Nike 2009 Annual Report Download - page 4

Our wholly-owned subsidiary, Converse Inc. (“Converse”), headquartered in North Andover,
Massachusetts, designs, distributes, and licenses athletic and casual footwear, apparel and accessories under the
Converse®, Chuck Taylor®, All Star®, One Star®, and Jack Purcell®trademarks.
Our wholly-owned subsidiary, Hurley International LLC (“Hurley”), headquartered in Costa Mesa,
California, designs and distributes a line of action sports apparel for surfing, skateboarding, and snowboarding,
youth lifestyle apparel, and accessories under the Hurley®trademark.
Our wholly-owned subsidiary, Umbro Ltd. (“Umbro”), headquartered in Manchester, England, designs,
distributes and licenses athletic and casual footwear, apparel and equipment, primarily for the sport of soccer,
under the Umbro®trademarks.
Sales and Marketing
Financial information about geographic and segment operations appears in Note 19 of the accompanying
consolidated financial statements on page 85.
We experience moderate fluctuations in aggregate sales volume during the year. Historically, revenues in
the first and fourth fiscal quarters have slightly exceeded those in the second and third quarters. However, the
mix of product sales may vary considerably as a result of changes in seasonal and geographic demand for
particular types of footwear, apparel and equipment.
Because NIKE is a consumer products company, the relative popularity of various sports and fitness
activities and changing design trends affect the demand for our products. We must therefore respond to trends
and shifts in consumer preferences by adjusting the mix of existing product offerings, developing new products,
styles and categories, and influencing sports and fitness preferences through aggressive marketing. Failure to
respond in a timely and adequate manner could have a material adverse effect on our sales and profitability. This
is a continuing risk.
We report our NIKE brand operations based on our internal geographic organization. Each NIKE brand
geography operates predominantly in one industry: the design, production, marketing and selling of sports and
fitness footwear, apparel, and equipment. The geographic organization consists of the following four
regions: U.S., Europe, Middle East and Africa (collectively, “EMEA”), Asia Pacific, and Americas. As
previously announced, in the fourth quarter of fiscal 2009, we initiated a reorganization of the NIKE brand into a
new model consisting of six geographies. As a result of the reorganization, beginning in the first quarter of fiscal
2010, our new organizational structure will consist of the following geographies: North America, Western
Europe, Central/Eastern Europe, Greater China, Japan, and Emerging Markets.
United States Market
In fiscal 2009, sales in the United States including U.S. sales of our Other businesses accounted for
approximately 42% of total revenues, compared to 43% in fiscal 2008 and 47% in fiscal 2007. For fiscal 2009,
our Other businesses were primarily comprised of Cole Haan, Converse, Hurley, NIKE Golf and Umbro (which
was acquired on March 3, 2008). For fiscal 2008 and 2007, our Other businesses were primarily comprised of
Cole Haan, Converse, Exeter (whose primary business was the Starter brand business which was sold on
December 17, 2007), Hurley, NIKE Bauer Hockey (which was sold on April 17, 2008), NIKE Golf and Umbro.
We estimate that we sell to more than 23,000 retail accounts in the United States. The NIKE brand domestic
retail account base includes a mix of footwear stores, sporting goods stores, athletic specialty stores, department
stores, skate, tennis and golf shops, and other retail accounts. During fiscal 2009, our three largest customers
accounted for approximately 25% of sales in the United States.
We make substantial use of our “futures” ordering program, which allows retailers to order five to
six months in advance of delivery with the commitment that their orders will be delivered within a set time
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