BEAVERTON, Ore., June 28, 2011 – NIKE, Inc. (NYSE: NKE) today provided an overview of its fiscal 2011 results and reviewed progress on key strategic initiatives to achieve sustainable, profitable long-term growth across its global portfolio of brands. During an investor meeting at its world headquarters in Beaverton, Ore., the Company increased its fiscal 2015 revenue target to a new range of $28-30 billion, up from its previous target of $27 billion announced in May 2010. Additionally, the Company reaffirmed its goal of generating $12 billion of cumulative free cash flow from operations from fiscal 2011 through fiscal 2015. Both goals extend NIKE, Inc.’s long-term financial model of high single-digit revenue growth, mid-teens earnings per share growth and expanding returns on capital.*
"Our fiscal 2011 results demonstrate that NIKE, Inc. has made substantial progress to deliver our 2015 global growth strategy and objectives,” said NIKE, Inc. President and CEO Mark Parker. “Our ability to create innovative product and exciting retail destinations, while leveraging our powerful supply chain and strong balance sheet, allows us to attack the biggest opportunities to continue transforming the global marketplace.”*
“While the last 12 months have revealed many changes in the world, the dynamic operating environment also underscores the considerable strengths of the NIKE, Inc. portfolio,” continued Parker. “At NIKE, Inc. we run a complete offense, and it’s based on a core commitment to innovation. That’s how we stay opportunistic, serve the athlete, reward our shareholders, and continue to lead our industry.”*
NIKE Brand Overview
Given strength of performance and robust growth opportunities identified for the NIKE Brand portfolio, the Company also raised its fiscal 2015 revenue target for the NIKE Brand to $24-25 billion, up from the previous target of $23 billion announced in May 2010.*
“Our category offense strategy is at the core of our success. It has enhanced our ability to target and go after our biggest growth opportunities. Nearly every NIKE Brand category was up in 2011 and we’re building even more momentum as we enter fiscal 2012,” said NIKE Brand President Charlie Denson. “At NIKE, we are relentlessly focused on the athlete. We lead with innovation and performance product built for the world’s best athletes and teams, and then we capture the imagination of the consumer by evolving, aligning and focusing our business around them.”*
Denson continued, “Our ability to be authentic, stay connected, and remain distinctive through innovating across all areas of our business is a definitive competitive advantage. Through our Compete-Train-Express strategy, we are dedicated to enhancing consumers’ lives, inspiring them and enabling them to be better athletes.”
By category, fiscal 2011 wholesale revenue growth rates excluding the impact of changes in currency for the NIKE Brand were as follows:
|NIKE Brand Category||FY11 Wholesale Revenue**||FY11 Growth**/***|
|Football (Soccer)||$1.8 billion||+8%|
|Men’s Training||$1.7 billion||+15%|
|Women’s Training||$842 million||+13%|
|Action Sports||$470 million||+18%|
|NIKE Golf1||$623 million||-4%|
|1 NIKE Golf is reported within the Company’s Other Businesses.|
NIKE Brand – Geographic Opportunities
The Company also updated plans for growth in the NIKE Brand geographies through fiscal 2015. In its developed geographies (North America, Western Europe and Japan), NIKE expects to generate solid growth off of a large base, reaffirming a mid single-digit average annual growth rate for the five year period from fiscal 2010 through fiscal 2015. In its developing geographies (Greater China, Central & Eastern Europe and Emerging Markets), the Company reiterated its expectation of low double-digit growth communicated in May 2010. Additionally, the Greater China geography reached $2.1 billion in revenue and was confirmed to be on track to double in size by fiscal 2015 off of its fiscal 2010 base.*
NIKE, Inc. – Direct to Consumer
Reviewing its Direct to Consumer operations, which includes owned retail stores and digital commerce, the Company reported 16% growth to $3.2 billion in fiscal 2011. Direct to Consumer operations within the Other Businesses and within each of the NIKE Brand geographies, except Japan, delivered growth across their inline, factory and digital (e-commerce) businesses.
