Nike 2014 Annual Report Download - page 24

PART II
Fiscal 2014 Compared to Fiscal 2013
On a currency neutral basis, revenues from NIKE, Inc. continuing operations
grew 11% for fiscal 2014, driven by increases in revenues for both the NIKE
Brand and Converse. Every NIKE Brand geography delivered higher revenues
for fiscal 2014. North America contributed 5 percentage points of the increase
in NIKE, Inc. revenues, while Western Europe and Emerging Markets each
contributed 2 percentage points and Central & Eastern Europe and Converse
each contributed 1 percentage point.
On a currency neutral basis, NIKE Brand footwear and apparel revenues
increased 12% and 10%, respectively, while NIKE Brand equipment
revenues increased 4% during fiscal 2014. The increase in NIKE Brand
footwear revenues for fiscal 2014 was mainly due to growth in our Basketball,
Sportswear, Running, and Football (Soccer) categories. The growth of NIKE
footwear revenues continued to be fueled by increased demand for
performance products, including NIKE and Brand Jordan Basketball styles;
Running models with NIKE Free, Air Max, Lunar, and Flyknit technologies;
and performance Football (Soccer) products. Footwear unit sales in fiscal
2014 increased approximately 7% and the average selling price per pair
increased approximately 5%, driven nearly equally by price increases and a
shift in mix to higher priced products.
For NIKE Brand apparel, the increase in revenues for fiscal 2014 was driven
by growth in all key categories, most notably our Football (Soccer), Running,
and Women’s Training categories. In fiscal 2014, unit sales of apparel
increased approximately 6% and the average selling price per unit increased
approximately 4%, driven by price increases, and to a lesser extent, a shift in
mix to higher priced products.
While wholesale revenues remain the largest component of overall NIKE
Brand revenues, we continue to expand our DTC businesses in each of our
geographies. Our NIKE Brand DTC operations include NIKE-owned in-line
and factory stores, as well as online sales through NIKE-owned websites. For
fiscal 2014, DTC revenues represented approximately 20% of our total NIKE
Brand revenues compared to 18% in fiscal 2013. On a currency neutral basis,
DTC revenues grew 22% for fiscal 2014, as comparable store sales grew
10% and we continued to open new stores and expand our e-commerce
business. Comparable store sales include revenues from NIKE-owned in-line
and factory stores for which all three of the following requirements have been
met: (1) the store has been open at least one year, (2) square footage has not
changed by more than 15% within the past year, and (3) the store has not
been permanently repositioned within the past year. Online sales through
NIKE-owned websites, which are not included in comparable store sales,
grew 42% in fiscal 2014. Online sales represented approximately 15% of our
total NIKE Brand DTC revenues for fiscal 2014, compared to 12% for fiscal
2013.
On a wholesale equivalent basis and excluding the effects of changes in
currency exchange rates, fiscal 2014 NIKE Brand Men’s revenues increased
9% mainly as a result of strong growth in our Basketball, Football (Soccer),
Running, and Sportswear categories. Women’s revenues increased 12% in
large part due to increases in our Running, Sportswear, and Women’s
Training categories. The 16% increase in the Young Athletes’ business was
driven by increases in the Basketball and Football (Soccer) categories in part
due to our expanded footwear and apparel offerings for this age group.
Fiscal 2013 Compared to Fiscal 2012
On a currency neutral basis, revenues from our NIKE, Inc. continuing
operations grew 11% for fiscal 2013, driven by increases in revenues for both
the NIKE Brand and Converse. Every NIKE Brand geography except Greater
China delivered higher revenues for fiscal 2013. North America contributed 7
percentage points of the increase in NIKE, Inc. revenues, while Emerging
Markets contributed 2 percentage points and Western and Central & Eastern
Europe each contributed 1 percentage point. Greater China’s results reduced
NIKE, Inc. revenue growth by 1 percentage point. Revenues for Converse
contributed 1 percentage point to our consolidated revenue growth.
Excluding the effects of changes in currency exchange rates, NIKE Brand
footwear and apparel revenues increased 11% and 10%, respectively, while
NIKE Brand equipment revenues increased 17% during fiscal 2013. The
increase in NIKE Brand footwear revenues for fiscal 2013 was attributable to
growth across our Running, Basketball, Football (Soccer), and Sportswear
categories. The growth of NIKE footwear revenues continued to be fueled by
increased demand for performance products, including Running models with
NIKE Free and Lunar technologies, NIKE and Brand Jordan Basketball styles,
and performance Football (Soccer) products. In fiscal 2013, unit sales of
footwear increased approximately 7% and the average selling price per pair
increased approximately 4%, driven equally by price increases and a shift in
mix to higher priced products.
For NIKE Brand apparel, the increase in revenues for fiscal 2013 was driven
by our Men’s Training category (which includes the NFL licensed business), in
addition to strong demand for Running and Basketball products. Apparel unit
sales in fiscal 2013 increased approximately 7% and the average selling price
per unit increased approximately 3%, reflecting a favorable mix of higher
priced products, such as performance Running, Basketball, and NFL licensed
apparel; and to a lesser extent, higher selling prices.
For fiscal 2013, DTC channels represented approximately 18% of overall
NIKE Brand revenues compared to 16% in fiscal 2012. On a currency neutral
basis, DTC revenues grew 24% for fiscal 2013, as comparable store sales
grew 14% and we continued to expand our store network and e-commerce
businesses. Online sales through NIKE-owned websites grew 32% in fiscal
2013 and represented approximately 12% of our total NIKE Brand DTC
revenues for fiscal 2013.
On a wholesale equivalent and currency neutral basis, fiscal 2013 NIKE Brand
Men’s revenues increased 9% due primarily to growth in our Running, Men’s
Training, and Basketball categories. Women’s revenues increased 9% driven
primarily by an increase in Running and Women’s Training. The 11% increase
in the Young Athletes’ business was due primarily to increases in Basketball.
Futures Orders
Futures orders for NIKE Brand footwear and apparel scheduled for delivery
from June through November 2014 were 11% higher than the orders
reported for the comparable prior year period. The U.S. Dollar futures order
amount is calculated based upon our internal forecast of the currency
exchange rates under which our revenues will be translated during this
period. Excluding the impact of currency changes, futures orders increased
12%, with unit orders and average selling price per unit contributing
approximately 8 and 4 percentage points of growth, respectively.
By geography, futures orders growth was as follows:
Reported Futures
Orders Growth Futures Orders Excluding Currency Changes(1)
North America 11% 11%
Western Europe 25% 22%
Central & Eastern Europe 10% 14%
Greater China 6% 6%
Japan -6% 0%
Emerging Markets 2% 9%
Total NIKE Brand futures orders 11% 12%
(1) Growth rates have been restated using constant exchange rates for the comparative period to enhance the visibility of the underlying business trends excluding the impact of foreign
currency exchange rate fluctuations.
NIKE, INC. 2014 Annual Report and Notice of Annual Meeting 67
FORM 10-K