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F500-2023-093-Nike

Despite falling 10 spots on the Fortune 500, the top apparel brand in the U.S. toughed through a year of continued supply-chain disruptions to post a 4.9% increase in revenue and a 5.6% increase in profit. 
<ul> 
 	<li>Because of global supply-chain woes, Nike experienced an inventory glut in 2022 and was forced to sell many of its products at a discount later on that year.</li> 
 	<li>The apparel company has recently benefited from the popularity of athleisure and casual fashion, which has come into vogue with the rise of work-from-home.</li> 
 	<li>Growth in China, its third biggest market by revenue, stalled throughout 2022 owing to COVID-19 lockdowns and boycotts of Western brands. However, after the country relaxed its pandemic restrictions, revenue has begun to improve, with Nike seeing a 11% increase from the second to third quarter of its 2023 fiscal year.</li> 
</ul>

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WMAC 2021-13-Nike

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<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Nike was on a tear in its fiscal 2020, with revenue up 7% during the first nine months of the period. Then came the coronavirus. Sales at the world’s largest purveyor of athletic footwear and apparel plunged 38% in the fourth quarter of its fiscal year as retail stores closed, supply chains were disrupted, and sporting events were canceled. CEO John Donahoe, who had only been in the top job since January 2020, continued the company’s drive into e-commerce—a move that helped soften the blow of COVID-19. Digital sales increased nearly 50% for the fiscal year to $5.5 billion. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">Nike was on a tear in its fiscal 2020, with revenue up 7% during the first nine months of the period. Then came the coronavirus. Sales at the world’s largest purveyor of athletic footwear and apparel plunged 38% in the fourth quarter of its fiscal year as retail stores closed, supply chains were disrupted, and sporting events were canceled. CEO John Donahoe, who had only been in the top job since January 2020, continued the company’s drive into e-commerce—a move that helped soften the blow of COVID-19. Digital sales increased nearly 50% for the fiscal year to $5.5 billion.

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F500-2021-85-Nike

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Nike was on a tear in its fiscal 2020, with revenue up 7% during the first nine months of the period. Then came the coronavirus. Sales at the world’s largest purveyor of athletic footwear and apparel plunged 38% in the fourth quarter of its fiscal year as retail stores closed, supply chains were disrupted, and sporting events were canceled. CEO John Donahoe, who had only been in the top job since January 2020, continued the company’s drive into e-commerce—a move that helped soften the blow of COVID-19. Digital sales increased nearly 50% for the fiscal year to $5.5 billion. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">Nike was on a tear in its fiscal 2020, with revenue up 7% during the first nine months of the period. Then came the coronavirus. Sales at the world’s largest purveyor of athletic footwear and apparel plunged 38% in the fourth quarter of its fiscal year as retail stores closed, supply chains were disrupted, and sporting events were canceled. CEO John Donahoe, who had only been in the top job since January 2020, continued the company’s drive into e-commerce—a move that helped soften the blow of COVID-19. Digital sales increased nearly 50% for the fiscal year to $5.5 billion.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-322-Nike

It’s hard to imagine Nike, the world’s largest athletic apparel maker, without Mark Parker, the quietly charismatic, running-obsessed athlete-turned-footwear-designer-turned CEO. Parker, who had been chief executive since 2006, announced his departure in the fall of 2019, and was replaced by Nike board member and former eBay CEO John Donahoe in January 2020. (Parker, for now, is staying on as executive chairman.) That said, the hand-off was a smooth one, thanks to a breakout star: China. Nike reported revenue of $1.68 billion in Greater China in September 2019, marking five quarters of double-digit revenue growth in the region, driven in part by its investment in digital commerce. That digital strength has helped fuel the company through the global impact of the COVID-19 pandemic; while revenue was down 38% in the quarter that ended May 31, the company's digital sales were up an impressive 75%.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-085-Nike

It’s hard to imagine Nike, the world’s largest athletic apparel maker, without Mark Parker, the quietly charismatic, running-obsessed athlete-turned-footwear-designer-turned CEO. Parker, who had been chief executive since 2006, announced his departure in the fall of 2019, and was replaced by Nike board member and former eBay CEO John Donahoe in January 2020. (Parker, for now, is staying on as executive chairman.) That said, the hand-off was a smooth one, thanks to a breakout star: China. Nike reported revenue of $1.68 billion in Greater China in September 2019, marking five quarters of double-digit revenue growth in the region, driven in part by its investment in digital commerce. Nike's digital reach helped its China segment continue to perform despite coronavirus-fueled shutdowns in the first few months of 2020.