The Company provided an overview of its plans to drive consistent growth in its Direct to Consumer operations. By fiscal 2015 the Company estimates it will have approximately 850 owned stores for the NIKE Brand and approximately 300 owned stores within the Other Businesses. Given plans to elevate the consumer experience and position the Company’s brands in the world’s premium shopping locations, and strong growth opportunities in digital commerce, NIKE, Inc. reaffirmed expectations of mid-teens average annual growth in its Direct to Consumer operations across all geographies with a goal of $5.6 billion in revenue by the end of fiscal 2015.*
NIKE, Inc. – Affiliate Brands
NIKE, Inc.’s four Affiliate brands – Cole Haan, Converse, Hurley, and Umbro – reached $2.1 billion in sales in fiscal 2011, an increase of 13 percent over its fiscal 2010 performance excluding the impact of changes in currency exchange rates. In discussing progress in each of the businesses, the Company updated its fiscal 2015 revenue targets for each Affiliate. Compared to its fiscal 2010 base, the Company is on track to double its Converse, Hurley and Umbro businesses through organic growth and market conversion opportunities by fiscal 2015.*
By brand, fiscal 2011 revenues for each of the four NIKE Affiliates were:
|Brand||FY11 Revenues||FY11 Growth***|
|Cole Haan||$518 million||+12%|
NIKE, Inc. – Long-term Financial Objectives
Reviewing performance against the Company’s long-term financial model, Chief Financial Officer Don Blair highlighted delivery of consistent results through dynamic market environments, “We are focused on driving sustainable, profitable growth and increasing returns on capital. The significant cash we expect to generate through fiscal 2015 will enable us to invest in compelling consumer experiences, industry-leading innovation and premium retail destinations to drive our growth goals, while consistently increasing cash returns to our shareholders.”*
The Company reiterated its primary financial objectives through 2015:*
- High single-digit revenue growth (average annual rate)
- Mid-teens Earnings Per Share growth (average annual rate)
- Return on Invested Capital of 25%
- Increasing dividends within a target calendar year payout range of 25-35% of trailing four quarter earnings per share
Additional Presenters and Replay
Additional presenters from NIKE, Inc.’s senior management included: Gary DeStefano, NIKE Brand President of Global Operations; Trevor Edwards, NIKE Brand Vice President of Brand and Category Management; Jeanne Jackson, NIKE, Inc. President of Direct to Consumer; Eric Sprunk, NIKE Brand Vice President of Merchandising and Product, and Roger Wyett, NIKE, Inc. President of Affiliates.
Investors and media are invited to view the replay of webcast and slides from the event at www.NIKEbiz.com/investors. An archived audio replay in downloadable MP3 format will also be available approximately 24 hours after the event and accessible through midnight, September 28, 2011.
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 subsidiaries include Cole Haan, which designs, markets and distributes luxury shoes, handbags, accessories and coats; Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories; and Umbro Ltd., a leading United Kingdom-based global football (soccer) brand. For more information, visit www.nikeinc.com/investors.
* 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, Inc. with the S.E.C., including Forms 8-K, 10-Q, and 10-K. Some forward-looking statements in this release concern changes in futures orders that are not necessarily indicative of changes in total revenues for subsequent periods due to the mix of futures and “at once” orders, exchange rate fluctuations, order cancellations and discounts, which may vary significantly from quarter to quarter, and because a significant portion of the business does not report futures orders.
**Category Revenue references are for NIKE Brand wholesale revenue only. The Company has provided these numbers only to provide context regarding the approximate sizes of the businesses. Forward-looking growth statements are made only as of the date hereof, and are subject to risks and uncertainties that could cause actual results to differ materially. The Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
***Fiscal 2011 results have been restated using fiscal 2010 exchange rates for the comparative period to enhance the visibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations.