Get Cash Back and $0 Commissions
+ The Power of TradeStation
Business Wire 22-Mar-2018 4:15 PM
NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2018 third quarter ended February 28, 2018. Revenue growth was led by international geographies and NIKE Direct globally.
Diluted net loss per share was $0.57, reflecting significantly higher income tax expense from the enactment of the Tax Cuts and Jobs Act (the "Tax Act"). The impact of the Tax Act resulted in one-time provisional charges that reduced diluted earnings per share by $1.25.
"NIKE's Consumer Direct Offense drove strong double-digit growth across our international geographies, led by Greater China," said Mark Parker, Chairman, President and CEO, NIKE, Inc. "As we close Q3, we now see a significant reversal of trend in North America, as momentum accelerates through the scaling of new innovation platforms and differentiated NIKE Consumer Experiences expand across the marketplace."*
Third Quarter Income Statement Review
February 28, 2018 Balance Sheet Review
Share Repurchases
During the third quarter, NIKE, Inc. repurchased a total of 14.6 million shares for approximately $962 million as part of the four-year, $12 billion program approved by the Board of Directors in November 2015. As of February 28, 2018, a total of 126.4 million shares had been repurchased under this program for approximately $7.2 billion.
Conference Call
NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on March 22, 2018, 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 For those unable to listen to the live broadcast, an archived version will be available at the same location through 9:00 p.m. PT, March 29, 2018.
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 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 | ||||||||||||||||||||||
THREE MONTHS ENDED | % | NINE MONTHS ENDED | % | |||||||||||||||||||
(Dollars in millions, except per share data) | 2/28/2018 | 2/28/2017 | Change | 2/28/2018 | 2/28/2017 | Change | ||||||||||||||||
Revenues | $ | 8,984 | $ | 8,432 | 7 | % | $ | 26,608 | $ | 25,673 | 4 | % | ||||||||||
Cost of sales | 5,046 | 4,682 | 8 | % | 15,030 | 14,184 | 6 | % | ||||||||||||||
Gross profit | 3,938 | 3,750 | 5 | % | 11,578 | 11,489 | 1 | % | ||||||||||||||
Gross margin | 43.8 | % | 44.5 | % | 43.5 | % | 44.8 | % | ||||||||||||||
Demand creation expense | 862 | 749 | 15 | % | 2,594 | 2,552 | 2 | % | ||||||||||||||
Operating overhead expense | 1,905 | 1,747 | 9 | % | 5,797 | 5,346 | 8 | % | ||||||||||||||
Total selling and administrative expense | 2,767 | 2,496 | 11 | % | 8,391 | 7,898 | 6 | % | ||||||||||||||
% of revenues | 30.8 | % | 29.6 | % | 31.5 | % | 30.8 | % | ||||||||||||||
Interest expense (income), net | 13 | 19 | — | 42 | 41 | — | ||||||||||||||||
Other (income) expense, net | (1 | ) | (88 | ) | — | 35 | (168 | ) | — | |||||||||||||
Income before income taxes | 1,159 | 1,323 | -12 | % | 3,110 | 3,718 | -16 | % | ||||||||||||||
Income tax expense | 2,080 | 182 | 1,043 | % | 2,314 | 486 | 376 | % | ||||||||||||||
Effective tax rate | 179.5 | % | 13.8 | % | 74.4 | % | 13.1 | % | ||||||||||||||
NET (LOSS) INCOME | $ | (921 | ) | $ | 1,141 | -181 | % | $ | 796 | $ | 3,232 | -75 | % | |||||||||
(Loss) earnings per common share: | ||||||||||||||||||||||
Basic | $ | (0.57 | ) | $ | 0.69 | -183 | % | $ | 0.49 | $ | 1.95 | -75 | % | |||||||||
Diluted | $ | (0.57 | ) | $ | 0.68 | -184 | % | $ | 0.48 | $ | 1.91 | -75 | % | |||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||
