Nike FY 1Q16 Earnings Call Notes

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New CFO

” Before I move into a discussion on our business, I want to take a moment to introduce our new Chief Financial Officer Andy Campion. As you know, Don Blair retired from the CFO role as of July 31. ”

14% currency neutral revenue growth. 23% EPS growth

“NIKE Inc. revenues grew 5% to $8.4 billion, despite significant FX headwinds. On a currency neutral basis, NIKE Inc. revenues grew 14%. Gross margin expanded 90 basis points to 47.5% and earnings per share increased 23% to $1.34.”

Ecommerce revenue up 46%

“revenue for e-commerce business. It’s up an incredible 46% on a constant currency basis, with robust growth across all of our geographies”

Relentless focus on innovation

” Our obsession with speed has driven us for years, so we never settle, always looking to shave off that extra second. This relentless focus on innovation can be seen in the momentum of our Zoom Air technology”

Mindful of economic volatility in China, but focused on what we can control

“the brand in China is extremely strong. And that’s a piece that we have known for a while. As we went through the reset strategy, we wanted to be really focused on how to make sure that we could drive the Business. So, we’re very mindful of the macroeconomic volatility in the marketplace. But we continue to really focus on the things that we can control which is how we continue to bring excitement to the marketplace and also continue to align the marketplace around our category offense and we’re seeing success from that perspective.”

Inventory still elevated thanks to port issue

“demand for our products continues to be very strong in the marketplace. What we’re working through is the impact of the west coast port congestion from earlier this year. And what we have done is we have seen the actual flow of product from the port normalize. At the same time, we’re working to efficiently clear the excess inventory to keep the in-line channel healthy.”

Europe is an example of complete offense working

“I will just quickly add, we’re seeing incredible brand strength, too, across the major cities across Europe. And I think that is helping as well. The product that we’ve been introducing to the market has resonated — sell-throughs are strong. Western Europe is a great example of a complete offense, not just the category offense working, but the complete offense. So, we really feel good about executing across the categories up and down the price point spectrum and across the major channels as well. e-commerce”

The Jordan brand can transcend basketball

“I want to add, Jordan is a tremendous brand globally. It’s not just a subset of NIKE basketball. It’s a stand-alone brand with tremendous potential to resonate beyond basketball as a category. So, it’s largely been basketball-based and that will always be the core of the Jordan brand. With that though, we see tremendous opportunity to expand that brand, not just here in North America, but around the world.”

The Olympics are great for the world, but especially for Nike

“Clearly, the Olympics are a great sport moment for the world, but certainly for NIKE. These global events at this scale, the Olympics and the World Cup really stand above and beyond all sports events. And for us, there’s an opportunity to really bring our best product, the best innovation, our best storytelling out, serve the athletes at the highest level.”