NIKE, Inc. has reported financial results for its fiscal 2018 fourth quarter and full year ended May 31, 2018.
Fourth quarter revenue increased 13 percent to US $9.8 billion driven by strong double-digit revenue growth in international markets and NIKE Direct globally, and a return to growth in North America. Diluted earnings per share for the fourth quarter rose 15 percent to US $0.69, primarily due to strong revenue growth, gross margin expansion, a lower tax rate and a lower average share count, which were partially offset by higher selling and administrative expense.
“Our new innovation is winning with consumers, driving significant momentum in our international geographies and a return to growth in North America,” said Mark Parker, Chairman, President and CEO, NIKE, Inc. “Fueled by a complete digital transformation of our company end-to-end, this year set the foundation for NIKE’s next wave of long-term, sustainable growth and profitability.”
The company also announced that its Board of Directors has authorized a new four-year, US $15 billion program to repurchase shares of NIKE’s Class B Common Stock. The company anticipates that the current US $12 billion share repurchase program will be completed within fiscal 2019, and the new program will commence upon the completion of the current program.
Revenues for the NIKE Brand were US $9.3 billion, up 9 percent on a currency-neutral basis, driven by double-digit increases in NIKE Direct, international geographies, Sportswear, Global Football and growth in North America.
Revenues for Converse were US $512 million, down 14 percent on a currency-neutral basis, as growth in Asia was more than offset by declines in other territories.
Gross margin increased 60 basis points to 44.7 percent due primarily to higher average selling prices, margin expansion in NIKE Direct and favorable full-price sales mix.
Selling and administrative expense increased 17 percent to US $3.1 billion. Demand creation expense was US $983 million, up 25 percent, primarily driven by sports marketing investments, new product launch and brand campaigns, and unfavorable changes in foreign currency exchange rates. Operating overhead expense increased 14 percent to US $2.1 billion, largely due to investments in global operations and capabilities to drive the Consumer Direct Offense, and, to a lesser extent, unfavorable changes in foreign currency exchange rates.
The effective tax rate was 6.4 percent, compared to 13.7 percent for the same period last year, due to several discrete impacts within the quarter, including adjustments to the provisional charges related to the enactment of the Tax Cuts and Jobs Act (the “Tax Act”).
Net income increased 13 percent to US $1.1 billion primarily due to strong global revenue growth, gross margin expansion and a lower tax rate, which were partially offset by higher selling and administrative expense, while diluted earnings per share increased 15 percent to US $0.69 reflecting a 2 percent decline in the weighted average diluted common shares outstanding.