Basic | 1,623.5 | 1,653.1 | 1,629.9 | 1,661.5 | ||||||||||||||||||
Diluted | 1,623.5 | 1,686.3 | 1,665.7 | 1,696.4 | ||||||||||||||||||
Dividends declared per common share | $ | 0.20 | $ | 0.18 | $ | 0.58 | $ | 0.52 | ||||||||||||||
NIKE, Inc. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
February 28, | February 28, |
|
|||||||
(Dollars in millions) | 2018 | 2017 |
% Change |
||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and equivalents | $ | 3,662 | $ | 4,021 | -9 | % | |||
Short-term investments | 1,089 | 2,139 | -49 | % | |||||
Accounts receivable, net | 3,792 | 3,752 | 1 | % | |||||
Inventories | 5,366 | 4,932 | 9 | % | |||||
Prepaid expenses and other current assets | 1,446 | 1,361 | 6 | % | |||||
Total current assets | 15,355 | 16,205 | -5 | % | |||||
Property, plant and equipment, net | 4,298 | 3,793 | 13 | % | |||||
Identifiable intangible assets, net | 282 | 283 | 0 | % | |||||
Goodwill | 139 | 139 | 0 | % | |||||
Deferred income taxes and other assets | 2,478 | 2,732 | -9 | % | |||||
TOTAL ASSETS | $ | 22,552 | $ | 23,152 | -3 | % | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Current portion of long-term debt | $ | 6 | $ | 6 | 0 | % | |||
Notes payable | 11 | 23 | -52 | % | |||||
Accounts payable | 1,961 | 1,938 | 1 | % | |||||
Accrued liabilities | 3,727 | 3,228 | 15 | % | |||||
Income taxes payable | 78 | 76 | 3 | % | |||||
Total current liabilities | 5,783 | 5,271 | 10 | % | |||||
Long-term debt | 3,469 | 3,472 | 0 | % | |||||
Deferred income taxes and other liabilities | 3,518 | 1,687 | 109 | % | |||||
Redeemable preferred stock | — | — | — | ||||||
Shareholders' equity | 9,782 | 12,722 | -23 | % | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 22,552 | $ | 23,152 | -3 | % | |||
NIKE, Inc. | ||||||||||||||||
DIVISIONAL REVENUES1 | ||||||||||||||||
|
|
|
|
|||||||||||||
% Change | % Change | |||||||||||||||
Excluding | Excluding | |||||||||||||||
THREE MONTHS ENDED |
% |
Currency |
NINE MONTHS ENDED |
% |
Currency | |||||||||||
(Dollars in millions) | 2/28/2018 | 2/28/2017 | Change |
Changes2 |
2/28/2018 | 2/28/2017 | Change |
Changes2 |
||||||||
North America | ||||||||||||||||
Footwear | $ 2,293 | $ 2,490 | -8% | -8% | $ 6,797 | $ 7,227 | -6% | -6% | ||||||||
Apparel | 1,153 | 1,154 | 0% | 0% | 3,731 | 3,744 | 0% | 0% | ||||||||
Equipment | 125 | 138 | -9% | -9% | 452 | 492 | -8% | -8% | ||||||||
Total | 3,571 | 3,782 | -6% | -6% | 10,980 | 11,463 | -4% | -4% | ||||||||
Europe, Middle East & Africa | ||||||||||||||||
Footwear | 1,489 | 1,271 | 17% | 7% | 4,250 | 3,844 | 11% | 6% | ||||||||
Apparel | 713 | 566 | 26% | 15% | 2,199 | 1,838 | 20% | 15% | ||||||||
Equipment | 97 | 88 | 10% | 0% | 327 | 297 | 10% | 6% | ||||||||
Total | 2,299 | 1,925 | 19% | 9% | 6,776 | 5,979 | 13% | 9% | ||||||||
Greater China | ||||||||||||||||
Footwear | 939 | 776 | 21% | 16% | 2,493 | 2,155 | 16% | 14% | ||||||||
Apparel | 368 | 271 | 36% | 30% | 1,074 | 895 | 20% | 19% | ||||||||
Equipment | 29 | 28 | 4% | -4% | 99 | 100 | -1% | -2% | ||||||||
Total | 1,336 | 1,075 | 24% | 19% | 3,666 | 3,150 | 16% | 15% | ||||||||
Asia Pacific & Latin America | ||||||||||||||||
Footwear | 884 | 777 | 14% | 12% | 2,584 | 2,382 | 8% | 9% | ||||||||
Apparel | 321 | 278 | 15% | 13% | 964 | 876 | 10% | 11% | ||||||||
Equipment | 63 | 67 | -6% | -7% | 182 | 201 | -9% | -9% | ||||||||
