Nike's CEO Discusses Q3 2012 Results - Earnings Call Transcript

Nike (NKE)

Q3 2012 Earnings Call

March 22, 2012 5:00 pm ET

Executives

Kelly Hall - Vice President of Treasury and Investor Relations

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

Charles D. Denson - President of Nike Brand

Donald W. Blair - Chief Financial Officer and Vice President

Analysts

Robert S. Drbul - Barclays Capital, Research Division

Kate McShane - Citigroup Inc, Research Division

Christopher Svezia - Susquehanna Financial Group, LLLP, Research Division

Michelle Tan - Goldman Sachs Group Inc., Research Division

Omar Saad - ISI Group Inc., Research Division

Taposh Bari - Jefferies & Company, Inc., Research Division

Michael Binetti - UBS Investment Bank, Research Division

Presentation

Operator

Good afternoon, everyone. Welcome to NIKE's Fiscal 2012 Third 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 Kelly Hall, Vice President of 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 period 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 number.

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 those 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 and non-GAAP financial measures. Discussion of nonpublic financial and statistical information and presentations of comparable GAAP measures and quantitative reconciliations can be found at NIKE's website, http://investors.nikeinc.com.

Now I would like to turn the call over to Kelly 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 fiscal 2012 third 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, 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 cooperation on this.

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

Mark G. Parker

Thanks, Kelly, and good afternoon, everyone. Q3 was another strong quarter of double-digit growth for NIKE, Inc. NIKE, Inc. revenue for the quarter grew 15% to $5.8 billion. Earnings per share grew 11% to $1.20 and NIKE Brand global futures grew 15%.

That performance illustrates what NIKE is all about, and as the relentless flow of innovation to serve athletes, celebrate sports and create opportunities for everyday athletes to connect with NIKE and each other around the world.

Collaboration is essential to how we innovate and grow. At NIKE, that always starts with insights from athletes, from the elite competitor to the everyday athlete. And it expands from there to include partners inside and outside our industry who inspire new ways of thinking; our retail partners, our manufacturing partners, universities, technology companies, NGOs, entrepreneurs and many more.

In our business, it's collaboration and the ability to consistently innovate that create momentum and fuel long-term growth. And that's what I'm going to talk to you about today.

When all met here on the NIKE campus last June, I said, "We're entering a time of unprecedented and game changing innovation." And that's what you saw from NIKE in Q3, and there's much more to come. We introduced the NIKE FuelBand, incredibly simple, intuitive and powerful. Not only are we leveraging digital technology, we're advancing it by creating broader assets for people who love sports, seek fitness and thrive on competition.

The FuelBand is more than a digital device. It's really an invitation for athletes of all levels to pursue their true potential. We also delivered a new generation of Nike+ in basketball and training, extending the reach of digital tools to make athletes better.

The FuelBand and Nike+ deliver on the most important aspects of a young athlete's life, and that's the ability to train more efficiently, compete more successfully and then connect more personally with the global community of athletes. And because we give consumers opportunities to reach their potential, we create opportunity for NIKE to reach its own.

In the last 90 days, we redefined state-of-the-art and lightweight performance product, digital connectivity and sustainable innovation. We are going to see it all come to life on the Olympic stage in London. The NIKE Pro TurboSpeed suit, our leanest most sustainable fastest tracksuit ever; Nike Hyper Elite basketball uniforms, ultra light and sustainable; the Nike Hyperdunk basketball shoe, with the latest in Flywire and Lunar technology. And my personal favorite innovation of Q3, Nike Flyknit technology. Flyknit allows us to knit a shoe upper in one piece. It's a revolutionary manufacturing method that requires less labor and virtually eliminates waste. The result is a shoe that represents the very pinnacle of performance and a new standard in sustainability. Flyknit has the potential to change everything.

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