Nike (NKE) Q4 2019 earnings summary

Executive summary

• FY19 was the first full year of the Consumer Direct Offense, focused on innovation, speed and direct consumer connections; new innovation platforms drove roughly 100% of incremental growth.

• Broad-based growth and investment in digital and consumer experiences supported record revenue and higher gross margin, net income and adjusted ROIC.

Financial highlights

• FY19 revenue rose 7% YoY to $39.117B reported and 11% currency-neutral; net income was $4.029B and diluted EPS was $2.49.

• Gross profit rose 10% to $17.474B; gross margin expanded 90 bps to 44.7%, while income before taxes increased 11% to $4.801B.

• EBIT increased 11% to $4.850B; S&A expense rose 10% to $12.702B, or 32.5% of revenue versus 31.6% in FY18.

• Operating cash flow increased to $5.903B from $4.955B; cash and equivalents ended FY19 at $4.466B.

Outlook and guidance

• Long-term FY23 goals, on average annually: high-single-digit revenue growth, gross-margin expansion up to 50 bps, slight S&A leverage, mid-teens EPS growth and low-30s ROIC.

• FY20 infrastructure investment expected to average 3%–4% of revenue, including corporate facilities, expanded digital capabilities and new NIKE Direct stores.

• FY20 launch plans include Joyride personalized cushioning and further digital and retail experience development.