NKE
$56.36
Nike
$.99
1.79%
Earnings Details
3rd Quarter February 2017
Tuesday, March 21, 2017 4:15:01 PM
Tweet Share Watch
Summary

Nike Beats

Nike (NKE) reported 3rd Quarter February 2017 earnings of $0.68 per share on revenue of $8.4 billion. The consensus earnings estimate was $0.52 per share on revenue of $8.5 billion. The Earnings Whisper number was $0.55 per share. Revenue grew 5.0% on a year-over-year basis.

Nike Inc designs, develops and markets footwear, apparel, equipment, and accessory products. It is a seller of athletic footwear and athletic apparel. It sells its products through NIKE-owned in-line and factory retail stores and internet websites.

Results
Reported Earnings
$0.68
Earnings Whisper
$0.55
Consensus Estimate
$0.52
Reported Revenue
$8.43 Bil
Revenue Estimate
$8.45 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

NIKE, Inc. Reports Fiscal 2017 Third Quarter Results

Diluted earnings per share up 24 percent to $0.68

--Inventories up 7 percent as of February 28, 2017

NIKE, Inc. (NKE) today reported financial results for its fiscal 2017 third quarter ended February 28, 2017. Consumer demand in all geographies drove revenue growth across the NIKE Brand portfolio. Diluted earnings per share were up 24 percent and grew faster than revenue, primarily due to selling and administrative expense leverage, higher other income (net), a lower effective tax rate and a lower average share count.

"The power of NIKE’s diverse, global portfolio delivered another solid quarter of growth and profitability," said Mark Parker, Chairman, President and CEO, NIKE, Inc. "To expand our leadership and ignite NIKE’s next phase of growth, we’re delivering a relentless flow of innovation through performance and style, increasing speed throughout the business and creating more direct connections with consumers leveraging digital and membership."**

Third Quarter Income Statement Review

Revenues for NIKE, Inc. increased 5 percent to $8.4 billion, up 7 percent on a currency-neutral basis.

Revenues for the NIKE Brand were $7.9 billion, up 7 percent on a currency-neutral basis, driven by double-digit growth in Western Europe, Greater China and the Emerging Markets as well as the Sportswear and Jordan Brand categories.

Revenues for Converse were $498 million, up 3 percent on a currency-neutral basis, driven by growth in North America.

Gross margin contracted 140 basis points to 44.5 percent, as higher average selling prices were more than offset by higher product costs, unfavorable changes in foreign exchange rates and the impact of higher off-price sales.

Selling and administrative expense decreased 3 percent to $2.5 billion. Demand creation expense was $749 million, down 7 percent as fiscal 2017 spend was weighted towards the first six months due to significant investments around the Olympics and the European Championships. Operating overhead expense decreased 1 percent to $1.7 billion, as continued investments in Direct-to-Consumer (DTC) were offset by lower bad debt expense compared to the prior year and lower administrative costs as Edit-to-Amplify initiatives are driving productivity in core operational spending.

Other income, net was $88 million comprised primarily of net foreign currency exchange gains, and to a lesser extent, non-operating items.

The effective tax rate was 13.8 percent, compared to 16.3 percent for the same period last year, primarily due to a reduction in tax reserves and an increase in the mix of earnings from operations outside of the U.S., which are generally subject to a lower tax rate.

Net income increased 20 percent to $1.1 billion and diluted earnings per share increased 24 percent to $0.68 as revenue growth, selling and administrative expense leverage, higher other income (net), a lower tax rate and a three percent decline in the weighted average diluted common shares outstanding more than offset lower gross margin.

February 28, 2017 Balance Sheet Review

Inventories for NIKE, Inc. were $4.9 billion, up 7 percent compared to the prior year as a 3 percent decrease in NIKE Brand wholesale unit inventories was offset by increases in average product costs per unit and higher inventories associated with growth in DTC.

Cash and short-term investments were $6.2 billion, $1.1 billion higher than the prior year as growth in net income and proceeds from the issuance of debt in the second quarter of fiscal 2017 as well as proceeds from employee exercises of stock options more than offset share repurchases, higher dividends and investments in infrastructure.

Share Repurchases

During the third quarter, NIKE, Inc. repurchased a total of 8.9 million shares for approximately $475 million as part of the four-year, $12 billion program approved by the Board of Directors in November 2015. As of February 28, 2017, a total of 64.9 million shares had been repurchased under this program for approximately $3.6 billion.

Futures Orders

Worldwide futures orders for the NIKE Brand will be referenced on our earnings conference calls as deemed appropriate. NIKE Brand and geography Futures Orders growth versus the prior year will be posted on the NIKE, Inc. Investor Relations website at http://investors.NIKE.com following the call.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on March 21, 2017, to review fiscal third quarter results. The conference call will be broadcast live over the Internet 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, 2017.

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 and individuals can follow @NIKE.

