Nike revenues up 6% in 2017 but profits halve due to Donald Trump’s tax plan
The sporting goods maker ended fiscal 2017 with a turnover of 36.4 billion dollars (31.5 billion euros). Net profit fell to 1.9 billion dollars (1.7 billion euros).
Nike’s profitability hit by Donald Trump’s tax plan. The sporting goods company closed fiscal 2017 (ended on May, 31) at double speed: the group increased its sales by 6% during the period, equalling the growth rate of 2016. On the other hand, net profit shrunk by 54% hurt by the US-government Tax Cuts and Jobs Act.
“Our new innovation is winning with consumers, driving significant momentum in our international geographies and a return to growth in North America,” said Mark Parker, Nike’s chairman, president and chief executive officer. “Fueled by a complete digital transformation of our company end-to-end, this year set the foundation for NIKE’s next wave of long-term, sustainable growth and profitability.”
The Oregon-based company posted a net profit of 1.9 billion dollars (1.7 billion euros) in 2017, compared to 4.2 billion dollars (3.7 billion euros) during fiscal 2016. Trump’s tax plan, which obliges US groups to pay taxes for profits obtained by their foreign subsidiaries, had a negative impact of 2.4 billion dollars (2.1 billion euros).
Nike gained 1.9 billion dollars (1.7 billion euros) in fiscal 2017, compared to 4.2 billion dollars in the previous year
Income before income taxes amounted to 4.3 billion dollars (3.7 billion euros), down 11%, while gross margin reduced from 44.6% in 2016 to 43.8% last fiscal year, mainly due to the unfavourable impact of exchange rates.
Nike’s turnover reached 36.4 billion dollars (31.5 billion euros). Like-for-like sales in Nike brand stores increased 4% in 2017. The eponymous label of the group accounted for the sales bulk, with 34.5 billion dollars (29.8 billion euros), 7% more. On the contrary, Converse revenues kept going downwards, falling 7.6% to 1.9 billion dollars (1.6 billion euros).
By sales channel, the group direct-to-consumer business grew 14.8%, reaching 10.4 billion dollars (9 billion euros). Wholesale revenues continued being the core business, with a turnover of 23.4 billion dollars (20.7 billion euros), 3.9% more.
Nike’s gross margin fell to 43.8%, damaged by unfavourable exchange rates
Footwear remained the key product category, with revenues of 22.3 billion dollars (19.3 billion euros) in 2017, 5.6% more than in the previous year. Apparel grew stronger, 11.2%, to reach 10.7 billion dollars (9.3 billion euros). The equipment business lost momentum, as sales shrunk by 2% to 1.4 billion dollars (1.2 billion euros).
Fueling innovation through acquisitions
Nike is diving through a digitalization process within the framework of a new strategy to create closer ties with consumers. To achieve this goal, the group last April acquired Investex, an Israel-based company dedicated to product customization solutions through mobile apps that scan the body of consumers in 3D. It was Nike’s second acquisition in just one month, following the takeover of Zodiac, a firm specializing in data analysis.
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