Nike, Inc. reported revenues for the first quarter ended Aug. 31 decreased 12% to $4.8 billion from $5.4 billion a year ago. Excluding changes in currency exchange rates, net revenue was down 7% compared to the same period last year.

 

First quarter net income was flat compared to the prior year at $513 million and diluted earnings per share increased 1% to $1.04.

“We delivered a good start to the fiscal year,” said Mark Parker, NIKE, Inc. president and chief executive officer. “These results illustrate that the emotion of sports, combined with innovative product, strong brands and premium retail experiences can make powerful connections to consumers even in challenging times.”

Parker concluded, “Leveraging these powerful consumer connections with a laser focus on operational excellence will enable Nike to deliver consistent long-term profitable growth. We’re on the right track, moving forward with confidence in hand and opportunity in mind.”

 

Futures Orders

 

The company reported worldwide futures orders for Nike brand athletic footwear and apparel, scheduled for delivery from September 2009 through January 2010, totaling $6.2 billion, 6% lower than orders reported for the same period last year. Excluding currency changes, reported orders would have declined 4%.*

 
































Geography

Reported Futures Orders

Excluding Currency Changes


North America


-4%

-4%


Western Europe


-8%

-6%


Central and Eastern Europe

-28%

-24%


Greater China

-6%

-7%


Japan


-3%

-5%


Emerging Markets

+10%

+18%


 

 

Geography Highlights

 

North America

 

During the first quarter, revenues in North America decreased 5% to $1.8 billion. Footwear revenues declined 4% to $1.2 billion, apparel revenues decreased 9% to $444 million and equipment revenues were down 5% to $98 million.

 

Excluding changes in currency, revenues for North America declined 5% with footwear down 3%, apparel decreasing 8% and equipment dropping 5%. North America earnings before interest and taxes  increased 10 percent to $411 million due to lower selling and administrative expenses and improved gross margins.

 

Western Europe

 

First quarter revenue for Western Europe was down 18% to $1.1 billion. Footwear revenue decreased 15% to $635 million, apparel revenue was down 21% to $393 million and equipment revenue declined 26% to $77 million.

 

Revenue for Western Europe, excluding currency changes, was down 8% with footwear declining 5 percent, apparel dropping 11% and equipment decreasing 17% First quarter EBIT decreased 11%  to $289 million.

 

Central and Eastern Europe

 

In the first quarter, revenue for Central and Eastern Europe declined 33 percent to $286 million. Footwear revenue decreased 32 percent to $159 million, apparel revenue was down 37 percent to $97 million and equipment revenue declined 29% to $30 million. Excluding currency changes, revenue in Central and Eastern Europe was down 23% compared to the same period last year with footwear declining 21%, apparel dropping 28% and equipment down 16%.

 

First quarter EBIT decreased 35% to $82 million.

 

Greater China

 

Revenue for Greater China during the first quarter was down 16% to $416 million compared to $496 million last year. Footwear revenue was down 17% to $218 million, apparel revenue declined 16% to $168 million, and equipment revenue decreased 16% to $29 million.

 

Excluding currency changes, revenue for Greater China was down 17% from last year with footwear down 17% and both apparel and equipment declining 16%. First quarter EBIT increased 7% to $149 million mainly driven by lower demand creation spending. Last year’s first quarter demand creation spending was higher in support of the Olympic Games in Beijing.

 

Japan

 

Japan first quarter revenues were essentially flat compared to the prior year at $186 million. Footwear revenue was up 4% to $98 million, apparel revenue dropped 8% to $67 million and equipment revenue increased 5 percent to $22 million. Excluding currency changes, Japan first quarter revenues were 10% lower than last year with footwear down 6%, apparel down 17% and equipment dropping 5%. First quarter EBIT decreased 7% to $35 million.

 

Emerging Markets

 

In the Emerging Markets revenue decreased 8% to $422 million for the first quarter compared to $458 million last year. Footwear revenue was down 6% to $279 million, apparel revenue dropped 9% to $107 million and equipment revenue decreased 19%to $36 million. Excluding currency changes, revenue in the Emerging Markets increased 9% compared to last year with 11% growth in footwear, a 9% increase of in apparel and a 4% drop in equipment. Despite declining reported revenue, first quarter EBIT rose 39% to $101 million due to lower selling and administrative expenses.

 

Other Businesses

 

For the first quarter, Other business revenue, which includes Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd. decreased 5% to $604 million. Excluding currency changes revenue was down 3%. EBIT was flat to last year at $87 million.

 

Income Statement Review

 

In the first quarter of fiscal 2010 gross margins were 46.2% compared to 47.2% for the same period last year. Gross margins for the quarter were lower than the prior year primarily due to unfavorable exchange rates and product markdowns taken to manage inventories. First quarter selling and administrative expenses were down 17% to $1.5 billion and dropped as a percent of revenue to 32.2% compared to 34.2 percent for the same period last year.

 

Selling and administrative expenses for the quarter were lower than the same period last year due to lower demand creation spending and lower personnel costs following restructuring efforts completed last fiscal year. Demand creation expenses were higher last year due to expenses incurred to support the Olympic Games in Beijing and the European Championships. The effective tax rate for the first quarter was 24.7% compared to 28.5% for the same period last year.

 

The first quarter tax rate benefitted from our lower on-going tax rate on operations outside the United States.

 

Balance Sheet Review

 

At the end of the first quarter, global inventories stood at $2.3 billion, down 7% from August 31, 2008. Cash and short-term investments at period-end were $3.6 billion, 40% higher than $2.6 billion last year.

 

Share Repurchase

 

During the first quarter, the company repurchased a total of 289,250 shares for approximately $15 million in conjunction with the company’s four-year, $3 billion share repurchase program, approved by the Board of Directors in June 2006. As of the end of the first quarter the company has purchased a total of 49.5 million shares for approximately $2.7 billion under this program.


























































































































































































































NIKE, Inc.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AUGUST 31, 2009
(In millions, except per share data)

 
 

QUARTER ENDED

INCOME STATEMENT 08/31/2009   08/31/2008   % Chg
Revenues $4,798.5   $5,432.2
-12%
Cost of sales 2,583.0   2,870.1
-10%
Gross margin 2,215.5
2,562.1
-14%

46.2%
47.2%






 
Selling and administrative expense 1,546.1
1,856.4
-17%

32.2%
34.2%






 
Other income (expense), net 13.1
(1.6)
919%
Interest (expense) income, net (1.3)   10.1
-113%





 
Income before income taxes 681.2
714.2
-5%





 
Income taxes 168.2   203.7
-17%

24.7%
28.5%






 





 
Net income $513.0   $510.5
0%





 
Diluted EPS $1.04
$1.03
1%





 
Basic EPS $1.06
$1.05
1%





 
Weighted Average Common Shares Outstanding:

Diluted 491.6
494.9

Basic 485.8   487.2

Dividends declared $0.25   $0.23