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$NKE 4Q15 Call – Mark, CEO: FY15 revenues rose 10% to $30.6Bil despite significant FX headwinds. On a currency-neutral basis revenues grew 14%. Gross margin increased 120 bps to 46%. Earnings per share rose 25% to $3.70 and we delivered ROIC of 28%. These are quality results that shareholders have come to expect from us and that we demand from us.
For FY18, $NKE continues to expect reported revenue growth in the mid single-digit range. However in 3Q18, with new product launches coming later in the quarter, the company expects reported revenue growth at or slightly below the rate of reported revenue growth delivered in 2Q18.
During 2Q18, $NKE repurchased a total of 16.7MM shares for approx. $902MM as part of the four-year, $12Bil program approved by the BoD in Nov. 2015. Additionally, GM for the quarter declined 120 BP to 43%, as higher ASPs were more than offset by unfavorable changes in FX rates and higher product costs per unit.
Footwear major $NKE reported dismal performance for 2Q18 with profit sinking 8.9% on waning margins in its largest market, North America. Profit fell to $767MM or $0.46 per share from $842MM or $0.50 a year ago. Revenue, however, surged 4.5% on higher demand from Greater China and EMEA regions, which was up 16% and 19% in revenue respectively.
$NKE BoD declared a quarterly cash dividend of $0.20 per share on the company’s outstanding Class A and Class B common stock, a 11% increase versus the prior quarterly dividend rate of $0.18 per share. The dividend is payable on Jan. 2, 2018 to shareholders of record at the close of business Dec. 4, 2017.
In 2Q18, $NKE expects GM to contract at approximately the same rate it saw in 1Q18, with FX continuing to be the largest driver. For FY18, the company believes the challenging dynamics in the U.S. retail landscape could result in its GM contracting between 50 and 100 BP versus the prior year.
$NKE said it is seeing good momentum in its international geographies and is now expecting slightly lesser headwinds from FX net of hedging. The company additionally believes there will be short-term headwinds within the U.S. retail landscape that will dampen growth going forward.
In 1Q18, $NKE Sportswear's momentum resulted in the largest revenue quarter ever, which was driven by Presto and the Air Force 1 styles. The company also continues to see strong growth in its NIKE branded experiences with partners and in about all key categories. $NKE is also seeing continued momentum in China over the balance of FY18.
$NKE, which is seeing increased competition from Adidas and is focusing on Asian markets as an area of growth, reported a 24% plunge in its 1Q18 earnings, impacted by higher expenses and declining sales in North America. Net income fell to $950MM or $0.57 per share from $1.24Bil or $0.73 per share in 1Q17. Revenue however remained flat at $9.07Bil.
$NKE realigned its NIKE Brand geographic operating segments into a new structure consisting of four geographies. $NKE would also report the NIKE Brand based on these four operating segments beginning in FY18. The operating geographies will be North America; Europe, Middle East & Africa (EMEA); Greater China; and Asia Pacific & Latin America (APLA).
$NKE's nearly three quarters of NIKE.com consumers were members in 4Q17, up 25%, with a plan to accelerate through stronger member benefits and international expansion. The company has also begun a new partnership with Instagram that will allow consumers to purchase $NKE product in the Instagram app.