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Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Founded in 1964, Nike is one of the largest global sports brands. The company designs and sells athletic footwear, apparel, equipment, and accessories, and offers related services worldwide. In addition, Nike markets apparel with licensed college and professional team logos. Its products are sold in stores, including Nike-owned retail stores, and on digital platforms. Nike is known for its marketing through celebrity endorsements from top athletes.

Q4 2026

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Q2 2025

Nike (NKE): Company Profile, Stock Price, News, Rankings

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Good afternoon, everyone. Welcome to NIKE, Inc. Fiscal twenty twenty five Second Quarter Conference Call. For those who want to reference today's press release, you'll find it at investors.nike.com. Leading today's call is Paul Tressell, VP of Corporate Finance and Treasurer.

Now, I would like to turn the call over to Mr. Paul Tressell. Please go ahead, sir.

Thank you, operator. Hello, everyone, and thank you for joining us today to discuss NIKE, Inc. Fiscal twenty twenty five second quarter results. Joining us on today's call will be NIKE, Inc. President and CEO, Elliott Hill and our CFO, Matt Fren.

Before we begin, let me remind you that participants on this call will make forward looking statements based on current expectations, and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in NIKE's reports filed with the SEC. In addition, participants may discuss non GAAP financial measures and non public financial and statistical information. Please refer to NIKE's earnings press release or NIKE's website investors.nike.com for comparable GAAP measures and quantitative reconciliations. All growth comparisons on the call today are presented on a year over year basis and are currency neutral unless otherwise noted.

We will start with prepared remarks and then open up for questions. We would like to allow as many of you to ask questions as possible in our allotted time, so we would appreciate you limiting your initial question to one. Thanks for your cooperation on this. I'll now turn the call over to NIKE, Inc. President and CEO, Elliot Hill.

Thank you, Paul. Hello, everyone, and happy holidays. In my first call, I want to start by saying how energized I am to be back at NIKE, working alongside my teammates. I look forward to the journey that lies ahead for all of us. When I retired in 2020 after thirty two years, I continued to stay in touch with many of my teammates and cheered them on from the sidelines.

Why? Because I have an irrational love for this company. I know Nike inside and out, take pride in what the brand stands for and want to see the company succeed. And in a moment where our team, brand and business are being challenged, my singular focus is to help get us back on track to get back to winning. Today, I'm going to share what I've seen and heard in my first two months.

I will then outline some of the immediate moves we're making to reposition the business. I'll tell you this, we, the entire NIKE team, feels the sense of urgency here. My full leadership team and I went on the road the past few weeks to meet our teammates, partners and consumers to get a firsthand view of our brand and business. We went to LA, New York, Amsterdam, London, Paris, Shanghai, Beijing. Together, we walked the high streets and shopping malls of those cities to see how consumers are experiencing our brand at retail.

I met with key wholesale partners in each geography, all of which I already know and have developed deep relationships with over the years. I met with the commissioners of the NFL, NBA and WNBA, MLB and NWSL, the heads of the top NCAA conferences and teams like PSG, and past and present athletes like MJ and Ronaldo to Sabrina, Asia and Erling. I visited our distribution centers in Memphis in locked on had calls with our top five manufacturing partners to understand the evolution of our supply chain as we've grown the business. It was important to me that I spent my first sixty days personally collecting these deep and direct insights. Across the board, our partners are energized.

The people I talk with are rooting for a strong NIKE. Because when NIKE is at its best, we bring excitement. We invite consumers into the world of sport and sport culture. And when we do that, we help grow the overall marketplace. That's good for consumers, that's good for our partners, and that's good for NIKE.

The consistent feedback we've heard is pretty simple. Let's see more of NIKE being NIKE. And that starts with leveraging all the advantages that make us great. Three of the world's most iconic brands, a dominant roster of athletes, teams and leagues, unmatched patented innovation, a deep catalog of products at every price point teams positioned to serve consumers across 190 countries a full integrated marketplace across multiple channels strong long standing relationships with leading suppliers and manufacturing partners, and most importantly, passionate, highly talented and committed teammates. Lately, we haven't been maximizing these strengths.

