Number 7: We Operate With Excellence.

As Phil Knight, our co-founder and Chairman, once said, “It’s not a single product model, or a single manager, or one ad, or a single celebrity, not even a single innovation that is key to Nike. It is the people of Nike, and their unique and creative way of working together that makes Nike special.”

If our products, brands, and marketplace management are the engines of profitable growth, operating with excellence is the transmission that converts revenue growth into profitability and shareholder value.

Our financial model is built on expanding profit margins and increasing capital productivity. This goal demands that we deliver on the fundamentals that create value:

Profit margins are a dynamic global equation and a function of many factors – some we control and some we do not. We’re deeply committed to driving productivity on those factors that we do control. Expanding profit margin starts with gross margins, where we’ve worked to reduce product costs by paring down the number of styles, eliminating waste, and streamlining our sourcing base. Additionally, we’ve been managing our supply chain to reduce closeouts and improve their profitability. And we’ve become much more strategic in managing our product mix and pricing to increase both revenue and profitability.

SG&A (selling, general and administrative) cost is an area where we’ve made good investments over the last few years, and those investments have delivered industry-leading growth in revenue, market share and profitability. That said, the current macro-economic environment presents a unique opportunity for us to reset our business – both operationally and fundamentally – making strategic investments to deliver consistent, profitable growth for the future. An opportunity we won’t miss.

While we certainly put a great deal of focus on the P&L, we never forget that cash is king. Operating with excellence means increasing the productivity of the capital our shareholders entrust to us. We tightly manage working capital by keeping our inventories lean and proactively managing accounts receivable. We deliver a solid return on our capital investments – being careful not to sacrifice long-term growth for near-term gain. From a capital structure standpoint, we work to consistently increase dividends and payout ratios. Over the past 10 years, Nike has returned $5.5 billion to shareholders through stock repurchases and dividends. Next»