At the rate that Nike is going, they’re on track to reach revenues of $36 Billion by fiscal year 2017. Impressive, right? Well if you think about it, the company as a whole can only get better from here on out. Considering the fact that we’re introduced to new innovations, initiatives, and technologies nearly every month, what’s not to believe here?
EAVERTON, Ore., October 9, 2013 – NIKE, Inc. (NYSE: NKE) today provided an overview of its progress on key strategic initiatives to achieve sustainable, profitable long-term growth. During an investor meeting at its world headquarters in Beaverton, Ore., the Company stated it expects to deliver revenues of $30 billion by fiscal year 2015, at the top end of its previously announced fiscal year 2015 target range of $28-30 billion and shared a new fiscal year 2017 revenue target of $36 billion. Additionally the Company reaffirmed its long-term financial model of high single-digit revenue growth, mid-teens earnings per share growth and expanding returns on capital.
“NIKE, Inc. is designed to win. We’ve never been better positioned to capitalize on the opportunities ahead of us,” said NIKE, Inc. President and CEO Mark Parker. “We have a strong management team and we are accelerating our innovation agenda to create products and services that drive growth in the marketplace, deliver exciting retail experiences globally and expand the capabilities of our powerful supply chain. We will continue to serve the athlete, reward our shareholders, manage risk, and lead our industry.”
NIKE Brand Overview
The NIKE Brand is expected to be the largest contributor of incremental growth as the Company targets NIKE, Inc. fiscal year 2017 revenues of $36 billion.
“The NIKE Brand is expected to deliver nearly $10 billion in incremental revenue by Fiscal 2017 and our apparel, women’s, and e-commerce businesses will support this growth,” said Trevor Edwards, President of the NIKE Brand. “Over the last three years, the NIKE Brand has grown close to 40 percent and we will continue to innovate and grow by focusing on products and services that capture the imagination of our consumer and help athletes perform at their highest potential.”
NIKE Brand – Geographic Opportunities
The Company also updated its projected long term growth plans in the NIKE Brand geographies through fiscal 2017. In its more developed geographies (North America, Western Europe and Japan), NIKE now expects to generate average annual growth at a high single digit rate for the four year period from fiscal 2014 through fiscal 2017, higher than the previous target of mid-single digit growth. The Company expects North America and Western Europe to reach over $14 billion and $6 billion, respectively, by fiscal year 2017.
In its developing geographies (Greater China, Central & Eastern Europe and Emerging Markets), the Company stated it expects to grow at a low double-digit average annual growth rate for the four year period from fiscal 2014 through fiscal year 2017. The Company’s expects its Emerging Markets geography to grow at a mid-teens average annual growth rate and for Greater China to return to growth, reaching an average low double-digit rate of annual growth for fiscal year 2014 through fiscal 2017.
NIKE, Inc. – Direct to Consumer
The Company provided an overview of its plans to drive consistent growth in its Direct to Consumer (DTC) operations. Due to strong results in its inline and factory stores as well as on-line, the Company now anticipates achieving its fiscal year 2015 NIKE Brand DTC revenue goal of $5 billion almost a year earlier than planned. The Company also announced plans for NIKE Brand DTC revenues to reach over $8 billion by the end fiscal 2017. Over the next four years incremental growth in DTC revenues is expected to be driven by e-commerce sales, which are projected to grow to $2 billion, as well as by new door expansion and continued same store sales gains in its factory and in-line stores.
The Company also discussed its plans for Converse, which is projected to grow at a mid-teens average annual growth rate, to $3 billion in revenues by the end of fiscal 2017. Over the next four years the Company expects steady growth from the Chuck Taylor franchise, with more rapid growth from Converse’s other brands, new apparel offerings, expansion of its Direct to Consumer business and conversion of additional markets to direct distribution.
NIKE, Inc. – Long-term Financial Objectives
Reviewing performance against the Company’s long-term financial model, Chief Financial Officer Don Blair highlighted the Company’s delivery of consistent results through dynamic market environments: “We are focused on driving sustainable, profitable growth and increasing returns on capital. The significant cash we expect to generate will enable us to invest in compelling consumer experiences, industry-leading innovation and compelling retail destinations to drive our growth goals, while consistently increasing cash returns to our shareholders.”
The Company stated its primary financial objectives through 2017:
- High single digit average annual revenue growth
- Mid-teens Earnings Per Share growth (average annual rate)
- Maintaining a mid-twenties rate of Return on Invested Capital
- Days in Inventory improvement of 5 to 10 days
- Low double-digit Free Cash Flow growth (average annual rate)
- Annual capital expenditures in a range of 3 to 4% of annual revenues
- Increasing levels of annual cash returned to shareholders through annual dividend increases and continued stock repurchases
Additional Presenters and Replay
Additional presenters from NIKE, Inc.’s senior management included: Elliott Hill, President, Global Geographies and Sales; Jayme Martin, Vice President & GM Global Categories; Jeanne Jackson, President, Product and Merchandising; Christiana Shi, President, Direct to Consumer; and Eric Sprunk, Chief Operating Officer.