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

** The marked paragraphs contain 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 Securities and Exchange Commission (SEC), including Forms 8-K, 10-Q, and 10-K.

NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED
%
NINE MONTHS ENDED
%
(Dollars in millions, except per share data)
2/28/2017
2/29/2016
Change
2/28/2017
2/29/2016
Change
Revenues
$
8,432
$
8,032
5 %
$
25,673
$
24,132
6 %
Cost of sales
4,682
4,343
8 %
14,184
12,947
10 %
Gross profit
3,750
3,689
2 %
11,489
11,185
3 %
Gross margin
44.5 %
45.9 %
44.8 %
46.3 %
Demand creation expense
749
804
-7 %
2,552
2,405
6 %
Operating overhead expense
1,747
1,762
-1 %
5,346
5,298
1 %
Total selling and administrative expense
2,496
2,566
-3 %
7,898
7,703
3 %
% of revenue
29.6 %
31.9 %
30.8 %
31.9 %
Interest expense (income), net
19
5
--
41
14
--
Other (income) expense, net
(88 )
(17 )
--
(168 )
(82 )
--
Income before income taxes
1,323
1,135
17 %
3,718
3,550
5 %
Income tax expense
182
185
-2 %
486
636
-24 %
Effective tax rate
13.8 %
16.3 %
13.1 %
17.9 %
NET INCOME
$
1,141
$
950
20 %
$
3,232
$
2,914
11 %
Earnings per common share:
Basic
$
0.69
$
0.56
23 %
$
1.95
$
1.71
14 %
Diluted
$
0.68
$
0.55
24 %
$
1.91
$
1.67
14 %
Weighted average common shares outstanding:
Basic
1,653.1
1,693.8
1,661.5
1,703.2
Diluted
1,686.3
1,737.3
1,696.4
1,748.5
Dividends declared per common share
$
0.18
$
0.16
$
0.52
$
0.46
NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
February 28,
February 29,
(Dollars in millions)
2017
2016
% Change
ASSETS
Current assets:
Cash and equivalents
$
4,021
$
3,044
32 %
Short-term investments
2,139
2,062
4 %
Accounts receivable, net
3,752
3,368
11 %
Inventories
4,932
4,590
7 %
Prepaid expenses and other current assets
1,361
1,782
-24 %
Total current assets
16,205
14,846
9 %
Property, plant and equipment, net
3,793
3,329
14 %
Identifiable intangible assets, net
283
281
1 %
Goodwill
139
131
6 %
Deferred income taxes and other assets(1)
2,732
2,381
15 %
TOTAL ASSETS
$
23,152
$
20,968
10 %
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt
$
6
$
7
-14 %
Notes payable
23
--
100 %
Accounts payable
1,938
1,714
13 %
Accrued liabilities(1)
3,228
3,223
0 %
Income taxes payable
76
35
117 %
Total current liabilities
5,271
4,979
6 %
Long-term debt
3,472
2,031
71 %
Deferred income taxes and other liabilities(1)
1,687
1,658
2 %
Redeemable preferred stock
--
--
--
Shareholders’ equity
12,722
12,300
3 %
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
23,152
$
20,968
10 %
(1) During the fourth quarter of fiscal 2016, NIKE, Inc.
adopted Accounting Standards Update No. 2015-17, which requires all
deferred tax assets and deferred tax liabilities to be classified as
non-current. All periods presented have been updated to reflect
these changes.
NIKE, Inc.
DIVISIONAL REVENUES
% Change
% Change
Excluding
Excluding
THREE MONTHS ENDED
%
Currency
NINE MONTHS ENDED
%
Currency
(Dollars in millions)
2/28/2017
2/29/2016
Change
Changes(1)
2/28/2017
2/29/2016
Change
Changes(1)
North America
Footwear
$ 2,490
$
2,404
4 %
3 %
$
7,227
$
6,932
4 %
4 %
Apparel
1,154
1,115
3 %
3 %
3,744
3,583
4 %
4 %
Equipment
138
164
-16 %
-16 %
492
514
-4 %
-4 %
Total
3,782
3,683
3 %
3 %
11,463
11,029
4 %
4 %
Western Europe
Footwear
990
985
1 %
6 %
3,002
2,958
1 %
6 %
Apparel
445
392
14 %
21 %
1,430
1,217
18 %
23 %
Equipment
64
65
-2 %
5 %
215
207
4 %
9 %
Total
1,499
1,442
4 %
10 %
4,647
4,382
6 %
11 %
Central & Eastern Europe
Footwear
232
237
-2 %
1 %
694
658
5 %
9 %
Apparel
110
102
8 %
8 %
368
361
2 %
5 %
Equipment
20
20
0 %
0 %
68
67
1 %
6 %
Total
362
359
1 %
3 %
1,130
1,086
4 %
7 %
Greater China
Footwear
776
719
8 %
14 %
2,155
1,918
12 %
18 %
Apparel
271
235
15 %
22 %
895
787
14 %
19 %
Equipment
28
28
0 %
7 %
100
101
