Nike (NKE)

Q2 2012 Earnings Call

December 20, 2011 5:00 pm ET

Executives

Kelly Hall - Vice President of Treasury and Investor Relations

Donald W. Blair - Chief Financial Officer and Vice President

Mark G. Parker - Chief Executive Officer, President, Executive Director and Member of Executive Committee

Charles D. Denson - President of Nike Brand

Analysts

Michelle Tan - Goldman Sachs Group Inc., Research Division

Omar Saad - ISI Group Inc., Research Division

Jim Duffy - Stifel, Nicolaus & Co., Inc., Research Division

Kate McShane - Citigroup Inc, Research Division

Sam Poser - Sterne Agee & Leach Inc., Research Division

Robert S. Drbul - Barclays Capital, Research Division

Michael Binetti - UBS Investment Bank, Research Division

Robert F. Ohmes - BofA Merrill Lynch, Research Division

Presentation

Operator

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Good afternoon, everyone. Welcome to NIKE's Fiscal 2012 Second Quarter Conference Call. For those who need to reference today's press release, you'll find it at http://investors.nikeinc.com. Leading today's call is Kelley Hall, Vice President, Treasury, and 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, including references to total wholesale equivalent sales for NIKE, Inc. businesses that have license sales. Wholesale equivalent sales include both reported revenue and estimations of sales by licensees based on the royalties paid. References to total wholesale equivalent sales are only intended to provide context as to the overall current market footprint of the brands owned by NIKE, Inc., and should not be relied upon as a financial measure of actual results.

Participants may also make references to other nonpublic financial and statistical information as non-GAAP financial measures. Discussion of non-public financial and statistical information, and presentations of comparable GAAP measures, and quantitative reconciliation can be found at NIKE's website, http://investors.nikeinc.com. Now, I would like to turn the call over to Kelley Hall, Vice President, Treasury, and Investor Relations.

Kelly Hall

Thank you, operator. Hello, everyone, and thank you for joining us today to discuss NIKE's second quarter 2012 result. 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 new Web address, investors.nikeinc.com.

Joining us on today's call will be NIKE, Inc. President and 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. [Operator Instructions] Thanks for your help with this.

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

Mark G. Parker

Thanks, Kelly, and happy holidays, everybody. We're closing the calendar year with a very strong second quarter performance. And looking at our results, you can see that NIKE, Inc. portfolio is a powerful engine for growth. NIKE, Inc. revenue for the quarter reached $5.7 billion, up 18%, earnings per share grew 6% to $1, and global NIKE Brand futures grew 13%.

Overall, a remarkable performance in what continues to be a very volatile global economy that has yet to deliver a uniform recovery. And looking ahead, economic and political uncertainty are unlikely to abate in any meaningful way in the short-term, so risk and challenges do remain. But that said, we're well-positioned and resourced to manage risk and continue to drive growth going forward.

There are 2 things I want to touch on today that connect our results from Q2 with where we're headed in the back half of the year and beyond. And the first is confidence. We create and commercialize innovation with the speed and quality unmatched by anyone in the industry. And we do that because we're deeply connected to athletes. They inspire us, they challenge us, and they help us create the products and experiences that come to life in stores, online and then the most important markets all around the world. Athletes will always be our most important partners.

And our brands will always be our strongest assets. People seek out brands they can trust and products that are relevant, especially in a more challenging economy. We have 7 distinct and high-energy brands delivering on that promise across categories, geographies, price points and channels. Our brands are a source of authentic, emotional connections, and they offer the power and flexibly needed to create and convert growth to value for our shareholders. It's a truly innovative product experiences in brands run by the strongest management team in the industry, that's a big part of why I see more opportunity now than ever before.

The second thing I want to touch on is focus. Recently, we held a meeting of our top 250 NIKE leaders from around the world. We came together to see and talk about what the future holds for the company. And that meeting focused on how we're really drilling down to identify and resource the most compelling growth opportunities for NIKE, Inc. What we call edits to amplify. By being better editors, we're able to be laser focused on what we're doing, who we're partnering with and where we are investing to reach our full potential as a company and as a leader in this industry.

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