Nike 2015 Annual Report Download - page 24

PART II
Fiscal 2015 Compared to Fiscal 2014
On a currency-neutral basis, revenues from NIKE, Inc. continuing operations
grew 14% for fiscal 2015, driven by increases in revenues for both the NIKE
Brand and Converse. Every NIKE Brand geography delivered higher revenues
for fiscal 2015 as our category offense continued to deliver innovative
products, deep brand connections and compelling retail experiences to
consumers. North America contributed 5 percentage points of the increase in
NIKE, Inc. revenues, while Western Europe contributed 4 percentage points,
Greater China contributed 2 percentage points and Central & Eastern Europe,
Emerging Markets and Converse each contributed 1 percentage point.
Excluding the effects of changes in currency exchange rates, NIKE Brand
footwear and apparel revenues increased 17% and 10%, respectively, while
NIKE Brand equipment revenues increased 1% during fiscal 2015. The
increase in NIKE Brand footwear revenues for fiscal 2015 was driven by
strong performance in our Sportswear, Basketball, Running and Football
(Soccer) categories. Footwear unit sales in fiscal 2015 increased 9% and
increases in average selling price per pair contributed approximately 8
percentage points of footwear revenue growth. The increase in average
selling price per pair was driven primarily by shifts in mix to higher-priced
products, and to a lesser extent, the favorable impact of growth in our higher-
priced DTC business.
The constant-currency increase in NIKE Brand apparel revenues for fiscal
2015 was driven by growth in most key categories, led by Sportswear,
Running and Women’s Training, which were partially offset by a decline in
Football (Soccer) due largely to the comparison to significant sales of replica
apparel in advance of the World Cup in 2014. Fiscal 2015 unit sales of apparel
increased 8% and increases in average selling price per unit contributed
approximately 2 percentage points of apparel revenue growth. The increase
in average selling price per unit was driven primarily by increased revenues
from our higher-priced DTC business.
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 2015, DTC revenues represented approximately 23% of our total NIKE
Brand revenues compared to 20% in fiscal 2014. On a currency-neutral
basis, DTC revenues grew 29% for fiscal 2015, driven by strong comparable
store sales growth of 16%, significant online sales growth and the addition of
new stores. 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 59% in fiscal 2015. Online sales represented approximately 18% of our
total NIKE Brand DTC revenues for fiscal 2015 compared to 15% for fiscal
2014.
On a wholesale equivalent basis and excluding the effects of changes in
currency exchange rates, fiscal 2015 NIKE Brand Men’s revenues increased
9%, driven by growth in our Sportswear, Basketball and Running categories.
Women’s revenues accelerated in fiscal 2015, achieving 20% growth
primarily due to increases in Sportswear, Running and Women’s Training
categories. Revenues in our Young Athletes’ business increased 19% as a
result of continued efforts to expand footwear and apparel offerings for this
group across multiple categories, particularly Basketball.
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. Footwear unit sales in
fiscal 2014 increased approximately 7% and the average selling price per pair
contributed approximately 5 percentage points of footwear revenue growth,
driven nearly equally by price increases and shifts 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 contributed
approximately 4 percentage points of apparel revenue growth, driven by price
increases and, to a lesser extent, a shift in mix to higher-priced products.
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. Online sales through NIKE-owned websites 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.
Futures Orders
Futures orders for NIKE Brand footwear and apparel scheduled for delivery
from June through November 2015 were 2% 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 13%, with unit orders
and average selling price per unit contributing approximately 8 and 5
percentage points of growth, respectively.
By geography, futures orders growth was as follows:
Reported Futures
Orders Futures Orders Excluding Currency Changes(1)
North America 13% 13%
Western Europe -11% 14%
Central & Eastern Europe -9% 17%
Greater China 20% 22%
Japan 1% 20%
Emerging Markets -14% 2%
TOTAL NIKE BRAND FUTURES ORDERS 2% 13%
(1) Reported futures have been restated using prior year 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. 2015 Annual Report and Notice of Annual Meeting 85
FORM 10-K