From everything I heard and observed, there are clear themes about the recent state of our business and where we need to go. I'll start with a high level observation. We lost our obsession with sport. Moving forward, we will lead with sport and put the athlete at the center of every decision. The sharpness in each sport is what differentiates our brand and our business and fuels our culture.

Another observation is that the reliance on a handful of sportswear silhouettes is not who we are. We will get back to leveraging deep athlete insights to accelerate innovation, design, product creation and storytelling. Sport is what authenticates our brand. I also see that we've shifted investments away from creating demand for our brand to capturing demand through performance marketing for our digital business. We will reinvest in our brands to create stories that inspire and emotionally connect with our consumers during important sports moments and critical product launches.

When visiting our teams around the world, it was clear, centralization has impacted the resources we have in key countries and key cities. We will rebalance resourcing and empowering our teams on the ground to win with the Everdy athletes and influencers. My last observation, prioritizing NIKE digital revenue has impacted the health of our marketplaces. We will build back an integrated marketplace. Across Nike, direct and wholesale, our marketplace will be consumer led, putting our best product and presentation in the path of the consumer wherever they choose to shop.

And ultimately with SportsStar Northstar, we will re energize our culture and identity. We believe we have one of the strongest mission statements of anyone and that is to bring inspiration and innovation to every athlete in the world. To me, inviting 8,000,000,000 athletes into sport is a pretty powerful purpose. One question to know you want to ask me is if we have the talent at NIKE and are they motivated? The short answer to both is yes.

I've grown more and more confident as I've traveled around the world and saw our teams engaging with each other, with our consumers and with our partners. It's also been great to see how much expertise we've added since I've been away. In spaces like supply chain, product creation, technology, materials, sports science, you name it, our talent is world class. Everywhere I've been, the teams are inspired and ready to go. I feel the optimism, we will win and we will do it as a team.

What our teams right now need right now is clear direction and focus. We built this company on the guiding principles of world class management of product, brand and marketplace. We create innovative and coveted products, tell emotional inspiring stories through our brand and execute in a way that grows the entire marketplace, digital and physical, wholesale and NIKE Direct. My leadership team and I have already identified key near term actions in each area and we're going to move fast. First, in product, we're getting sharper on specific sports.

We're shifting into sport led teams segmented by men's, women's and kids and we call each of them fields of play and it is a segment to grow approach. Throughout our history, we've utilized inflection points to further segment our businesses to unlock the next wave of growth. We will do this by empowering more nimble cross functional teams to assess the needs of sports specific athletes by gender. The approach enables the teams to identify new opportunities, fuel innovation and drive incremental growth by sport and by gender. Breadth and depth and how we orchestrate our complete product portfolio have always been strengths of NIKE.

We will return to the discipline of franchise management that I was a part of for so many years. We've already started managing the inventory in our marketplaces and will move faster to return to a full market for our largest classic footwear franchises. At the same time, the team has been planting the seeds of the next franchises that will fuel growth. In the quarter, some of our most sought after products are franchises that are distinctly Nike, the Pegasus 41, Nike Shox and the Kobe lineup. And we're building anticipation for what's ahead unveiling the Vomero 18 and Pegasus Premium to passionate runners at the running event in my hometown a

in rounding out the portfolio, but I'm really encouraged by the innovation coming from our field to play in the next several seasons, especially in the high volume areas like running, training, sportswear and core product and the Jordan brand lineup. Turning to the Nike brand. There are moments when we need to create impact that's felt around the world and day to day work that connects emotionally with local communities. We will deliver bold creative marketing that leverages our athletes in sport moments and drive the ground game authentically in neighborhoods. To do that, we're going to be much more intentional about investing to move the brand forward.

We're already moving in that direction. The marketing team delivered moments this quarter that got us back to owning the conversation in sport. From the Liberty's first WNBA championship to the Dodgers World Series win to Saquon Barkley's reverse hurdle, to city takeovers at the Berlin, Shanghai, New York City and Chicago marathons. We're also going to continue to be aggressive in sports marketing. In just the last sixty days, we've announced the re signing of the NBA and the WNBA, the Brazil Football Confederation, FC Barcelona and last week, the NFL.

We drive growth through sports most iconic partners. Their athletes are the creative fuel for our brand. They power our innovation agenda, our brand voice and our revenue. Inspiring the consumer includes being part of the active communities who run, train and compete locally. It's about showing up and building relationships every day with athletes and influencers.

