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Digital and consumer-direct give NIKE full year revenue a +7% boost to US$39bn

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Nike Air Society - photo credit Nike

NIKE has reported financial results for its fiscal 2019 fourth quarter and full financial year ended May 31, 2019. Fourth quarter revenue increased to US$10.2 billion, up 4% on a reported basis and up 10% on a currency-neutral basis. Full year revenue rose to US$39.1 billion, up 7% on a reported basis and up 11% on a currency-neutral basis.

The company points out that ‘strategic investments in innovation and digital drove global consumer demand led by NIKE Direct in both [reporting] periods.’

“FY19 was a pivotal year for NIKE as we continue to bring our Consumer Direct Offense to life throughout the marketplace,” said Mark Parker, Chairman, President and CEO at NIKE. “Our distinctive innovation and digital advantage led to accelerated growth across our complete portfolio, while our brand fuelled deeper relationships with consumers around the globe.”

Andy Campion, Executive Vice President and CFO at NIKE, said “Reflecting on our FY19 performance, it is clear that growth is paramount at NIKE, and that our strong growth is being driven by strategic transformation. Amid foreign exchange volatility, our double-digit currency-neutral revenue growth and expanding ROIC [return on invested capital] showcase NIKE’s unrivaled ability to create extraordinary value for consumers and shareholders over the long term.”

Diluted earnings per share in the fourth quarter was US$0.62. This was driven by revenue growth, strong gross margin expansion, and a lower average share count, partially offset by higher selling and administrative expense and a higher tax rate. Diluted earnings per share for the full year was US$2.49.

Fourth quarter summary

  • Revenues for NIKE increased 4% to US$10.2 billion, up 10% on a currency- neutral basis.
  • Revenues for the NIKE Brand were US$9.7 billion, up 10% on a currency-neutral basis, driven by growth across NIKE Direct and wholesale, key categories including Sportswear, Jordan and Basketball, and continued growth across footwear and apparel.
  • Net income was US$989 million and diluted earnings per share was US$0.62 – driven by strong revenue growth, gross margin expansion, and a lower average share count. These were slightly offset by higher selling and administrative expense and a higher tax rate.

Fiscal 2019 summary

  • Revenues for NIKE rose 7% to US$39.1 billion, up 11% on a currency-neutral basis.
  • Revenues for the NIKE Brand were US$37.2 billion, up 11 % on a currency-neutral basis driven by growth across NIKE Direct and wholesale, key categories including Sportswear, Jordan and Running, and double-digit growth across footwear and apparel.
  • NIKE Direct revenues were US$11.8 billion, up 16% on a currency-neutral basis. This was driven by a 35% increase in digital commerce sales, 6% growth in comparable store sales as well as the addition of new stores. Sales to wholesale customers increased 10%.
  • Net income increased to US$4.0 billion and diluted earnings per share was US$2.49 driven by strong revenue growth, gross margin expansion, a lower average share count and a lower tax rate. This was partially offset by higher selling and administrative expense.

As at May 31, 2019 inventories for NIKE were US$5.6 billion, up 7% compared to the prior year period, with ‘healthy inventory levels across all geographies’.

Share repurchases
During the fourth quarter, NIKE repurchased 10.6 million shares for approximately US$897 million as part of the four-year, US$15 billion program approved by the Board of Directors in June 2018. As of May 31, 2019, a total of 11.6 million had been repurchased under this program for approximately US$986 million.

In fiscal 2019, NIKE repurchased a total of 54.3 million shares for approximately US$4.3 billion under the US$15 billion share buyback program currently in use as well as the previous $12 billion program approved by the Board of Directors in November 2015.

www.nike.com

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