-1 %
4 %
Total
1,075
982
9 %
15 %
3,150
2,806
12 %
18 %
Japan
Footwear
153
133
15 %
8 %
470
383
23 %
8 %
Apparel
67
52
29 %
21 %
197
158
25 %
10 %
Equipment
16
20
-20 %
-24 %
52
48
8 %
-4 %
Total
236
205
15 %
8 %
719
589
22 %
8 %
Emerging Markets
Footwear
673
596
13 %
17 %
2,060
1,940
6 %
15 %
Apparel
222
228
-3 %
3 %
719
721
0 %
8 %
Equipment
55
55
0 %
2 %
163
168
-3 %
3 %
Total
950
879
8 %
13 %
2,942
2,829
4 %
12 %
Global Brand Divisions(2)
19
17
12 %
12 %
55
61
-10 %
-10 %
Total NIKE Brand
7,923
7,567
5 %
7 %
24,106
22,782
6 %
8 %
Converse
498
489
2 %
3 %
1,488
1,442
3 %
4 %
Corporate(3)
11
(24 )
--
--
79
(92 )
--
--
Total NIKE, Inc. Revenues
$ 8,432
$
8,032
5 %
7 %
$ 25,673
$
24,132
6 %
8 %
Total NIKE Brand
Footwear
$ 5,314
$
5,074
5 %
7 %
$ 15,608
$
14,789
6 %
8 %
Apparel
2,269
2,124
7 %
9 %
7,353
6,827
8 %
10 %
Equipment
321
352
-9 %
-7 %
1,090
1,105
-1 %
1 %
Global Brand Divisions(2)
19
17
12 %
12 %
55
61
-10 %
-10 %
(1) Fiscal 2017 results have been restated using fiscal
2016 exchange rates for the comparative period to enhance the
visibility of the underlying business trends excluding the impact
of translation arising from foreign currency exchange rate
fluctuations, which is considered a non-GAAP financial measure.
(2) Global Brand Divisions revenues are primarily
attributable to NIKE Brand licensing businesses that are not part
of a geographic operating segment.
(3) Corporate revenues primarily consist of foreign
currency hedge gains and losses related to revenues generated by
entities within the NIKE Brand geographic operating segments and
Converse but managed through our central foreign exchange risk
management program.
NIKE, Inc.
EARNINGS BEFORE INTEREST AND TAXES(1)
THREE MONTHS ENDED
%
NINE MONTHS ENDED
%
(Dollars in millions)
2/28/2017
2/29/2016
Change
2/28/2017
2/29/2016
Change
North America
$
980
$
903
9 %
$
2,896
$
2,827
2 %
Western Europe
290
334
-13 %
918
1,126
-18 %
Central & Eastern Europe
57
69
-17 %
196
243
-19 %
Greater China
381
358
6 %
1,127
1,015
11 %
Japan
49
36
36 %
147
119
24 %
Emerging Markets
193
202
-4 %
601
701
-14 %
Global Brand Divisions(2)
(598 )
(625 )
4 %
(1,988 )
(1,874 )
-6 %
TOTAL NIKE BRAND
1,352
1,277
6 %
3,897
4,157
-6 %
Converse
109
127
-14 %
340
359
-5 %
Corporate(3)
(119 )
(264 )
55 %
(478 )
(952 )
50 %
TOTAL EARNINGS BEFORE INTEREST AND TAXES
1,342
1,140
18 %
3,759
3,564
5 %
Interest expense (income), net
19
5
--
41
14
--
TOTAL INCOME BEFORE INCOME TAXES
$ 1,323
$
1,135
17 %
$
3,718
$
3,550
5 %
(1) The Company evaluates performance of individual
operating segments based on earnings before interest and taxes
(commonly referred to as "EBIT"), which represents net income before
interest expense (income), net and income tax expense and is
considered a non-GAAP financial measure.
(2) Global Brand Divisions primarily represent demand
creation, operating overhead and product creation and design
expenses that are centrally managed for the NIKE Brand. Revenues
for Global Brand Divisions are primarily attributable to NIKE
Brand licensing businesses that are not part of a geographic
operating segment.
(3) Corporate consists largely of unallocated general and
administrative expenses, including expenses associated with
centrally managed departments; depreciation and amortization
related to the Company’s corporate headquarters; unallocated
insurance, benefit and compensation programs, including
stock-based compensation; and certain foreign currency gains and
losses, including certain hedge gains and losses.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170321006511r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170321006511/en/

SOURCE: NIKE, Inc.

NIKE, Inc.
Investor Contact:
Nitesh Sharan, 503-532-2828
or
Media Contact:
Kellie Leonard, 503-671-6171