My visits to the Geos the past few weeks only reinforce my conviction that we need to get back to empowering our teams in key countries and key cities. I know from my years of working in our geographies, they are the ones creating emotional consumer connections in their neighborhood, they are the ones identifying the insights that inform our offense. We will resource our key country and key city teams to create stronger consumer connections, build relationships with athletes, influencers and partners and unlock incremental growth for our brand and business. We're optimistic about the actions that are already underway in product and brand, but we're still in the early innings of elevating the marketplace, both in NIKE Direct and with our wholesale partners. What I've seen is traffic in NIKE Direct, digital and physical, have softened because we lack newness in product and we're not delivering inspiring stories.

The result is we've become far too promotional. We've moved to a pushed model. Entering the year, our digital platforms were delivering roughly a fiftyfifty split of full price to promotional sales. The level of markdowns not only impacts our brand, but it also disrupts the overall marketplace and the profitability of our partners. We will return NIKE Direct digital and physical to premium destinations that lead the sports industry.

They'll elevate the consumer experience and be the ultimate representation of the Nike brand. It's where we'll offer our most complete assortments, tell deep product stories and share our passion for sports. Being premium also means full price. We'll focus promotions during traditional retail moments, not at the consistent levels we are today and we will leverage NIKE value stores to profitably move through any excess inventory. The final action we prioritize is building back and earning the trust of our key wholesale partners.

Some partners and channels feel we've turned our back on them and we've stopped engaging consistently. I've connected with many of them directly. Ed and Lauren at Dick's, Regis and Mike at JD Sports, Mary at Foot Locker, Heinrich at the Dyckman Group, Michael at Sports Direct, Mr. Yu at Top Sports, Mr. Yu and Mr.

Wang from Kaohsiung and Juan Carlos at Innovasport. They're all encouraged by our commitment to delivering new innovative products, telling emotional and inspiring stories and elevating NIKE Direct. Their confidence is building in our product pipeline and they welcome the closer collaboration as we invest more in their business. We know our sales teams will have to earn every open to buy dollar, but we're investing to make sure our partners feel supported. We'll give them access to our best products and the breadth and depth they need, educate their teams on the latest NIKE innovation and provide them with the marketing support both in store and out of home.

more than just sell in our products. We'll actively support mutually profitable sell through. Simply put, we will win when our partners win. Before I hand it off to Matt, I just wanted to say it's been an incredibly rewarding first two months. It feels great to be back with my NIKE teammates.

This isn't going to be easy, but we're ready for the challenge. After spending so much time with my team in the past few weeks, I'm confident we are all aligned and focused on the areas that will make the most immediate impact. I'll list the near term priority actions again. Ignite our culture through a focus on obsessing sport and getting back to winning. Accelerate a complete product portfolio driven by athlete insights through sport led field to play.

Increased investment in our brand to deliver big bold marketing statements. Invest in and empower our teams in key countries and key cities to win the ground game, elevate the marketplace through a more premium NIKE Direct and an unwavering commitment

these actions are already underway and some need to move faster. And I will continue to evaluate and assess what is needed. I recognize that some of these actions will have a negative impact on our near term results. But we're taking the long term view here. We're making the decisions that are best for the health of our brand and business, decisions that will drive shareholder value.

I strongly believe NIKE's path to sustainable, profitable growth will be through sport. And with that, I'll turn it over to Matt to cover some of the specific quarter results and our financial outlook before we take some questions.

Thank you, Elliot, and hello to everyone on the call. To start, our Q2 financial performance largely met our expectations as we continue to make progress repositioning our business. Today, I will focus my remarks on our recent performance and outlook. First, I will start by reviewing our Q2 financial results. Then I will go deeper into our performance in the quarter, including marketplace trends, portfolio highlights and operating segments.

And last, I will review our near term outlook, including the strategic actions introduced by Elliott to accelerate our pace in stabilizing the business and reigniting brand momentum. This quarter, revenues were down 8% on a reported basis and down 9% on a currency neutral basis, reflecting ongoing headwinds from our franchise management actions. We continue to drive the biggest reductions to our classic footwear franchises on NIKE Direct, which was down 14% with NIKE Digital declining 21% and NIKE Stores declining 2%. Wholesale was down 4%. Gross margins declined 100 basis points to 43.6% on a reported basis due to higher markdowns on NIKE Direct, wholesale discounts to liquidate inventory and channel mix headwinds, partially offset by lower product costs and strategic pricing actions.

