Nike 2015 Annual Report Download - page 30

PART II
Central & Eastern Europe
(Dollars in millions) Fiscal 2015 Fiscal 2014 % Change
% Change
Excluding
Currency
Changes Fiscal 2013 % Change
% Change
Excluding
Currency
Changes
Revenues by:
Footwear $ 827 $ 763 8% 22% $ 672 14% 15%
Apparel 495 532 -7% 5% 468 14% 17%
Equipment 95 92 3% 14% 89 3% 7%
TOTAL REVENUES $ 1,417 $ 1,387 2% 15% $ 1,229 13% 15%
Revenues by:
Sales to Wholesale Customers $ 1,237 $ 1,245 -1% 11% $ 1,126 11% 13%
Sales Direct to Consumer 180 142 27% 48% 103 38% 45%
TOTAL REVENUES $ 1,417 $ 1,387 2% 15% $ 1,229 13% 15%
EARNINGS BEFORE INTEREST AND TAXES $ 247 $ 279 -11% $ 234 19%
Fiscal 2015 Compared to Fiscal 2014
Excluding changes in currency exchange rates, Central & Eastern Europe
revenues for fiscal 2015 grew 15%, attributable to increases in most
territories. Turkey, one of our largest territories, grew 23% and our distributors
business grew 18%, while revenues declined in Israel, our smallest territory.
On a category basis, revenue growth was driven by increases in most key
categories, primarily Sportswear and Running. DTC revenues increased 48%,
driven by strong comparable store sales growth of 28%, the addition of new
stores and online sales growth.
The constant currency growth in footwear revenue in fiscal 2015 was driven
by growth in nearly all key categories, most notably Sportswear and Running.
Unit sales of footwear increased 11% and increases in average selling price
per pair contributed approximately 11 percentage points of footwear revenue
growth. The increase in average selling price per pair was driven by price
increases in response to inflationary conditions in certain territories, as well as
shifts in mix to higher-priced products.
The constant currency growth in apparel revenue in fiscal 2015 resulted from
growth in most key categories, led by Sportswear and Running, partially offset
by a decline in Football (Soccer) due to comparison to strong sales related to
the World Cup in fiscal 2014. Unit sales of apparel increased 1% and
increases in average selling price per unit contributed approximately 4
percentage points of apparel revenue growth. The increase in average selling
price per unit was primarily due to price increases in response to inflationary
conditions in certain territories.
On a reported basis, EBIT declined 11% for fiscal 2015, primarily reflecting the
impact of weakening foreign currency exchange rates. Reported revenue
increases and slight selling and administrative expense leverage were more
than offset by lower gross margin. Gross margin decreased 340 basis points
as higher product costs and unfavorable standard foreign currency exchange
rates were only partially offset by higher average selling prices. Selling and
administrative expense decreased as a percent of revenue despite increases
in both demand creation and operating overhead. Operating overhead
increased primarily as a result of investments in our growing DTC business,
while demand creation increased as a result of higher sports marketing costs.
Fiscal 2014 Compared to Fiscal 2013
On a currency-neutral basis, Central & Eastern Europe revenues for fiscal
2014 were driven by growth across nearly all territories, particularly Russia,
our largest territory, which grew 14%, and Turkey, which grew 17%. Revenue
growth was driven by growth in nearly every key category, led by Football
(Soccer) and Running.
Constant currency footwear revenue growth in fiscal 2014 was driven by
growth in nearly all categories, most notably Running and Football (Soccer).
Unit sales increased 11% while average selling price per pair contributed
approximately 4 percentage points of footwear revenue growth, due primarily
to price increases.
Constant currency apparel revenue growth in fiscal 2014 was driven by
growth in every key category, led by Football (Soccer) and Running. Unit sales
increased 15%, while average selling price per unit contributed approximately
2 percentage points of apparel revenue growth, driven by price increases.
On a reported basis, EBIT grew faster than revenues primarily due to gross
margin improvement, partially offset by higher selling and administrative
expense. Gross margin increased 180 basis points, primarily driven by price
increases, a shift in mix to higher-margin products, warehousing efficiencies
and the favorable impact of our higher-margin DTC business, partially offset
by unfavorable standard foreign currency exchange rates. Selling and
administrative expense increased as a result of higher demand creation
expense to support key events as well as higher operating overhead to
support overall growth, including our expanding DTC business.
NIKE, INC. 2015 Annual Report and Notice of Annual Meeting 91
FORM 10-K