Nike 2016 Annual Report Download - page 31

PART II
Greater China
(Dollars in millions) Fiscal 2016 Fiscal 2015 % Change
% Change
Excluding
Currency
Changes Fiscal 2014 % Change
% Change
Excluding
Currency
Changes
Revenues by:
Footwear $ 2,599 $ 2,016 29% 33% $ 1,600 26% 28%
Apparel 1,055 925 14% 17% 876 6% 7%
Equipment 131 126 4% 7% 126 0% 1%
TOTAL REVENUES $ 3,785 $ 3,067 23% 27% $ 2,602 18% 19%
Revenues by:
Sales to Wholesale Customers $ 2,623 $ 2,234 17% 21% $ 2,041 9% 11%
Sales Direct to Consumer 1,162 833 39% 44% 561 48% 51%
TOTAL REVENUES $ 3,785 $ 3,067 23% 27% $ 2,602 18% 19%
EARNINGS BEFORE INTEREST AND TAXES $ 1,372 $ 993 38% $ 816 22%
Fiscal 2016 Compared to Fiscal 2015
On a currency-neutral basis, Greater China revenues for fiscal 2016 increased
27%, driven by higher revenues in nearly every key category, led by
Sportswear, Running, NIKE Basketball and the Jordan Brand. DTC revenues
increased 44%, driven by significant online sales growth, the addition of new
stores and comparable store sales growth of 19%.
The constant currency increase in footwear revenue for fiscal 2016 was driven
by growth in nearly every key category, most notably Sportswear, Running,
NIKE Basketball and the Jordan Brand. For fiscal 2016, unit sales of footwear
increased 27%. Higher ASP per pair contributed approximately 6 percentage
points of footwear revenue growth, driven by higher full-price ASP and the
favorable impact of an increase in the proportion of revenues from our higher-
priced DTC business.
Constant currency apparel revenue growth for fiscal 2016 was attributable to
higher revenues in nearly every key category, led by Running and Sportswear.
Unit sales of apparel increased 17% for fiscal 2016 while ASP per unit was
flat.
On a reported basis, EBIT increased 38% for fiscal 2016 due to strong
revenue growth, gross margin expansion and selling and administrative
expense leverage. Gross margin increased 80 basis points due to higher full-
price ASP and an increase in the proportion of revenues from our higher-
margin DTC business, partially offset by shifts in mix to higher-cost products
and unfavorable standard foreign currency exchange rates. Selling and
administrative expense decreased as a percent of revenues despite higher
operating overhead and demand creation expense. Operating overhead
increased largely due to support for our growing DTC operations, while
demand creation was also higher, primarily due to retail brand presentation
costs to re-profile category and consumer-focused retail stores as well as
spending for key brand events.
Fiscal 2015 Compared to Fiscal 2014
Excluding changes in currency exchange rates, Greater China revenue
growth for fiscal 2015 was driven by higher revenues in our Sportswear,
Running, NIKE Basketball and Jordan Brand categories, partially offset by
small declines in other categories. Strong growth in DTC revenues reflected a
28% increase in comparable store sales, strong online sales growth and the
addition of new stores.
Constant currency footwear revenue growth in fiscal 2015 was driven by
increased sales in our Sportswear, Running, NIKE Basketball and Jordan
Brand categories, partially offset by small declines in other categories. Unit
sales of footwear increased 20% for fiscal 2015. Higher ASP per pair
contributed approximately 8 percentage points of footwear revenue growth,
primarily due to an increase in the proportion of revenues from our higher-
priced DTC business.
Constant currency apparel revenue growth in fiscal 2015 was driven by
increases in the Sportswear, Running, Jordan Brand and NIKE Basketball
categories, partially offset by decreases in other categories, primarily Football
(Soccer) and Men’s Training. For fiscal 2015, unit sales of apparel increased
8%. Changes in ASP per unit reduced apparel revenues by approximately 1
percentage point, due primarily to lower full-price ASP, partially offset by
increased revenues from our higher-priced DTC business.
On a reported basis, EBIT increased 22% for fiscal 2015 as higher revenues
and gross margin expansion more than offset higher selling and administrative
expense. Gross margin increased 270 basis points primarily due to higher full-
price ASP on footwear and an increase in the proportion of revenues from our
higher-margin DTC business, partially offset by higher product costs. Selling
and administrative expense increased due to higher operating overhead to
support growth initiatives, primarily related to our DTC operations, as well as
higher demand creation spending, primarily for sports marketing.
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