher demand creation spending for events like the Olympics and European Football Championships, as well as increased marketing for new product initiatives. Additionally, a lower gross margin, resulting from higher product input costs and a shift in business mix, impacted profitability. The company is also in the process of divesting its Cole Haan and Umbro businesses to focus on its core brands.
Financial Highlights
50 data points| Revenue | $6.47B |
| Cost of Revenue | $3.65B |
| Gross Profit | $2.83B |
| SG&A Expenses | $2.06B |
| Operating Income | $585.00M |
| Net Income | $567.00M |
| EPS (Basic) | $0.31 |
| EPS (Diluted) | $0.30 |
| Shares Outstanding (Basic) | 1.81B |
| Shares Outstanding (Diluted) | 1.85B |
Key Highlights
- 1Total revenues increased by 10% to $6.7 billion, with a 15% increase on a currency-neutral basis, indicating strong underlying demand.
- 2Net income decreased by 12% to $567 million, and diluted EPS decreased by 10% to $1.23, largely due to increased operating expenses and lower gross margins.
- 3Gross margin declined by 80 basis points to 43.5%, primarily due to higher product input costs (materials and labor) and a less favorable sales mix.
- 4Selling and administrative expenses increased by 18% to $2.15 billion, driven by higher demand creation spending and operating overhead.
- 5The company announced its intention to divest the Cole Haan and Umbro businesses to streamline its portfolio and focus on core brands.
- 6Direct to Consumer (DTC) channels showed robust growth, with revenues up 21% (24% on a currency-neutral basis), representing 19% of NIKE Brand revenues, up from 17% in the prior year.
- 7Futures orders for NIKE Brand footwear and apparel, for delivery from September 2012 to January 2013, increased by 6% (8% excluding currency impacts), suggesting continued demand.