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NIKE, Inc. Reports Fiscal 2019 Third Quarter Results

Nachrichtenquelle: Business Wire (engl.)
21.03.2019, 21:15  |  282   |   |   

NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2019 third quarter ended February 28, 2019. Revenue growth was driven by broad-based strength across all geographies as well as NIKE Direct, led by digital.

“In Q3, our team once again drove strong, healthy growth across NIKE’s complete portfolio,” said Mark Parker, Chairman, President and CEO, NIKE, Inc. “Our business momentum is being accelerated by our ability to scale innovation at a faster pace and expand new digital consumer experiences around the world.”*

Diluted earnings per share for the quarter was $0.68 driven by strong revenue growth and gross margin expansion, partially offset by higher selling and administrative expenses. In the prior year period, diluted loss per share reflected the enactment of the U.S. Tax Cuts and Jobs Act which has impacted comparability with the current period.

“The Consumer Direct Offense is delivering broad-based growth across all four of our geographies, led by continued momentum in China,” said Andy Campion, Executive Vice President and Chief Financial Officer, NIKE, Inc. “We will continue investing in key capabilities to drive NIKE’s digital transformation and fuel strong profitable growth into next fiscal year and beyond.”*

Third Quarter Income Statement Review

  • Revenues for NIKE, Inc. increased 7 percent to $9.6 billion, up 11 percent on a currency-neutral basis.**
    • Revenues for the NIKE Brand were $9.1 billion, up 12 percent on a currency-neutral basis driven by growth across wholesale and NIKE Direct, categories including Sportswear and Jordan, and continued double-digit growth across footwear and apparel.
    • Revenues for Converse were $463 million, down 2 percent on a currency-neutral basis, mainly driven by double-digit growth in Asia and digital which was more than offset by declines in the U.S. and Europe.
  • Gross margin increased 130 basis points to 45.1 percent primarily driven by higher average selling prices, favorable changes in foreign currency exchange rates and growth in NIKE Direct, partially offset by higher product costs.
  • Selling and administrative expense increased 12 percent to $3.1 billion. Demand creation expense was $865 million, flat to prior year. Operating overhead expense increased 17 percent to $2.2 billion driven primarily by wage-related expenses, which reflect critical investments to drive key transformational initiatives for the Consumer Direct Offense.
  • The effective tax rate was 14.7 percent, compared to 179.5 percent for the same period last year which included one-time charges related to the enactment of the U.S. Tax Cuts and Jobs Act.
  • Net income was $1.1 billion in the third quarter and diluted earnings per share was $0.68 driven by strong revenue growth, gross margin expansion, the lower effective tax rate and a lower average share count, which were slightly offset by higher selling and administrative expenses.

February 28, 2019 Balance Sheet Review

  • Inventories for NIKE, Inc. were $5.4 billion, up 1 percent compared to the prior year period, primarily driven by strong demand for key franchises resulting in healthy inventories across all geographies.
  • Cash and equivalents and short-term investments were $4.0 billion, $705 million lower than last year as share repurchases, dividends, and investments in infrastructure more than offset proceeds from net income.

Share Repurchases

During the third quarter, NIKE, Inc. repurchased 9.8 million shares for a total of $754 million. During the quarter, the company completed the four-year, $12 billion program authorized by the Board of Directors in November 2015 and commenced a new four-year, $15 billion share repurchase program which was authorized in June 2018.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on March 21, 2019, to review fiscal third quarter results. The conference call will be broadcast live via webcast and can be accessed at http://investors.nike.com. For those unable to listen to the live broadcast, an archived version will be available at the same location through 9:00 p.m. PT, March 28, 2019.

About NIKE, Inc.

NIKE, Inc., based near Beaverton, Oregon, is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned NIKE, Inc. subsidiary brands include Converse, which designs, markets and distributes athletic lifestyle footwear, apparel and accessories; and Hurley, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories. For more information, NIKE, Inc.’s earnings releases and other financial information are available on the Internet at http://investors.nike.com. Individuals can also visit http://news.nike.com and follow @NIKE.

*    

The marked paragraph contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed from time to time in reports filed by NIKE with the U.S. Securities and Exchange Commission (SEC), including Forms 8-K, 10-Q and 10-K.

 
**

See additional information in the accompanying Divisional Revenues table regarding this non-GAAP financial measure.

 

(Tables Follow)

 
NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                       
THREE MONTHS ENDED % NINE MONTHS ENDED %
(Dollars in millions, except per share data)     2/28/2019     2/28/2018     Change     2/28/2019     2/28/2018     Change
Revenues $ 9,611 $ 8,984 7 % $ 28,933 $ 26,608 9 %
Cost of sales       5,272         5,046       4 %       16,092         15,030       7 %
Gross profit 4,339 3,938 10 % 12,841 11,578 11 %
Gross margin 45.1 % 43.8 % 44.4 % 43.5 %
 
Demand creation expense 865 862 0 % 2,739 2,594 6 %
Operating overhead expense       2,226         1,905       17 %       6,557         5,797       13 %
Total selling and administrative expense 3,091 2,767 12 % 9,296 8,391 11 %
% of revenues 32.2 % 30.8 % 32.1 % 31.5 %
 
Interest expense (income), net 12 13 37 42
Other (income) expense, net       (55 )       (1 )             (50 )       35        
Income before income taxes 1,291 1,159 11 % 3,558 3,110 14 %
Income taxes       190         2,080       -91 %       518         2,314       -78 %
Effective tax rate 14.7 % 179.5 % 14.6 % 74.4 %
                                     
NET INCOME (LOSS)     $ 1,101       $ (921 )     n/m       $ 3,040       $ 796       282 %
 
Earnings (loss) per common share:
Basic $ 0.70 $ (0.57 ) n/m $ 1.92 $ 0.49 292 %
Diluted $ 0.68 $ (0.57 ) n/m $ 1.87 $ 0.48 290 %
 
Weighted average common shares outstanding:
Basic 1,572.8 1,623.5 1,582.8 1,629.9
Diluted 1,609.6 1,623.5 1,621.5 1,665.7
 
Dividends declared per common share     $ 0.22       $ 0.20             $ 0.64       $ 0.58        
n/m - Not meaningful as a result of the net loss incurred for the three months ended February 28, 2018, due to the enactment of the U.S. Tax Cuts and Jobs Act.
 
 
NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
    February 28,     February 28,    

 

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