Nike 2016 Annual Report Download - page 24

PART II
Fiscal 2016 Compared to Fiscal 2015
On a currency-neutral basis, NIKE, Inc. Revenues grew 12% for fiscal 2016,
primarily driven by higher revenues for the NIKE Brand. Every NIKE Brand
geography grew revenues for fiscal 2016 as our category offense continued
to deliver innovative products, deep brand connections and compelling retail
experiences to consumers online and at NIKE-owned and retail partner
stores, driving strong demand for NIKE Brand products. North America
contributed approximately 4 percentage points of the increase in NIKE, Inc.
revenues, while Greater China and Western Europe each contributed
approximately 3 percentage points, Emerging Markets contributed
approximately 2 percentage points and Central & Eastern Europe contributed
approximately 1 percentage point.
Excluding the effects of changes in currency exchange rates, NIKE Brand
footwear and apparel revenues increased 15% and 11%, respectively, for
fiscal 2016, while NIKE Brand equipment revenues decreased 2%. The
increase in NIKE Brand footwear revenues for fiscal 2016 was driven by
growth in nearly every key category, including strong growth in Sportswear,
the Jordan Brand and Running. Footwear unit sales for fiscal 2016 increased
9%, with higher average selling price (ASP) per pair contributing
approximately 6 percentage points of footwear revenue growth. Higher ASP
per pair was driven by higher full-price ASP, and to a lesser extent, the
favorable impact of an increase in the proportion of revenues from our higher-
priced DTC business.
The constant-currency increase in NIKE Brand apparel revenues for fiscal
2016 was attributable to growth in most key categories, led by Sportswear,
Men’s Training, Running, Women’s Training and Football (Soccer). Apparel
unit sales for fiscal 2016 increased 7%. Higher ASP per unit contributed
approximately 4 percentage points of apparel revenue growth, primarily due
to higher full-price ASP and growth in 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. NIKE Brand DTC operations include NIKE-owned in-line and
factory stores, as well as online sales through NIKE-owned websites. For
fiscal 2016, DTC revenues represented approximately 26% of our total NIKE
Brand revenues. On a currency-neutral basis, DTC revenues increased 25%
for fiscal 2016, driven by strong online sales growth, the addition of new
stores and comparable store sales growth of 10%. 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 51% in fiscal 2016.
For fiscal 2016, online sales represented approximately 22% of our total NIKE
Brand DTC revenues.
On a wholesale equivalent basis and excluding the effects of changes in
currency exchange rates, fiscal 2016 NIKE Brand Men’s revenues increased
11%, driven by growth in Sportswear and the Jordan Brand, while Women’s
revenues increased 17%, led by Sportswear, Running and Women’s
Training. Revenues for our Young Athletes’ business increased 11%, with
growth across multiple categories, most notably the Jordan Brand.
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 Sportswear, the Jordan Brand, Running, NIKE
Basketball and Football (Soccer). Footwear unit sales in fiscal 2015 increased
9%. Higher ASP per pair contributed approximately 8 percentage points of
footwear revenue growth, driven primarily by higher full-price ASP, 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% with higher ASP per unit contributing approximately 2
percentage points of apparel revenue growth, driven primarily by growth in
our higher-priced DTC business.
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. Online sales through NIKE-owned websites 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, the Jordan Brand, NIKE 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 the
Jordan Brand.
Futures Orders
Futures orders for NIKE Brand footwear and apparel scheduled for delivery
from June through November 2016 totaled $14.9 billion and were 8% higher
than the orders reported for the comparable prior year period. NIKE Brand
reported futures include (1) orders from external wholesale customers and (2)
internal orders from our DTC in-line stores and e-commerce operations which
are reflected at prices that are comparable to prices charged to external
wholesale customers. The U.S. Dollar futures orders 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 11%, with unit orders increasing
4% and average selling price per unit contributing approximately 7
percentage points of growth.
NIKE, INC. 2016 Annual Report and Notice of Annual Meeting 77
FORM 10-K