NIKE Reports Second Quarter Earnings up 81 Percent;
Worldwide Futures Orders Increase 54 PercentBEAVERTON, Ore., Dec. 18 /PRNewswire/ -- NIKE, Inc. (NYSE: NKE) today reported record revenues and earnings for the Company's second quarter ended November 30, 1996. Second quarter net income totaled $176.9 million or $0.60 per share compared to $97.8 million, or $0.34 per share. Worldwide revenues were $2.10 billion, up 55 percent from $1.36 billion last year.*
The Company also reported worldwide futures orders for athletic footwear and apparel scheduled for delivery between December 1996 and April 1997 total a record $4.1 billion, 54 percent higher than such orders for the same period last year. Worldwide futures orders were not materially impacted by the change in value of the U.S. dollar compared to year-ago levels. This significant increase in worldwide orders for the period is due both to continued growth of NIKE core business and a change in the mix of futures and "at once" shipments as NIKE futures programs become more established on a global basis, particularly in apparel.**
NIKE Chairman Philip H. Knight stated, "It is rare that a company our size in any industry can generate the growth NIKE has achieved over the past 24 months. These record results are a testament to the strength of the NIKE team, which has raised the measure of our brand strength to unprecedented levels throughout the world.
"The strength of our team can be seen in the U.S., where sales of men's running and basketball footwear -- which most observers consider "mature" categories for NIKE -- grew 90 percent and 38 percent respectively in the second quarter. It can be seen in our customer service center in Laakdal, Belgium, the distribution source for Western Europe, which shipped the product that enabled each of our five top European countries to grow by more than 35 percent in the quarter. But perhaps our team strength is best seen in NIKE Japan, where, in the second quarter of fiscal 1997, revenues increased by almost 200 percent on a constant dollar basis.
"Led by record numbers from NIKE Japan, international revenues increased 60 percent in the quarter compared to last year. Excluding the record results from NIKE Japan, the balance of the Asia Pacific region still grew 50 percent. We continued to gain market share in key European markets such as the United Kingdom where constant-dollar revenues increased 93 percent in the quarter. There is tremendous excitement for our brand in Brazil, where our recently-announced association with Confederacao Brasileira de Futebol will put NIKE and the world's premiere national soccer team together on the global soccer stage starting next month.**
"In the U.S., we continued to see balanced growth across the footwear spectrum, with key categories such as women's fitness up 79 percent and men's training up 57 percent. On a trailing 12-month basis, U.S. footwear revenues at the end of the quarter exceeded $3 billion for the first time. Our U.S. apparel business continued its excellent performance in the second quarter, with revenues increasing 93 percent. This number is particularly impressive given the 100 percent revenue increase we saw in the same period last year.
"The significant growth we've seen over the past two years may best be viewed in the context of our worldwide futures orders, which topped $4 billion, more than double the figure we reported 24 months ago. In the U.S., key footwear categories such as women's fitness, men's basketball, men's running and kids all showed futures increases of more than 50 percent."
In the second quarter, U.S. athletic footwear and apparel revenues totaled $1.19 billion, an increase of 63 percent. International athletic footwear and apparel revenues increased 60 percent to $779.3 million. Had the U.S. dollar remained constant at year-ago levels, international revenues would have increased 67 percent in the quarter. Revenues from other brands, which include Bauer, Cole Haan(R), Tetra Plastics and Sports Specialties, decreased one percent to $133.6 million.
Consolidated gross margins for the quarter were 39.4 percent compared to 39.0 percent last year. Selling and administrative expenses were 25.2 percent of second quarter revenues, compared to 26.1 percent last year.
NIKE's balance sheet remained very strong. The current ratio at November 30, 1996, was 2.1 to 1. Cash and short-term investments totaled $267.5 million. Total U.S. footwear inventory units ended the quarter up 24 percent compared to August 31, 1996, and down six percent from November 30, 1995.
NIKE, Inc., based in Beaverton, Oregon, is the world's leading designer and marketer of authentic athletic footwear, apparel and accessories for a wide variety of sports and fitness activities. Wholly-owned NIKE subsidiaries include Bauer Inc., the world's leading manufacturer of hockey equipment; Cole Haan, which markets a line of high-quality men's and women's dress and casual shoes; and Sports Specialties Corporation, which markets a full line of licensed headwear. All per share data reflects the Company's 2-for-1 stock split that became effective October 23, 1996. Total revenues for the trailing twelve months ending November 30, 1996, were $7.82 billion.
* Certain of the Company's international subsidiaries changed their fiscal years to coincide with the Company's consolidated fiscal year-end of May. This change, effective June 1, 1996, does not have a material effect on the annual results of operations. The results reported this quarter are reflecting the change in the international subsidiaries' year-end and are therefore not comparable to the second quarter results as reported last year. Comparisons for the second quarter last year are stated as they would have appeared had the subsidiaries reported on a same month basis.
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