Nike FY 4Q15 Earnings Call Notes

Nike is a growth company

“We’ve shown once again that NIKE is a growth company. Here are the fiscal ’15 highlights. NIKE, Inc. revenues grew 10% to $30.6 billion, despite significant FX headwinds. On a currency neutral basis, NIKE, Inc. revenues grew 14%. Gross margin increased 120 basis points to 46%. Earnings per share rose 25% to $3.70 and we delivered ROIC of 28%. These are the quality results that our shareholders have come to expect from us and that we demand from ourselves. One of the reasons we are able to deliver results like these are the talented people who work at NIKE around the world.”

Nike continues to build digital

“At NIKE innovation comes in many forms and our growing digital ecosystem is the great example. Consumers are increasingly connected and utilizing premium personal digital services. Digital is an accelerator of growth that is shaping everything we do. We are building deep connections to consumers with digital services and communities to driving rapid expansion of our e-commerce business”

Always moving forward

“What I just recapped is by no means an exhaustive list, but it clearly shows how much ground this company can cover in just one year. And while we’re pleased with this year’s results, at NIKE, we’re always moving forward. We’re relentless in our pursuit to get better and we see opportunities that no one else can and most importantly we have the resources and the talented team to deliver.”

Put the consumer at the center

“The success in our business is a natural outcome of putting the consumer at the center of everything we do, our connection with consumers strengthens our brand every day from our own retail to wholesale partners, from in store to online, from digital experiences to unforgettable live events. It’s those deep and authentic connections that power the NIKE Brand around the world.’

There are some headwinds out there, but we’re confident we can keep expanding margin

“There are some headwinds out there of course with labor inflation and FX, but on the flipside, we’ve done a pretty consistent job of raising average gross selling prices, our DTC business of course is accretive. So overall on margin, we’re pretty confident we can keep moving margin forward.”

Passing of the trade bill and new manufacturing technologies could shift the global supply chain

“the passing of the TPA was obviously an important step toward what we hope is a final approval of TPP and as we’ve said before as you know, this will help us to accelerate the work that we’re doing with advanced manufacturing, will help us expand our business overall, I think certainly give us an opportunity to build local manufacturing here in the United States, can put us closer to market events, some of the innovation particularly in the area of customization. We are in the middle – Don had mentioned this briefly, but scaling our advanced manufacturing initiatives, which we’ve really been working on over the past three to four years, so you’re going to start see those scale, but opportunity to get some – translate some duty relief into investing in our advanced manufacturing supply chain efforts here in the United States is going to be significant we hope, I mean, that’s our goal. So that the idea is that we will accelerate and we will see some real benefits from that. I think you’re going to see the overall supply chain geographically shift a bit here and there with the advancements of new manufacturing innovation. That is a major priority for NIKE. It will give us the flexibility to create more localized manufacturing overtime, and that will put us closer to market and again allow us to advance products, particularly in the customization area and to meet more local demand as well.”

“brand accretive”

‘ we feel very confident that we’re going to be working through that inventory in a way that’s brand accretive and is not going to be problematic from a profitability standpoint.”