NIKE has reported fiscal 2015-2016 financial results for its fourth quarter and full year ended 31 May 2016. A release from the company points to ‘strong global demand that fuelled revenue increases across nearly all geographies in fiscal 2016, while robust international revenue drove growth in the fourth quarter.’
Headlines:
- Fourth quarter revenues up 6% to US$8.2 billion; 9%growth excluding currency changes
- Fourth quarter diluted earnings per share flat to prior year at US$0.49
- Fiscal 2016 revenues up 6% to US$32.4 billion; 12% growth excluding currency changes
- Fiscal 2016 diluted earnings per share up 17% to US$2.16
- Worldwide futures orders up 8%; 11% growth excluding currency changes
- Inventories as of 31 May 2016 up 12%
Focusing on its flat diluted earnings per share for the quarter, at US$0.49, NIKE noted international momentum and a lower average share count were offset by a higher tax rate; a gross margin decline partially due to the clearance of excess inventory in North America; and higher selling and administrative expense. Fiscal 2016 diluted earnings per share rose 17% to US$2.16, reflecting revenue growth of 6%, gross margin expansion, a lower tax rate and a lower average share count.
“Our consistent growth is fuelled by innovation, which is why fiscal 2016 was such a breakthrough year for NIKE in everything we do,” said Mark Parker, President and CEO of NIKE. “From product to manufacturing to how we serve our consumers – more personally and at scale – we’ve raised the bar of what’s possible. It’s a great time to be in sports, and the NIKE Brand has never been stronger. Fuelled by our unrivalled roster of athletes, fiscal 2017’s calendar of sport moments promises to build on our business momentum and inspire consumers.”
Fiscal Q4
Revenues for NIKE rose 6% to US$8.2 billion, up 9% on a currency-neutral basis. Revenues for the NIKE Brand were US$7.7 billion, up 8% on a currency-neutral basis – driven by double-digit growth in Western Europe, Greater China, Emerging Markets and Japan, including strong growth in Sportswear, Global Football and the Jordan Brand.
Gross margin declined 30 basis points to 45.9% as higher average selling prices were offset by higher product costs, the negative impact of clearing excess inventory in North America and unfavourable changes in foreign currency exchange rates.
Selling and administrative expense increased 7% to US$2.8 billion. ‘Demand creation expense was US$873 million, up 7%, reflecting investments in digital demand creation, sports marketing and brand events which were partially offset by lower advertising expense.’ Operating overhead expense increased 7% to US$1.9 billion, reflecting continued growth in the Direct-to-Consumer (DTC) business, and ‘targeted investments in operational infrastructure and consumer-focused digital capabilities’.
Fiscal 2016
Revenues for NIKE rose 6% to US$32.4 billion, up 12% on a currency-neutral basis. Revenues for the NIKE Brand were US$30.5 billion, up 13% excluding the impact of changes in foreign currency.
NIKE Brand sales to wholesale customers increased 9% on a currency-neutral basis while DTC revenues grew to US$7.9 billion, up 25% excluding the impact of changes in foreign currency, and driven by a 51% increase in online sales, the addition of new stores and 10% growth in comparable store sales. As of 31 May 2016, the NIKE Brand had 919 DTC stores in operation as compared to 832 a year ago.
On a currency neutral basis, NIKE Brand revenue growth was driven by robust growth in every geography as well as most key categories including Sportswear, Running and the Jordan Brand. Its Men’s, Women’s and Young Athletes’ businesses all grew double-digits.
