Nike Inc. reported revenues increased 16% for the fourth quarter ended May 31, to $5.1 billion from $4.4 billion a year ago. Changes in currency exchange rates increased revenue growth by 7 percentage points for the quarter. Net income increased 12% to $490.5 million, or 98 cents a share, from $437.9 million, or 86 cents, a year ago.
For the fiscal year, revenues grew 14% to $18.6 billion, compared to $16.3 billion last year. Net income increased 26% to $1.9 billion, or $3.74 a share, compared to $1.5 billion, or $2.93, last year. Changes in currency exchange rates increased revenue growth by 5 percentage points for the full year.
“Nike turned in another strong performance in fiscal year 2008. The power and strength of the Nike brand as well as the depth and diversity of the Nike, Inc. portfolio produced solid sales growth across all geographies and key product platforms,” said Mark Parker, President and CEO of Nike, in a statement. “By continuing to deliver compelling consumer experiences, backed by strong operational execution, were confident we can deliver long-term profitable growth and create value for our shareholders.”
“Going forward we are going to play to those strengths and continue to invest in product innovation, deep brand connections, improved retail presentation, and operational effectiveness. Our focus is on working stronger, leaner and smarter through uncertain macroeconomic conditions to maximize our unique potential as a leader and innovator,” Parker continued. “As we complete fiscal 2008, we are better positioned than we ever have been.”
Futures Orders
The company reported worldwide futures orders for athletic footwear and apparel, scheduled for delivery from June 2008 through November 2008, totaling $8.8 billion, 11% higher than such orders reported for the same period last year. Changes in currency exchange rates increased reported orders growth by 3 percentage points.(a)
By region, futures orders for the
Regional Highlights
During the fourth quarter,
For the full fiscal year,
Fourth quarter revenues for the European region grew 19% to $1.5 billion from $1.3 billion for the same period last year. Changes in currency exchange rates increased revenue growth by 15 percentage points. Footwear revenues increased 17% to $889.2 million. Apparel revenues grew by 22% to $531.1 million and equipment revenues increased 16% to $113.9 million. Fourth quarter pre-tax income increased 8% to $326.2 million.
Full fiscal year European revenues grew 19% to $5.6 billion. Changes in currency exchange rates increased revenue growth by 11 percentage points. Footwear revenues were up 19% to $3.1 billion, apparel revenues increased 19% to $2.1 billion and equipment revenues grew 18% to $424.3 million. European fiscal year pre-tax income increased 22% to $1.3 billion.
Fourth quarter revenues for the Asia Pacific region grew 39% to $828.0 million compared to $596.9 million a year ago. Changes in currency exchange rates increased revenue growth by 13 percentage points. Footwear revenues were up 42% to $422.0 million, apparel revenues increased 40% to $337.7 million and equipment revenues grew 14% to $68.3 million. Fourth quarter pre-tax income increased 32% to $166.0 million.
For the full fiscal year, Asia Pacific revenues increased 26% to $2.9 billion, compared to $2.3 billion last year. Changes in currency exchange rates increased revenue growth by 6 percentage points. Footwear revenues were $1.5 billion, up 29% from $1.2 billion last year, apparel revenues increased 25% to $1.1 billion and equipment revenues grew 13% to $242.2 million. Pre-tax income increased 36% to $692.6 million for the fiscal year.
Fourth quarter revenues in the
Full fiscal year revenues for the
Other Businesses
For the fourth quarter, Other business revenues, which include, Converse Inc., NIKE Golf, Cole Haan, NIKE Bauer Hockey, Hurley International LLC, and Umbro Ltd. grew 15% to $749.5 million and pre-tax income was up 2% to $92.9 million. For the fiscal year, Other business revenues increased 15% to $2.6 billion and pre-tax income increased 12% to $336.4 million.
In fiscal 2008, following a strategic review of the companys affiliate brands portfolio, the company made a number of changes. During the year, the company completed the divestiture of the Starter brand and NIKE Bauer Hockey and the acquisition of Umbro. The Starter brand was sold for $60 million in cash resulting in a gain of $29 million, which was included in third quarter Other income and expense. NIKE Bauer Hockey was sold for $189 million in cash resulting in a gain of $32 million, which was included in fourth quarter Other income and expense. As part of the sale, the company licensed the limited use of certain company trademarks for a period of two years. Accordingly, $41 million of the sales price was deferred and will be recognized in Other income and expense over the license period. The acquisition of Umbro was completed in the fourth quarter for total consideration of £290.5 million (approximately $576 million), inclusive of transaction fees.
Income Statement Review
In the fourth quarter of fiscal 2008 gross margins were 45.8% compared to 43.8% for the same period last year. For the fiscal year, gross margins were 45.0% compared to 43.9% last year.
Selling and administrative expenses were 33.1% of fourth quarter revenue compared to 29.0% for the same period last year. For the fiscal year, selling and administrative expenses as a percentage of revenue were 32.0% versus 30.8% last year.
The effective tax rate for the fourth quarter was 24.3% compared to 33.5% for the same period last year, benefiting from a larger proportion of earnings coming from outside the
Balance Sheet Review
At the end of the fiscal year, global inventories stood at $2.4 billion, an increase of 15% from May 31, 2007. Cash and short-term investments were comparable to the end of last fiscal year at $2.8 billion.
Share Repurchase
During the fourth quarter, the company purchased a total of 4,447,605 shares for approximately $290 million in conjunction with the companys four-year, $3 billion share repurchase program approved by the Board of Directors in June 2006. As of the end of the fiscal year, the company has purchased a total of 38,646,058 shares for approximately $2.1 billion under this program.
