Nature of Business
Highlight Sales on Footwear
Nike,
Inc (“Nike”), incorporated in 1967 with paid-in capital of USD10,824mn. As of
FY2014, sales reported at USD27,799mn (+9.8% YoY). To breakdown sales by
product segments, 54.7% of sales contributed by footwear, 27.4% of sales
derived from apparel and the rest of sales was from converser brand, equipment
and others.
Income Statement Analysis
Sales: Sales On an Upward Trend for 3 Years
Driven
by increase sales for both the NIKE Brand and Converse and the recovery demand
in North America. In FY2014, sales climbed by 9.8% to USD27,799mn.
Gross Profit Margin: GPM Expand for 3
Consecutive Years
Benefitted
by the increase in average net selling prices attributable to both shifts to in mix to
higher-priced products and price increases, gross profit margin climbed
from 43.6% to 44.8% in FY2014.
Operating Profit Margin: OPM also on Lifted
Trend
Although
assisting in World Cup made the selling and marketing expenses climbed by 13%,
operating margin expanded which aligned with the upward sales performance. The
operating profit margin expanded continually to 13.2% in FY2014.
Net Profit After Tax: Bottom Line Climb
Despite Margin Reduce
Impacted
by a bankruptcy for a former customer in Western Europe, Nike incurred a
non-operating loss of USD103mn in FY2014 compared to income of USD15mn in
FY2013. As a result, the net profit margin reduced to 9.7% from 9.8% in FY2013
but bottom line still expanded by 8.9% to USD2,693mn, which was in line with
sales growth.
Nature of Business
Highlight Sales on Apparel
Under
Armour Inc (“UA”), incorporated in 1996 with paid-in capital of USD1,350.3mn.
As of FY2014, sales reported at USD3,084.3mn (+32.3% YoY) and 90.7% of sales
was contributed by North America. Breakdown the sales by items, 75.1% of sales
was contributed by apparel, 14.1% of sales derived by footwear and the rest of
sales was from accessories as well as license and other revenue.
Income Statement Analysis
Sales: Sales Grew 3 Consecutive Years
Benefitted
by the growing demand for functional clothes (HEATGEAR, COLDGEAR, ALLSEASONGEAR), UA’s net sales
maintained an upward trend and increased by USD752.3mn to USD3,084.3mn (+32.3%
YoY) in FY2014. The growth momentum mainly contributed by North America with a
USD220.5mn increase and by EMEA and Latin America with a USD128.5mn
increase.
Gross Profit Margin: Gross Profit Margin
Expand 3 Consecutive Years
Acting
as a global sports clothing brand, UA’s gross profit margin is able to enjoy an
upward trend. Gross profit margin climbed to 49.0% in 2014 compared to 48.7% in
2013 thanks to (i.) effective inventory management by reducing sales mix of
excess inventory through UA’s factory house outlet (ii.) lower duty costs
recorded on certain product imported in 2014 compared to 2013.
Operating Profit Margin: Climb by 0.1% to
11.5% in FY2014 compared to FY2013
While
gross profit margin expanded continually, UA put more efforts on SG&A
(selling, general and administration) costs to maintain product innovation and
branding campaign which
leads the marketing expenses climbed by USD86.5mn, selling cost increased by
USD81.0mn and product innovation costs expanded by USD82.4mn, respectively.
Nevertheless, operating
profit margin climbed slightly to 11.5% compared to 11.4% in FY2013. In FY2014
thanks to sales growth.
Net Profit after Tax: Margin declined but
Net Profit Increased thanks to Sales lifted
Impacted
by the FX loss of USD5.2mn, net profit after income tax margin narrowed from
7.0% to 6.7%. However, benefitted by sales increased, bottom line expanded by
28.1% to USD208,042mn.
Revenue
Although
sales of UA was significantly lower than Nike, UA enjoys a stronger sales
growth momentum in view of the strong demand for functional apparels, the sales
yoy growth of UA is almost 3 times compared to Nike despite revenue scale is
around 1/10 of Nike.
Gross Profit Margin
Both
Nike and UA enjoys high GPM in view of good brand image and able to increase
its average selling price among intensive competition. The GPM performance for
both Nike and UA are satisfied.
Operating Profit
On the
other hand, UA is a relatively new brand compared to Nike. Thus, UA puts
relative more efforts on product innovation and marketing. However, Nike could
enjoy a relative low percentage SG&A expenses compared to UA. Therefore,
for the operating expense point of view, Nike is better off than UA.
Net Profit Margin
The
profitability for profit after tax of Nike is stronger than UA (9.7% vs 6.7%)
not only in its better economy of scale benefited in its expense control but
also global penetration compared to UA, which mostly relies on North America
market. Therefore, based on the income
statement analysis, Nike is better than UA in its profitability and stability.
沒有留言:
張貼留言