SG and A was down 3% on a reported basis. While we increased investment in areas such as sports marketing, this was more than offset by lower wage related expenses and timing shifts in other demand creation expenses. Earnings per share was $0.78 Now let me go deeper into the quarter's performance. Q2 marketplace trend largely reflected the challenges that Elliot outlined, with traffic and retail sales across the marketplace falling below our expectations, especially in September and October. In November, we saw momentum build with digital and physical traffic inflecting positive, especially around the quarter's biggest consumer moments.

In North America, Black Friday Week was our largest demand week ever on NIKE Digital with sales up double digits. In Greater China, our 11.11 performance exceeded plan. However, on NIKE Digital, our off price mix was up high single digits versus the prior year with performance marketing increasing over the same period. As Elliott said, NIKE Digital has become a platform where we have been capturing demand and competing with our wholesale partners rather than creating and growing demand for our brands. This is why we must elevate the consumer experience, grow organic traffic and drive full price demand.

Next, inventory was flat versus the prior year as elevated supply in North America and Greater China was offset by declines in EMEA and APLA. Footwear inventory declined, while apparel and accessories inventory increased to support marketplace growth. On a year over year basis, these trends were partly driven by timing related factors. That said, inventory levels are higher than we would like, especially given recent sales trends on NIKE Direct. Partner owned inventory declined versus the prior year.

We took some steps this quarter and we plan to accelerate inventory actions in our second half to drive a return to a healthy marketplace. In particular, we are moving aggressively to reduce aged inventory, adjust supply with demand on NIKE Digital and ensure we have marketplace capacity for our newest product assortments. Turning to our portfolio, this quarter showed progress in key areas, especially as our teams get back on the offense and sport with consumers. Overall, our sport performance field of play grew year over year, offset by a double digit decline in sportswear. In training, men's was up high teens, women's up high single digits and kids up high single digits.

In global football, men's grew low single digits and kids grew high teens. In basketball, women's grew strong double digits and kids grew low teens. And in running, men's was flat and women's up low to mid single digits. In addition, we took another step forward shifting our product portfolio by reducing the proportion of our business driven by our classic footwear franchises. For Q2, these franchises again decelerated faster than the overall business and at a rate greater than the first quarter.

As I said last call, we expect the impact of these shifts to continue for the next few quarters. With that, let me turn to our operating segments. In North America, Q2 revenue was down 8%. NIKE Direct declined 15% with NIKE Digital down 22% and NIKE stores down 3%. Wholesale declined 1%.

EBIT declined 10% on a reported basis. Highlights in the quarter included growth in kids with strong momentum in apparel and performance footwear. Men's and women's training drove strong growth. And in basketball, JAW grew double digits. COBI became the market's largest signature franchise with demand far exceeding available supply.

And Sabrina too made a statement as the NBA's second most worn sneaker this season behind only the Kobe six. Throughout Q2, we positioned NIKE as the brand of athletes around key sports moments. Our winning is in comfortable running campaign, one ad age is best out of 2024. As our ground game built momentum at the Chicago and New York Marathons. As the NFL season got underway, our Kobe release drove our largest cleat shock drop in Nike history.

And when the New York Liberty clinched the WNBA championship and my LA Dodgers won the World Series, our brand storytelling owned the moment. In EMEA, Q2 revenue declined 10%. NIKE Direct declined 20% with NIKE Digital down 32% and NIKE stores up 3%. Wholesale declined 4% and EBIT declined 10% on a reported basis. We continue to build momentum in sport performance, led by strong growth in men's and kids' global football.

Men's and women's running returned to growth and all three of our top performance franchises in EMEA, Mercurial, Pegasus and Phantom grew double digits. In sportswear, we are seeing momentum from newer franchises including Shox, Vivero five, LD one thousand and P six thousand. In addition, we moved first in EMEA to reposition NIKE Digital as a premium platform. This quarter, full price realization improved with a strong double digit decline in off price sales. While we are seeing near term traffic impact as we reduce promotional activity in paid media, we believe these shifts will elevate the total marketplace over time.

In Greater China, Q2 revenue declined 11%. NIKE Direct declined 7% with NIKE Digital down 4% and NIKE Stores down 8%. Wholesale was down 15%. EBIT declined 27% on a reported basis. In Q2, we experienced another quarter of retail traffic declines in a difficult macro environment.

