NIKE CEO Discusses F1Q2011 Results - Earnings Call Transcript

NIKE CEO Discusses F1Q2011 Results - Earnings Call Transcript
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NIKE, Inc. (NKE)

F1Q2011 Earnings Call Transcript

September 23, 2010 5:00 pm ET

Executives

Kelley Hall – Senior Director, IR

Mark Parker – President & CEO

Charlie Denson – President, NIKE Brand

Don Blair – VP & CFO

Analysts

Chi Lee – Morgan Stanley

Christopher Svezia – Susquehanna Financial Group

Kate McShane – Citigroup

Michelle Tan – Goldman Sachs

Bob Drbul – Barclays Capital

Michael Binetti – UBS

Jim Duffy – Stifel Nicolaus

Omar Saad – Credit Suisse

Robby Ohmes – Bank of America

Presentation

Operator

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Good afternoon, everyone. Welcome to Nike’s fiscal 2011 first quarter conference call. For those who need to reference today’s press release, you will find it at www.nikebiz.com. Leading today’s call is Kelley Hall, Senior Director, Investor Relations.

Before I turn the call over to Ms. Hall, let me remind you that participants on this call will make forward-looking statements based on current expectations and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in the reports filed with the SEC, including forms 8-K, 10-K and 10-Q.

Some forward-looking statements concern future orders that are not necessarily indicative of changes in total revenues for subsequent periods due to mix of futures and at-once orders, exchange rate fluctuations, order cancellations, and discounts, which may vary significantly from quarter-to-quarter. In addition, it is important to remember a significant portion of NIKE, Inc.’s business, including equipment, NIKE Golf, Cole Haan, Converse, Hurley, and Umbro, are not included in these futures numbers.

Finally, participants may discuss non-GAAP financial measures. The presentation of comparable GAAP measures and quantitative reconciliations are found at Nike’s website. This call might also include discussion of non-public financial and statistical information, which is also publicly available on that site, www.nikebiz.com.

I would now like to turn the call over to Kelley Hall, Senior Director, Investor Relations.

Kelley Hall

Thanks, operator. Hello, everyone. And thanks for joining us today to discuss Nike’s fiscal 2011 first quarter results. As the operator indicated, participants on today’s call may discuss non-GAAP financial measures. You will find the appropriate reconciliations in our press release, which was issued about an hour ago, and at our website, nikebiz.com.

Joining us on today’s call will be NIKE, Inc. CEO, Mark Parker, followed by Charlie Denson, President of the NIKE Brand, and finally, you will hear from our Chief Financial Officer, Don Blair, who will give you an in-depth review of our financial results.

Following their prepared remarks, we will take your questions. We would like to allow as many of you to ask questions as possible in our allotted time. So we would appreciate you limiting your initial questions to two. In the event you have additional questions that are not covered by others, please feel free to re-queue and we will do our best to come back to you. Thanks for your cooperation on this.

I will now turn the call over to NIKE, Inc. President and CEO, Mark Parker.

Mark Parker

Thanks, Kelley. And hello, everybody. In June, I talked about the momentum that we saw back in the back half of fiscal 2010. And Q1 shows how we are expanding on that momentum. Revenue, gross margin and profit are all up. Global futures are up 13%, our biggest increase in over a decade. And our portfolio of affiliate brands, Converse, Hurley, Cole Haan, NIKE Golf, and Umbro, continues to gain strong momentum. As a result, we delivered exceptional earnings per share of $1.14 to our investors.

Our first quarter results are a great start to the year and demonstrates a tremendous growth potential of the NIKE, Inc. portfolio. Equally important is what is behind the numbers. And I point the three reasons for our outstanding performance; flexibility, balance and alignment.

Flexibility is about the power of our portfolio, our mix of brands and category offense. We are able to pull multiple levers across many dimensions of our business. For example, we can dial up the Running category to leverage successful new designs like the LunarGlide and Dynamic stability. We can create momentum in Action Sports by combining three great brands across multiple sports in a single consumer experience. And in an environment where certain categories or geographies might be slower to recover, our diverse global portfolio allows us to create new growth in other key markets. This flexibility is strategic and powerful and unique to NIKE, Inc.

Balance is all about leveraging innovation to create new opportunities. We fixate on superior performance product and then use that innovation to drive the style side of the business, something you can see clearly in the success of our apparel business. We invest in direct-to-consumer retail and use that innovation to elevate our presence with our own retail partners. We take everything we know about the physical world of sports and we apply that knowledge to the potential of digital technology to create new experience. And we do these things to create short and long-term opportunities that generate top and bottom line growth.

Finally, alignment, which is all about optimizing our resources, to maximize return. When we are fully aligned across design, production, marketing and distribution, the result is experienced is that only NIKE can create. Like our Write the Future World Cup campaign, the US Open of Surfing, and the World Basketball Festival, and all three of those events happened in Q1. We see the same power of alignment throughout the company in design, our supply chain, in retail, in HR and operations, and in marketing and sales. Alignment amplifies our resources to create unique and compelling successes for our consumers and shareholders.

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