Total | 1,268 | 1,122 | 13% | 11% | 3,730 | 3,459 | 8% | 8% | ||||||||
Global Brand Divisions3 | 21 | 19 | 11% | 11% | 64 | 55 | 16% | 15% | ||||||||
TOTAL NIKE BRAND | 8,495 | 7,923 | 7% | 4% | 25,216 | 24,106 | 5% | 3% | ||||||||
Converse | 483 | 498 | -3% | -8% | 1,374 | 1,488 | -8% | -10% | ||||||||
Corporate4 | 6 | 11 | — | — | 18 | 79 | — | — | ||||||||
TOTAL NIKE, INC. REVENUES | $ 8,984 | $ 8,432 | 7% | 3% | $ 26,608 | $ 25,673 | 4% | 2% | ||||||||
TOTAL NIKE BRAND | ||||||||||||||||
Footwear | $ 5,605 | $ 5,314 | 5% | 2% | $ 16,124 | $ 15,608 | 3% | 2% | ||||||||
Apparel | 2,555 | 2,269 | 13% | 9% | 7,968 | 7,353 | 8% | 7% | ||||||||
Equipment | 314 | 321 | -2% | -6% | 1,060 | 1,090 | -3% | -4% | ||||||||
Global Brand Divisions3 | 21 | 19 | 11% | 11% | 64 | 55 | 16% | 15% | ||||||||
TOTAL NIKE BRAND REVENUES | $ 8,495 | $ 7,923 | 7% | 4% | $ 25,216 | $ 24,106 | 5% | 3% | ||||||||
1 Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation. This includes reclassified operating segment data to reflect the changes in the Company's operating structure, which became effective June 1, 2017. These changes had no impact on previously reported consolidated results of operations or shareholders' equity. |
||||||||||||||||
2 The percentage change has been calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure. |
||||||||||||||||
3 Global Brand Divisions revenues are primarily attributable to NIKE Brand licensing businesses that are not part of a geographic operating segment. |
||||||||||||||||
4 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 TAXES1,2 | ||||||||||||||||||||||
THREE MONTHS ENDED | % | NINE MONTHS ENDED | % | |||||||||||||||||||
(Dollars in millions) | 2/28/2018 | 2/28/2017 | Change | 2/28/2018 | 2/28/2017 | Change | ||||||||||||||||
North America | $ | 840 | $ | 980 | -14 | % | $ | 2,625 | $ | 2,896 | -9 | % | ||||||||||
Europe, Middle East & Africa | 417 | 361 | 16 | % | 1,205 | 1,159 | 4 | % | ||||||||||||||
Greater China | 496 | 381 | 30 | % | 1,268 | 1,127 | 13 | % | ||||||||||||||
Asia Pacific & Latin America | 298 | 228 | 31 | % | 849 | 703 | 21 | % | ||||||||||||||
Global Brand Divisions3 | (649 | ) | (598 | ) | -9 | % | (1,926 | ) | (1,988 | ) | 3 | % | ||||||||||
TOTAL NIKE BRAND | 1,402 | 1,352 | 4 | % | 4,021 | 3,897 | 3 | % | ||||||||||||||
Converse | 69 | 109 | -37 | % | 206 | 340 | -39 | % | ||||||||||||||
Corporate4 | (299 | ) | (119 | ) | -151 | % | (1,075 | ) | (478 | ) | -125 | % | ||||||||||
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES | 1,172 | 1,342 | -13 | % | 3,152 | 3,759 | -16 | % | ||||||||||||||
Interest expense (income), net | 13 | 19 | — | 42 | 41 | — | ||||||||||||||||
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES | $ | 1,159 | $ | 1,323 | -12 | % | $ | 3,110 | $ | 3,718 | -16 | % | ||||||||||
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. |
||||||||||||||||||||||
2 Certain prior year amounts have been reclassified to conform to fiscal 2018 presentation. This includes reclassified operating segment data to reflect the changes in the Company's operating structure, which became effective June 1, 2017. These changes had no impact on previously reported consolidated results of operations or shareholders' equity. |
||||||||||||||||||||||
3 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. |
||||||||||||||||||||||
4 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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180322006196/en/