This quarter also required higher markdown activity to drive sell through and inventory velocity, which negatively affected gross margins. In a competitive environment, NIKE's focus is on serving consumers with product innovation and brand inspiration and fueling the growth of sport in China. This quarter JAH2 launched with strong sell through, Pegasus forty one topped sales in women's running and new ACG apparel releases created social buzz. We also continue to see strong full price demand with lower markdowns and higher margins for our locally designed Express Lane products. This fall more than 250,000 runners joined us for the Shanghai Marathon.

In addition, we hosted marathoner, Ilya Kipchoge for community events, school visits and a run along the Great Wall to inspire the next generation of runners in China. While near term conditions are challenging, sport continues to grow in China and we are addressing our current headwinds to reignite brand momentum and a healthy pool marketplace. In APLA, Q2 revenue was down 2%. NIKE Direct declined 4% with NIKE Digital down 8% and NIKE Stores up 2%. Wholesale declined one percent.

EBIT declined 12% on a reported basis. Earlier on, we read consumer trends in Korea and Japan and moved quickly to diversify our sportswear footwear portfolio. Our mix of classic footwear franchises in APLA is below our global business and new styles are resonating with consumers. Our look of running franchises are up triple digits and new releases like City and Air Max Muse drove positive consumer response. In addition, we drove strong growth in men's and women's training and kids' global football, as men's and women's running returned to growth in the geography.

Now, let me turn to our financial outlook. As I said last quarter, we intend to continue providing quarterly guidance during this period of transition. Let me start first by providing some additional color and context. Elliott has now outlined certain strategic actions to reposition our business and re energize NIKE brand momentum through sport. Some of these actions have been in motion and we are accelerating the pace.

Others are new. More specifically, we are shifting NIKE Digital to a full price model and reducing the percentage of our business driven by promotional activity. We are also reducing investment in performance marketing, which will reduce paid traffic. This will require short term liquidation of excess inventory through less profitable channels. We are creating capacity in the marketplace to sell in seasonal newness and innovation for fall and holiday 2025.

This requires additional investment in marketplace returns, higher wholesale discounts to liquidate excess inventory and to win back shelf space, as well as higher promotions to accelerate volume through our NIKE factory stores. We are targeting a significant reduction in weeks of supply of our classic footwear franchises over the next few seasons, with timelines varying by franchise, channel, market and geography. As a result, summer order books will be down versus the prior year. We are increasing brand marketing activity to support key product launches and upcoming sports moments. Investment in sports marketing is also increasing with our recent long term partnership extensions.

And we are investing to rebuild our key city offense, our sport by consumer field of play and our commercial teams to serve our retail partners. We believe the strategic actions that Elliott has outlined are the right moves for NIKE to create better balance in our business and to reignite growth with our wholesale partners in an integrated marketplace. But over the near term, the net effect of these actions will result in lower revenue, additional gross margin pressure and higher demand creation expenses with a greater headwind to the fourth quarter compared to the third quarter. Turning to our third quarter outlook. We expect Q3 revenues to be down low double digits.

This reflects initial steps on the actions outlined above, as well as worsening foreign exchange headwinds, partially offset by a timing benefit from Cyber Week shifting into our third quarter. We expect Q3 gross margins to be down approximately 300 basis points to three fifty basis points, including restructuring charges during the same period in the prior year. This reflects the actions described earlier to clean and to reset the marketplace. We expect Q3 SG and A dollars to be slightly down year over year, including restructuring charges in the prior year. We will continue to tightly manage expenses, while we strategically increase investment as mentioned earlier.

We expect other income and expense, including net interest income to be $30,000,000 to $40,000,000 for Q3. With that, let me turn it back over to Elliot.

Thanks, Matt. Before taking questions, I wanted to share some additional thoughts. Matt and I have made it clear that we're repositioning the business to get back to driving a pull market for NIKE. Over the coming quarters, we'll provide more details of our plans and I commit to being transparent on our progress. We'll also share more specifics about the marketplace moves, stories and products that give us optimism.

But I want you to know my bigger purpose for being here, I rejoined NIKE to take our consumers, our amazing athletes and this great company to someplace new. I want to be a part of a team that celebrates the biggest sports moments in unexpected ways, supports record breaking athletes, creates innovation that people couldn't even imagine, builds new markets for sport from the ground up and most of all a team that changes people's lives, a team that helps athletes at all levels all around the world to reach their full potential. It's an ambitious vision, but one that I truly believe only NIFE can deliver. Thank you and let's open it up for questions.

