NIKE Inc has reported financial results for its fiscal 2013 second quarter ended 30 November 2012. The company noted ‘For continuing operations, strong demand for NIKE Inc brands propelled double-digit revenue growth on a currency neutral basis, and diluted earnings per share grew faster than revenue.’
“Our strong second quarter results show that our growth strategies are working, even under challenging macroeconomic conditions,” said Mark Parker, President and CEO of NIKE Inc. “We have a focused and flexible portfolio that allows us to target the biggest growth opportunities at all levels – brand, category and product. We stay connected with our consumers and that enables us to deliver innovations that excite the marketplace, grow the business and deliver more value to shareholders.”*
Revenues for NIKE Inc increased 7% to US$6.0 billion, up 10% on a currency-neutral basis. Excluding the impact of changes in foreign currency, NIKE Brand revenues rose 11%, with growth in all key categories, product types and geographies except Greater China. Revenues for Other Businesses increased 6% on a currency-neutral basis.
Gross margin declined 30 basis points to 42.5%. Gross margin benefitted from pricing actions and easing material costs; however, these benefits were more than offset by higher labour costs and unfavourable changes in foreign exchange rates. Additionally, gross margin was negatively impacted by a shift in the mix of the company’s revenues to lower margin products and businesses.
Inventories for NIKE Inc were US$3.3 billion, up 9% year on year. NIKE Brand inventories increased 8%; of which 6 percentage points of growth were due to higher NIKE Brand wholesale unit inventories to support future demand and 2 percentage points of growth were due to higher average product cost per unit.
Share repurchasing
During its second fiscal quarter NIKE Inc repurchased a total of 4.0 million shares for approximately US$384 million and concluded the company’s previous four-year, US$5 billion share repurchase program approved by the Board of Directors in September 2008. During this program the company purchased a total of 59.4 million shares at an average price of US$84.16.
Following the completion of the previous program, the company began repurchases under the new four-year, US$8 billion program approved in September 2012. Of the total shares repurchased during the second quarter, 3.1 million shares were purchased under this program at a cost of approximately US$294 million.
Futures orders
As of the end of the quarter worldwide futures orders for NIKE Brand athletic footwear and apparel, scheduled for delivery from December 2012 through to April 2013 totalled $9.3 billion. This was 6% higher than orders reported for the same period last year. Excluding currency changes, reported orders would have increased 7%.
Discontinued operations
On 31 May 2012, the company announced its intention to divest of the Umbro and Cole Haan businesses, which will allow it to focus resources on driving growth in the NIKE, Jordan, Converse and Hurley brands.
On 30 November 2012, the company completed the sale of certain assets of the Umbro brand to Iconix Brand Group for US$225 million. And, on 16 November 2012, the company announced it had reached a definitive agreement to sell Cole Haan to Apax Partners for US$570 million.
