Driven by gross margin expansion and a lower tax rate, earnings per share surged 25 per cent, year over year at sports good and sportswear marketer Nike Inc for the fiscal ending May 31, 2015.
A Nike press release informed that fiscal 2015 diluted earnings per share rose 25 per cent from the previous fiscal to $3.70.
“This increase reflects 10 per cent revenue growth, gross margin expansion, a lower tax rate and a lower average share count, which more than offset the impacts of higher SG&A investments,”it said.
Revenues rose much slower at 10 per cent year on year to $30.6 billion, but were up 14 per cent on a currency-neutral basis.
Revenues for Nike brand reached $28.7 billion, up 14 per cent, excluding the impact of changes in foreign currency.
Gross margin for fiscal 2015 expanded 120 basis points over fiscal 2014 to 46.0 per cent led by higher average selling prices and continued growth in the higher margin DTC business.
Selling and administrative expense grew 13 per cent to $9.9 billion, while demand creation expense was $3.2 billion, up 6 per cent from hike in investments in support of key events and product launches.
Operating overhead expense climbed 16 per cent over the last fiscal to $6.7 billion from the expanding DTC business, higher costs for operational infrastructure and investments in consumer-facing digital capabilities.
Other income, net was $58 million for the reporting fiscal, mainly comprised of net foreign currency exchange gains.
The effective tax rate for the fiscal under review was 22.2 per cent, compared to 24.0 per cent in the prior fiscal, primarily due to the favourable resolution of tax audits across multiple jurisdictions.
For fiscal 2015, net income soared 22 per cent to $3.3 billion reflecting strong revenue growth, gross margin expansion and a lower tax rate.
“CEO Mark Parker said, “Our consistent growth is fueled by our connection to the consumer and our ability to deliver innovation at an unprecedented pace and scale.”
Inventories at the end of the fiscal totaled to $4.3 billion, up 10 percent from May 31, 2014, driven primarily by a 13 per cent increase in Nike brand wholesale unit inventories.
Cash and short-term investments were $5.9 billion, $782 million higher than last year as growth in net income and collateral received from counterparties as a result of hedging activities.
During the fourth quarter, Nike repurchased a total of 6.8 million shares for approximately $678 million as part of the four-year, $8.0 billion program approved by its board of directors in September 2012.
As of the end of fiscal 2015, a total of 80.9 million shares had been repurchased under this program for approximately $6.0 billion, at an average cost of $73.55 per share.
