China

Fiscal 2010 Compared to Fiscal 2009

For fiscal 2010, revenues for Greater China were flat, primarily attributable to comparisons against strong revenue growth in the first half of fiscal 2009 driven by the Beijing Olympics. Greater China began to gain momentum in the second half of fiscal 2010, as revenues increased 11% as compared to the second half of fiscal 2009. On a currency−neutral basis, futures orders scheduled to be delivered during the first six months of fiscal 2011 were 16% higher compared to the same period in the prior year.

The increase in footwear revenue was primarily driven by a mid single−digit increase in average selling price, partially offset by a mid single−digit decrease in unit sales. The increase in average selling price was primarily due to strategic product pricing increases, while the decrease in unit sales was primarily driven by lower discounts on in−line products compared to the prior year.

The decrease in apparel revenue for fiscal 2010 was primarily due to a mid single−digit decrease in unit sales across most major categories, which more than offset a low single−digit increase in average selling price primarily driven by strategic product pricing increases.

EBIT for Greater China increased at a faster rate than revenue as a result of higher gross margins and reductions in demand creation spending attributable to comparisons against higher prior year spending around the Beijing Olympics.

Fiscal 2009 Compared to Fiscal 2008

Greater China continued to deliver strong results in fiscal 2009 as revenues increased 21% on a currency−neutral basis, driven by expansion in both the number of stores selling NIKE products and sales through existing stores. China’s rate of revenue growth slowed to 6% on a currency neutral basis in the fourth quarter of fiscal 2009 as we lapped very strong growth in the fourth quarter of fiscal 2008.

The increase in both footwear and apparel revenues was driven primarily by a double−digit increase in unit sales. The growth in unit sales was partially offset by a reduction in average selling price in fiscal 2009, resulting primarily from increased discounts on in−line products provided to retailers to manage inventory levels.

The increase in EBIT for Greater China for fiscal 2009 was driven by higher revenues, which more than offset higher selling and administrative expense. Selling and administrative expense increased, but represented a lower percentage of revenues for fiscal 2009. The increase in selling and administrative expense during fiscal 2009 was primarily due to retail and infrastructure expansion and spending around brand events. 

Japan

Fiscal 2010 Compared to Fiscal 2009

Excluding changes in currency exchange rates, both footwear and apparel revenues in Japan declined during fiscal 2010 due to decreases in unit sales across most major categories. The decline in revenues was reflective of a difficult and highly promotional marketplace in Japan. As we enter fiscal 2011, we anticipate macroeconomic conditions in Japan to remain difficult. On a currency−neutral basis, futures orders scheduled to be delivered during the first six months of fiscal 2011 were 16% lower