Nike 2011 Annual Report Download - page 4

4 NIKE,INC.-Form10-K
PARTI
ITEM1Business
Because NIKE is a consumer products company, the relative popularity
of various sports and fi tness 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 infl uencing sports and
fi tness preferences through aggressive marketing. Failure to respond in a timely
and adequate manner could have a material adverse effect on our sales and
profi tability. 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, development, marketing and selling of athletic footwear,
apparel, and equipment.Effective June1,2009, we began operating under
our new organizational structure for the NIKE Brand, which consists of the
following six geographies: North America, Western Europe, Central& Eastern
Europe, Greater China, Japan, and Emerging Markets. Previously, NIKE
Brand operations were organized into the following four geographic regions:
U.S., Europe, Middle East and Africa (collectively, “EMEA”), Asia Pacifi c, and
Americas. Our NIKE Brand Direct to Consumer operations are managed within
each geographic segment.
UnitedStates Market
In fi scal2011, sales in the UnitedStates including U.S. sales of our Other
Businesses accounted for approximately 43% of total revenues, compared to
42% in fi scal2010 and 2009. Our Other Businesseswere primarily comprised
of our affi liate brands; Cole Haan, Converse, Hurley and Umbro (which was
acquired on March3,2008); and NIKE Golf. We estimate that we sell to more
than 20,000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 fi scal2011, our three largest customers
accounted for approximately 23% of sales in the UnitedStates.
We make substantial use of our “futures” ordering program, which allows
retailers to order fi ve to sixmonths in advance of delivery with the commitment
that their orders will be delivered within a set time period at a fi xed price.
Infi scal2011, 87% of our U.S. wholesale footwear shipments (excluding our
Other Businesses) were made under the futures program, compared to 89%
in fi scal2010 and 2009. In fi scal2011, 60% of our U.S. wholesale apparel
shipments (excluding our Other Businesses) were made under the futures
program, compared to 62% in fi scal2010 and 60% in fi scal2009.
We utilize 18NIKE sales offi ces to solicit sales in the UnitedStates. We also
utilize 4 independent sales representatives to sell specialty products for golf
and5 for skateboarding and snowboarding products. In addition, our Direct to
Consumer operations sell NIKE Brand products through our internet website,
www.nikestore.com, and thefollowing retail outlets in the UnitedStates:
U.S. Retail Stores Number
NIKE factory stores 150
NIKE stores 16
NIKETOWNs 9
NIKE employee-only stores 3
Cole Haan stores (including factory stores) 107
Converse stores (including factory stores) 58
Hurley stores (including factory and employee stores) 20
TOTAL 363
NIKE’s three signifi cant distribution centers in the UnitedStates for NIKE Brand
products, including NIKE Golf, are located in Memphis, Tennessee. NIKE
also operates and leases one facility in Memphis, Tennessee for NIKE Brand
product returns. NIKE Brand apparel and equipment products are also shipped
from our Foothill Ranch, California distribution center. Cole Haan products
are distributed primarily from Greenland, New Hampshire, and Converse and
Hurley products are shipped primarily from Ontario, California.
International Markets
In fi scal2011, non-U.S. sales (including non-U.S. sales of our Other Businesses)
accounted for 57% of total revenues, compared to 58% in fi scal2010 and 2009.
We sell our products to retail accounts, through our own Direct to Consumer
operations, and through a mix of independent distributors and licensees
around the world. We estimate that we sell to more than 20,000retail accounts
outside the UnitedStates, excluding sales by independent distributors and
licensees. We operate 16distribution centers outside of the UnitedStates.
In many countries and regions, including Canada, Asia, some Latin American
countries, and Europe, we have a futures ordering program for retailers similar
to the UnitedStates futures program described above. During fi scal2011,
NIKE’s three largest customers outside of the U.S. accounted for approximately
9% of total non-U.S.sales.
Our Direct to Consumer business operates the following retail outlets outside the UnitedStates:
Non-U.S. Retail Stores Number
NIKE factory stores 243
NIKE stores 50
NIKETOWNs 3
NIKE employee-only stores 13
Cole Haan stores 83
Hurley stores 1
TOTAL 393