Having set out an overview of its fiscal 2011 results during an investor meeting at its world headquarters in Beaverton, Oregon – Nike increased its fiscal 2015 revenue target to a new range of US$28-30 billion, up from its previous target of US$27 billion announced in May 2010.
For the Nike brand itself the company is now targeting US$24-25 billion by 2015, up from the previous target of US$23 billion.
“Our fiscal 2011 results demonstrate that Nike Inc has made substantial progress to deliver our 2015 global growth strategy and objectives,” said Nike Inc President and CEO Mark Parker. “Our ability to create innovative product and exciting retail destinations, while leveraging our powerful supply chain and strong balance sheet, allows us to attack the biggest opportunities to continue transforming the global marketplace.
“While the last 12 months have revealed many changes in the world, the dynamic operating environment also underscores the considerable strengths of the Nike Inc portfolio,” continued Parker.
“At Nike Inc we run a complete offense, and it’s based on a core commitment to innovation. That’s how we stay opportunistic, serve the athlete, reward our shareholders, and continue to lead our industry.”
The company reaffirmed its goal of generating US$12 billion of cumulative free cash flow from operations from fiscal 2011 through to fiscal 2015. Both goals extend Nike’s long-term financial model of high single-digit revenue growth, mid-teens earnings per share growth and expanding returns on capital.
“Our category offense strategy is at the core of our success. It has enhanced our ability to target and go after our biggest growth opportunities. Nearly every Nike brand category was up in 2011 and we’re building even more momentum as we enter fiscal 2012,” said Nike Brand President Charlie Denson.
“At Nike, we are relentlessly focused on the athlete. We lead with innovation and performance product built for the world’s best athletes and teams, and then we capture the imagination of the consumer by evolving, aligning and focusing our business around them.”
Denson continued, “Our ability to be authentic, stay connected, and remain distinctive through innovating across all areas of our business is a definitive competitive advantage. Through our Compete-Train-Express strategy, we are dedicated to enhancing consumers’ lives, inspiring them and enabling them to be better athletes.”
Category growth
By category, fiscal 2011 wholesale revenue and growth rates, excluding the impact of changes in currency for the Nike brand, were as follows:
- Running US$2.8 billion +30%
- Basketball US$1.9 billion +11%
- Football (Soccer) US$1.8 billion +8%
- Men’s Training US$1.7 billion +15%
- Women’s Training US$842 million +13%
- Action Sports US$470 million +18%
- Sportswear US$5.1 billion +3%
- NIKE Golf US$623 million -4%
The company reiterated its primary financial objectives through to 2015:
- High single-digit revenue growth (average annual rate)
- Mid-teens earnings per share growth (average annual rate)
- Return on invested capital of 25%
- Increasing dividends within a target calendar year pay-out range of 25-35% of trailing four quarter earnings per share
The company also updated plans for growth in the Nike brand geographies through to fiscal 2015. In its developed geographies (North America, Western Europe and Japan), Nike expects to generate solid growth off of a large base, reaffirming a mid single-digit average annual growth rate for the five year period from fiscal 2010 through to fiscal 2015.
In its developing geographies (Greater China, Central & Eastern Europe and Emerging Markets), the company reiterated its expectation of low double-digit growth communicated in May 2010. Additionally, the Greater China geography reached US$2.1 billion in revenue and was confirmed to be on track to double in size by fiscal 2015 off of its fiscal 2010 base.
Direct to Consumer
Reviewing its Direct to Consumer operations, which include owned retail stores and digital commerce, the Company reported 16% growth to US$3.2 billion in fiscal 2011. Direct to Consumer operations within the Other Businesses and within each of the Nike brand geographies, except Japan, delivered growth across their inline, factory and digital (e-commerce) businesses.
Nike provided an overview of its plans to drive consistent growth in its Direct to Consumer operations. By fiscal 2015 the company estimates it will have approximately 850 owned stores for the Nike brand and approximately 300 owned stores within its Other Businesses category.
