2012



CEO Letter to Shareholders



To Our Shareholders,

 

NIKE was awarded its first patent in 1974 for the Waffle outsole. It was the inspired invention of Bill Bowerman, legendary track coach and co-founder of NIKE. In fiscal year 2012, NIKE landed the top spot on The Patent Board’s Consumer Products scorecard. We earned it for our strong technical skills, the depth of our science and research, and the quantity of our innovation.

That’s a tribute to the drive, ingenuity and teamwork of NIKE people across the organization. I’m very proud of that. While earning top honors for the strength of our innovation is an outstanding achievement, we still have room to improve and elevate our performance.

That’s how it’s been for my 33 years with this company – a relentless drive to innovate, inspire and grow. That’s how it was in fiscal 2012 and how it will continue to be going forward.

WE ARE ON THE OFFENSE. ALWAYS.

This is one of our guiding principles. It drives us to create and deliver amazing products to the marketplace – shoes, apparel, equipment, services, and experiences. That generates topline growth, and fiscal 2012 was a very strong year.

Global revenue for NIKE, Inc. grew 16 percent to $24.1 billion, our fastest growth in 15 years.

Global revenue for the NIKE Brand was up 16 percent, with increases in every geography and category.

Our NIKE Brand Direct-to-Consumer (DTC) business – that’s the stores and websites we own and operate – increased 23 percent overall. Online sales alone grew 26 percent.

And Converse had another great year, increasing revenue by 17 percent – terrific momentum in that business.

There’s no doubt about the power of our brands and the strong consumer demand for our products.

That said, we didn’t deliver as much of that growth to the bottom line as we would have liked, due largely to significantly higher costs for the materials and labor that go into our products. We raised prices over the course of the year and did a good job leveraging SG&A expense, which grew below the rate of revenue. As a result, our diluted Earnings per Share for the year grew 8 percent to $4.73. Those are solid results given the variables in our economy. But we’re not satisfied with “solid.” We remain confident that our earnings will grow faster than our revenue over the long-term. *

THE POWER OF THE NIKE, INC. PORTFOLIO IS OUR COMPETITIVE ADVANTAGE.

NIKE has the size and diversity of businesses to compete on a global scale. We use our leadership position to help us mitigate the impact of macroeconomic forces on our profitability. And we use it to identify and invest in the biggest growth opportunities. Sometimes those decisions are easy – like creating a new generation of digital products and services, or bringing great consumer experiences to retail.

Sometimes the decisions are much tougher, like divesting of Cole Haan and Umbro. But every decision is focused on increasing our ability to deliver sustainable, profitable growth. And that growth can be found in our core businesses: NIKE, Converse, Jordan and Hurley. In fact, at our last investor day meeting we shared a revenue target of $28 to $30 billion by the end of fiscal