NIKE has reported fiscal 2014 financial results for its fourth quarter and full year ended 31 May 2014.
In the fourth quarter, Revenues for NIKE Inc rose 11% year on year to US$7.4 billion, up 13% on a currency neutral basis. Revenues for the Nike brand were US$7.0 billion in the quarter, also up 13% percent on a currency neutral basis and ‘powered by growth in every key category and geography except Japan, where revenues were in line with the fourth quarter last year.’
Revenues for Converse were US$410 million, up 15% on a currency neutral basis, mainly driven by strong performance in NIKE’s largest direct distribution markets: the United States, China and the United Kingdom.
Despite the negative impact of changes in foreign exchange rates, diluted earnings per share for the quarter increased 3% – as revenue growth, gross margin expansion and a lower average share count more than offset increased SG&A (Selling, General and Administrative Expenses) and a higher tax rate.
NIKE’s Gross margin expanded 170 basis points to 45.6% in the quarter. The increase was primarily attributable to higher average selling prices and continued growth in the company’s higher margin direct to consumer (DTC) business; although this was partially offset by higher product input costs and unfavourable foreign exchange rates.
“These results demonstrate the energy and excitement Nike brings to the market,” said President and CEO Mark Parker. “Our ability to relentlessly innovate for consumers drove our growth in FY14, and will continue to fuel it for years to come. And as we grow, we remain focused on managing all areas of our business to drive sustainable, profitable growth for our shareholders.”
In the full year, revenues for NIKE Inc rose 10% to US$27.8 billion, up 11%. Revenues for the Nike brand were US$26.1 billion, up 11% excluding the impact of changes in foreign currency.
Nike brand wholesale revenues increased 8% on a currency neutral basis, while direct to consumer (DTC) revenues grew to US$5.3 billion, up 22% excluding the impact of changes in foreign currency. This was driven by 10% growth in comparable store sales, new store expansion and a 42% increase in e-commerce sales.
As of 31 May 2014, the Nike brand had 768 DTC stores in operation, compared to 678 a year ago.
On a currency neutral basis, Nike brand revenue growth was driven by growth in every geography, key category and across the brand’s Men’s, Women’s and Young Athletes’ (Kids’) businesses.
Gross margin expanded 120 basis points to 44.8% in the full year. The increase was primarily due to higher average selling prices and continued growth in the higher margin direct to consumer business, partially offset by higher product input costs and unfavourable foreign exchange rates.
