Nike Inc yesterday reported financial results for its fiscal 2011 fourth quarter and full year ended 31 May 2011. Diluted earnings per share for both the quarter and full year hit record highs, as higher revenues and leverage of expenses more than offset a lower gross margin rate.
“In fiscal year 2011, we delivered exceptional results in extraordinary times,” said Mark Parker, Nike President and CEO. “Our business is organized to drive growth across multiple brands, geographies and categories, as we manage through the ever-changing macroeconomic landscape.”
Parker added, “We continue to deliver compelling innovation to athletes and consumers, and strong returns for our shareholders. The global appetite for sports has never been stronger.”
As of the end of the company’s fiscal fourth quarter, futures orders for Nike Brand athletic footwear and apparel scheduled for delivery from June through to November 2011, totalled US$10.3 billion. This is 15% higher than orders reported for the same period last year. Although, excluding currency changes, reported orders would have increased by a slightly lower figure of 12% year on year.
Fourth quarter revenues for Nike Inc increased 14% to US$5.8 billion, up 11% on a currency neutral basis. Excluding the impact of changes in foreign currency, Nike Brand revenues rose 12%, driven by growth in all geographies except Japan and Central and Eastern Europe.
By category, revenues were up on a currency neutral basis in all key categories except Football (Soccer), which faced tough comparisons to last year’s World Cup. Revenues for Nike Other Businesses increased 6% with a 1 percentage point benefit from changes in currency exchange rates. For the quarter, growth in Converse, Cole Haan and Hurley more than offset lower revenues at Umbro and NIKE Golf.
Gross margin declined 310 basis points to 44.3%, primarily driven by higher product costs. Other factors contributing to this decline include elevated freight costs (including airfreight to meet strong demand for select Nike Brand products), higher inventory obsolescence reserves and higher royalty expenses related to sales of endorsed team products.
However, the company did note the positive impact of growing sales in Nike’s Direct to Consumer operations and on-going product cost reduction initiatives.
Selling and administrative expenses grew at a slower rate than revenue, up 2% to US$1.8 billion.
Taking the full year, revenues for Nike Inc and the Nike brand were both up 10% to US$20.9 billion and US$18.1 billion respectively with minimal impact from changes in currency exchange rates.
During the fourth quarter, Nike Inc repurchased a total of 7.5 million shares for approximately US$607 million as part of its four-year, US$5 billion share repurchase program, approved by the Board of Directors in September 2008. As of the end of the fourth quarter, the company has purchased a total of 30.4 million shares for approximately US$2.3 billion under this program.
