29 Jun Nike reaps $25.3 billion in FY13
It’s easy to pull out a vintage year from Nike’s foray into China.
Let’s take a look at fiscal 2009. A very good year, with robust sales in excess of $1.7 billion — nearly 30 percent more than 2008. Thirty percent!
Then there’s fiscal 2011. Its $2.06 billion in sales marked a milestone, as Greater China sales exceeded $2 billion for the first time, besting a relatively flat 2010 by 18 percent.
And in 2012, China sales blossomed to about $2.5 billion, 23 percent over 2011.
But Nike executives have been warning for months that stock analysts should expect a souring of the company’s China performance in fiscal 2013. And, in unaudited figures reported Thursday, they presented a decidedly non-vintage $2.45 billion in sales for China — a 3 percent drop from the previous year.
Executives warned analysts Thursday that the Oregon sports apparel and equipment company would likely serve up the same flat performance in the world’s biggest market for the foreseeable future.
“Our reported results for China won’t always follow a smooth trajectory,” chief financial officer Don Blair said in a conference call. “It’s difficult to predict how quickly we’ll return to sustained growth.”
But the company’s overall performance in the fourth quarter ended May 31, as well as the 2013 fiscal year, was hardly reflective of a single place on the map — even an important place like China.
Fourth quarter revenues increased 7 percent to $6.7 billion, or up 9 percent on a currency-neutral basis for the quarter ended May 31.
The unaudited figures show Nike was a $25.3 billion company in fiscal 2013, with revenues up 8 percent from last year’s $23.3 billion.
Quarterly net income, or profit, increased 25 percent to $696 million, from $559 million in the fourth quarter last year. Diluted earnings per share increased 27 percent to 76 cents per share, a penny higher than had been predicted by stock analysts.
For the year, net income increased 9 percent, from about $2.27 billion to $2.46 billion.
Looking forward to 2014, a year with the Winter Olympics as well as soccer’s World Cup, should prove as bountiful for Nike, chief executive Mark Parker said.
“We’re set to grow, to explore, refine and leverage our leadership position” as the world’s largest sports footwear and apparel company, Parker said. “We have scale, power and passion, and we’re not shy about using them.”
Nike Brand revenues rose 8 percent for the year, with growth across each product type and in every geography except Western Europe and Greater China. For the fourth quarter, Nike Brand revenues were higher in running, basketball, men’s training and women’s training, offsetting slight declines in sportswear, action sports and soccer.
Parker touted Nike’s knack for developing new products, mentioning one in muted detail. He said the company would introduce a running shoe in August that would be a cross between a Flyknit and Nike Free shoe.
“I’m tempted to say more,” said Parker, an occasional shoe designer, “but I can’t.”
One of the challenges in creating products, Parker told analysts, was knowing how to say “no” or “something else” to new ideas.
“I know the discipline that needs to go with managing innovation to achieve the greatest impact,” he said.
Several parts of the hour-long conference call were spent paying homage to Charlie Denson, the Nike Brand president who announced last week he’d be leaving the company in January. He will be replaced by Trevor Edwards, previously executive vice president of global brand and category management.
Parker has worked with Denson for most of Denson’s 34 years at the company.
Denson is “a brilliant and affable man, easy to respect and easy to like,” Parker said. “Charlie has showed the next generation what it takes — and what it means — to be a Nike leader.”
— Allan Brettman