We had a great quarter – NIKE President, CEO

18 Mar '10

5 min read

Japan
Japan's third quarter revenue was down 7 percent to $213 million. Compared to the prior year, footwear revenue declined 6 percent to $103 million, apparel revenue dropped 9 percent to $87 million and equipment revenue decreased 9 percent to $23 million. EBIT declined 16 percent in the third quarter to $40 million.

Emerging Markets
In the Emerging Markets revenue was up 43 percent to $509 million for the third quarter. Footwear revenue increased 53 percent to $352 million, apparel revenue rose 32 percent to $119 million and equipment revenue increased 10 percent to $38 million. EBIT for the Emerging Markets in the third quarter improved 72 percent to $122 million.

Other Businesses
Revenue in the third quarter for Other Businesses, which includes Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd. increased 13 percent to $656 million. Third quarter EBIT was $105 million versus a loss of $343 million last year. Last year's results included a $401 million pre-tax non-cash impairment charge to reduce the carrying value of Umbro's goodwill, intangible and other assets. Excluding this charge, EBIT increased 80 percent compared to the same period last year.

Income Statement Review
In the third quarter of fiscal 2010 gross margins were 46.9 percent compared to 43.9 percent for the same period last year. Gross margins for the quarter were higher than the prior year primarily due to improved in-line product margins, less discounted close-out sales and favorable changes in product mix.

Third quarter selling and administrative expenses grew 16 percent to $1.6 billion. Selling and administrative expenses for the quarter were higher than the same period last year mainly due to the timing of demand creation spending, investments in Company owned retail and higher costs for performance-based compensation.

The effective tax rate for the third quarter was 25.0 percent compared to a negative 3.6 percent for the same period last year. Excluding the tax effect of the charge for the impairment of Umbro assets, the effective tax rate for the third quarter of fiscal 2009 would have been 23.9 percent.

Balance Sheet Review
At the end of the third quarter, global inventories stood at $2.2 billion, down 13 percent from February 28, 2009. Cash and short-term investments at February 28, 2010 were $4.0 billion, $1.4 billion or 55 percent higher than last year.

Share Repurchase
During the third quarter, the Company repurchased a total of 5,134,092 shares for approximately $329 million. These purchases concluded the Company's previous four-year, $3 billion share repurchase program, approved by the Board of Directors in June 2006. During this program, the Company purchased a total of 53.9 million shares.

Having completed the previous program, the Company began repurchases under the four-year, $5 billion program approved in September 2008. Of the total shares repurchased during the third quarter 3.7 million shares for approximately $239 million were purchased under this program.

NIKE Inc

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