Worldwide futures orders up at Nike

18 Dec '09

5 min read

Greater China

Revenue for Greater China during the second quarter was down 3 percent to $404 million. Footwear revenue was down 1 percent to $210 million, apparel revenue declined 7 percent to $170 million, and equipment revenue decreased 2 percent to $25 million. Second quarter EBIT decreased 7 percent to $126 million as lower revenues and higher selling and administrative expenses offset improved gross margins.

Japan

Japan second quarter revenues declined 2 percent to $222 million. Footwear revenue was up 6 percent to $104 million, apparel revenue dropped 10 percent to $98 million and equipment revenue was flat compared to the prior year at $21 million. EBIT decreased 19 percent in the second quarter to $45 million mainly due to lower revenues and higher selling and administrative expenses that offset better gross margins.

Emerging Markets

In the Emerging Markets revenue was up 8 percent to $555 million for the second quarter compared to $512 million last year. Footwear revenue increased 12 percent to $370 million, apparel revenue rose 7 percent to $143 million and equipment revenue decreased 13 percent to $41 million. Second quarter EBIT for the Emerging Markets rose 29 percent to $156 million as a result of revenue growth, gross margin improvement and better leverage of selling and administrative expenses.

Other Businesses

For the second quarter, revenue for Other Businesses, which includes Cole Haan, Converse Inc., Hurley International LLC, NIKE Golf, and Umbro Ltd. increased 1 percent to $556 million. EBIT for the second quarter was up 65 percent at $35 million due to lower selling and administrative expenses which more than offset lower gross margin results.

Income Statement Review

In the second quarter of fiscal 2010 gross margins were 44.5 percent compared to 44.7 percent for the same period last year. Gross margins for the quarter were lower than the prior year primarily due to unfavorable year over year foreign exchange impacts and higher discounts related to inventory management efforts.

Second quarter selling and administrative expenses were down 4 percent to $1.5 billion and dropped as a percent of revenue to 33.6 percent compared to 33.7 percent for the same period last year. Selling and administrative expenses for the quarter were lower than the same period last year due to lower demand creation spending and lower personnel costs following restructuring efforts completed last fiscal year.

The effective tax rate for the second quarter was 23.5 percent compared to 24.9 percent for the same period last year. The decrease was primarily due to the impact from settlements of uncertain tax positions as well as the reduction in our on-going effective tax rate on operations outside the United States.

NIKE Inc

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