BEAVERTON, Ore., December 21, 2017 - NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2018 second quarter ended November 30, 2017. For the quarter, revenue growth was driven by international geographies and continued strength in NIKE Direct, which was partly offset by an expected decline in North America wholesale revenue.
Diluted earnings per share were $0.46, down 8 percent compared to the same period last year due primarily to a decline in gross margin and higher selling and administrative expense, which offset solid revenue growth, a lower tax rate and a lower average share count.
“This quarter, led by our Consumer Direct Offense, we accelerated international growth and built underlying momentum in our domestic business,” said Mark Parker, Chairman, President and CEO, NIKE, Inc. “For the back half of the fiscal year, NIKE’s innovation line-up is as strong as it’s ever been and we’ll continue to actively shape retail through new differentiated experiences.”*
Revenues for NIKE, Inc. increased 5 percent to $8.6 billion, up 3 percent on a currency-neutral basis.**
Revenues for the NIKE Brand were $8.1 billion, up 4 percent on a constant-currency basis, driven by EMEA, Greater China and APLA, including growth in the Sportswear and NIKE Basketball categories.
Revenues for Converse were $408 million, down 4 percent on a currency-neutral basis, as international growth was more than offset by declines in North America.
Gross margin declined 120 basis points to 43.0 percent, as higher average selling prices were more than offset by unfavorable changes in foreign currency exchange rates and, to a lesser extent, higher product costs per unit.
Selling and administrative expense increased 10 percent to $2.8 billion. Demand creation expense was $877 million, up 15 percent, primarily driven by higher sports marketing and advertising costs. Operating overhead expense increased 8 percent to $1.9 billion, due largely to higher administrative costs and continued investments in NIKE Direct.
Other expense, net was $18 million as net foreign currency exchange losses were partially offset by non-operating items.
The effective tax rate was 12.7 percent, compared to 24.4 percent for the same period last year, reflecting the tax benefit from stock-based compensation in the current period, as well as 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 decreased 9 percent to $767 million as a decline in gross margin and higher selling and administrative expense more than offset revenue growth and a lower tax rate, while diluted earnings per share decreased 8 percent from the prior year to $0.46, including a 2 percent decline in the weighted average diluted common shares outstanding.
Inventories for NIKE, Inc. were $5.3 billion, up 6 percent from November 30, 2016, driven primarily by changes in foreign currency exchange rates and, to a lesser extent, an increase in NIKE Brand units.
Cash and equivalents and short-term investments were $6.4 billion, $446 million higher than last year due to net income, and proceeds from debt issuance and employee exercises of stock options, which more than offset share repurchases, dividends and investments in infrastructure.
During the second quarter, NIKE, Inc. repurchased a total of 16.7 million shares for approximately $902 million as part of the four-year, $12 billion program approved by the Board of Directors in November 2015. As of November 30, 2017, a total of 111.8 million shares had been repurchased under this program for approximately $6.2 billion.
NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on December 21, 2017, to review fiscal second 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, January 4, 2018.
Download the PDF of the FY18 Q2 Press Release and Schedules
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.
The Converse x Vince Staples collection features a shoe fans will remember from the Long Beach rapper's recent Life Aquatic tour.
The Converse x Vince Staples collection features a shoe f...
Designed by Tony Hardman and debuted in Cleveland, the PG2 arrives February 10 in a special PlayStation colorway.
Designed by Tony Hardman and debuted in Cleveland, the PG...
Eight Air Max Zero silhouettes designed by young Imaginairs celebrate the creative impulse of air. The shoes will be available in grade school sizes beginning January 20,
Eight Air Max Zero silhouettes designed by young Imaginai...
The AF1 CR7 is available January 11.
The iconic Jordan XI hits the gridiron this weekend.
A special-edition training shoe for quarterback Russell Wilson is...
Nike announced today that it has signed its second major wind contract with Avangrid Renewables — this time for 86 megawatts of Texas wind power — positioning the brand to achieve its 2025 target of sourcing 100-percent renewable energy.
Nike announced today that it has signed its second major ...
A discrete group of internal Nike designers rethinks the Nike Air Force 1 and Air Jordan 1 for the first time.
A discrete group of internal Nike designers rethinks the ...
Limited units of the Nike VaporMax Plus drop today on SNKRS.
This spring, the Air Jordan I and Air Jordan XIII are reimagined with new color ways and the Air Jordan X celebrates its 23rd year.
This spring, the Air Jordan I and Air Jordan XIII are rei...
The NikeCourt Melbourne collection, including the NikeCourt Air Zoom Vapor X, is available now for men and women on nike.com
The NikeCourt Melbourne collection, including the NikeCou...
EQUALITY represents Nike’s belief that sport brings people together like nothing else. The ongoing effort to encourage people to take the fairness and respect they see in sport and translate them off the field.
EQUALITY represents Nike’s belief that sport brings peopl...
Learn what this year’s dates, graphics and colors represent, and find out when NBA players will wear EQUALITY and BHM apparel on court. Products will be available starting January 15 on nike.com.
Learn what this year’s dates, graphics and colors represe...
The collection comes in women’s sizes 5-12.
The jacket system, pants, boots and gloves that make up Team USA's medal stand look celebrate success (while keeping the athletes warm and comfortable). You can buy the products January 15 on nike.com.
The jacket system, pants, boots and gloves that make up T...