NIKE, Inc. (NKE)
Q2 2010 Earnings Call
December 17, 2009 5:00 pm ET
Mark Parker – President & CEO
Don Blair – VP & CFO
Charlie Denson – President Nike Brands
Pamela Catlett – VP IR
Robert Drbul - Barclays Capital
Michelle Tan - Goldman Sachs
Kate McShane - Citi
Michael Bonetti – UBS
Omar Saad - Credit Suisse
Robert Ohmes - BofA Merrill Lynch
Christopher Svezia - Susquehanna Financial Group
Sam Poser - Sterne, Agee & Leach
Robert Sanuels - Oppenheimer
Thomas Shaw - Stifel Nicolaus
Previous Statements by NKE
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Before I turn the call over to Ms. Catlett, let me remind you that participants of 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 periods 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, most of Nike retail, Nike Golf, Cole Haan, Converse, Hurley, and Umbro are not included in these future numbers.
Finally, participants may discuss non-GAAP financial measures. The presentation of comparable GAAP measures and quantitative reconciliations are found at Nike's website. This call might also include discussion of non-public financial and statistical information, which is also publicly available on that site, www.nikebiz.com.
Now I would like to turn the call over to Pamela Catlett, Vice President, Investor Relations.
Happy holidays everyone and thank you for joining us today to discuss Nike's fiscal 2010 second 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, www.nikebiz.com.
Joining us on today’s call will be NIKE Inc.’s Chief Executive Officer, 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 be happy to take your questions.
With that, I will now turn the call over to NIKE Inc. President and CEO, Mark Parker.
Thanks Pam and happy holidays everybody. It was about a year ago I told you that Nike would perform well in this challenging economy and expand our lead over our competitors by doing what we do best and that’s delivering superior innovative product, connecting with our consumers, creating compelling marketplace experiences, and operating with discipline and efficiency.
As our performance over the last year clearly indicates we’re executing these strategies and winning in the marketplace. We continue to lead the industry in footwear and apparel product innovation, and we‘re doing that across multiple categories and geographies and up and down the price spectrum.
Our portfolio of global brands has deepened our personal connections with consumers. We continue to create compelling marketplace experiences with our retail partners in Nike owned retail stores, and online.
And we’re managing our business to balance ongoing investments in long-term growth with current profitability and cash flow. Sticking with these principals allows NIKE Inc. to expand competitive separation across multiple dimensions. We continue to gain share in key markets around the world and outperform the industry.
Even as revenues dip a bit our second quarter shows we’re able to deliver an appropriate level of financial performance in a rapidly changing environment. By tightly managing the inventory on our books and in the marketplace we’ve strengthened our brands, maintained profitability for Nike and our retail partners, and positioned ourselves for accelerated growth as consumer confidence returns.
As we move into the second half of fiscal 2010 I have to say I’m very excited about how we’re executing against our key growth opportunities. I see a lot of momentum in our direct to consumer business where we continue to deliver positive results especially online.
We’re doing a good job of developing our retail capabilities and as I’ve said many times that makes us a better wholesale partner and a better company. This really came to life in Tokyo where we opened a new Nike flagship store in Harajuku. It’s a great example of how innovative retail experiences really connect with consumers even in a very tough economy like Japan.
As we evolve we’re getting increasingly better at product design, assortment planning, product flow and merchandising, all because we’re executing everything with that consumer experience in mind. We’re also seeing the power of our category offence yield insights to drive excellence from product creation all the way through to the retail floor.
And we continue to see opportunities to build on that category strength beyond the Nike brand. Football is a great example, where we’re leveraging the most powerful dimensions in sports, specifically the global passion for the game, the upcoming World Cup, and our position as the world’s biggest football company.
It’s a perfect storm that allows us to deliver compelling experiences, innovative product from Nike and Umbro, like the CTR 360 football boot, and the tailored England national team jersey, all the way through retail experiences like the boot room in Nike Towns. And the recent launch of Lace Up Saved Lives in London, which is just another example of how we’re able to deepen our connection with consumers while working to make the world a better place.