Thank you, sir. The first question comes from Bob Drbul, Guggenheim.

Hi. Elliot, welcome back. Congratulations and best of luck.

Bob. I appreciate it. It's good to be back.

I guess, I appreciate all the commentary. The one question I'd love for you to elaborate a bit more on is the relationships and the reception by your retail partners, especially around earning back the shelf space that you've given up as a

Yes. Thank you, Bob. Here's what I'd say. We are absolutely committed to getting back to leading and growing a consumer led marketplace.

And I think there's a couple of keywords there. It's obviously key being consumer led. The bottom line is there are consumers that want to shop Nike Directs, there are consumers that want to shop wholesale and there are consumers that want to shop digital and physical and we have to show up with the best representation of the Nike brand wherever that is and we will do exactly that. In terms of our T wholesale partners, I've got a long history there, as you know, Bob, and I have deep relationships with all of them. I listed a number of them.

And so we have work to do. And I would say, especially in the specialty channels, Bob, running and football specialty, we're committed to investing in there. We've already started to invest in those areas. We've started to engage with our wholesale partners, bringing them out here for what we call key account planning meetings or bringing them out to have product engagement meetings for fall twenty twenty five and the response has been very positive. If I had to sort of frame it up for you, they want us to get back to being Nike and they want us to have the unrelenting flow of innovative products that we bring across all sports and against all price points and they want us to get back to being to delivering bold brand statements that help drive traffic.

Because when it's all said and done, what they want indeed from us is to drive mutually profitable growth for them and for us. And that's exactly what we're going to get back to. And we will the only way we're going to get back open to buy and shelf space is to do the things that we've already laid out, clean up the marketplace, bring innovative, coveted product every single quarter, bring the brand heat that drives traffic and drives sell through. They're open, they're receptive and we're excited and looking forward to getting back in business with them.

Great. Thanks. And I guess one of the other meetings I think you said you had was with the NCAA. Just curious if you think this is the year for the Ducks, are they going to win the college football playoff?

Bobby, that's a trick question. My guess is I might have the founder on this call. I don't know. But I think where I sit today and the role I sit, I better say I better go with the Nike team. And by the way, with the number of Nike teams we have in the playoffs, I like my chances.

I'd like a few more of those calls or questions.

And we'll take the next question from Michael Denetti, Evercore.

Hey guys. Elliot, welcome back. It's great to hear your voice.

all the detail, Matt. Elliot, did you think you gave us some commentary around how you're planning the near term investments in the business. And Matt, you made some allusions to some of those investments continuing into the fall. As you look at your first sixty days and think about the path to getting this brand back to growth longer term that it deserves, what do you think are some of the most important things about how you phase costs in bringing investments back into the business along the way and the pace of those investments along the way as you look to, I guess, returning to growth as we look past fiscal twenty twenty five?

Yes. Thank you, Michael. We touched on in our prepared remarks what we saw out in the market as we traveled around. And first and foremost, we've got to get back to putting sport at the center of everything that we do. Our product management, we're starting to clean up what we have out in the marketplace.

We're starting to shift dollars from performance marketing to brand marketing. We will shift we will invest in our fields of play because that's where we drive our product innovation, our newness, our distinction. And we will also invest in the brand. And then finally, which is demand creation, both from sports marketing and then just big, bold brands marketing efforts. And then we touched on what we call our ground game in key countries and key cities.

We'll speak later today with our teammates, but I think the easiest way to think about we can't do all of them everywhere. So we're going to focus in on five sports to start with running, basketball, training, football and sportswear. And while we have 10 key countries and 12 key cities, we're going to focus our efforts on three key countries and five key cities. So we're really going to narrow down and we'll pace and phase as we go throughout the next eighteen, twenty four months or so. So I'm excited about the actions we're taking and the clarity we have about where we need to invest.

I would add to that is, you've seen us for a couple of quarters now tightly managing expenses as we have been prioritizing our investments in the brand and demand creation. The long term sport partnerships, these assets like the NFL, the NBA, the WNBA, Brazil, these are long term partnerships deep into the next decade. And I think that's a great example for you of our commitment to sport and to invest behind sport, not only now, but for the long term. And so over the next couple of quarters, you will see our demand creation investment continue to go up. That's going to be a combination of sports marketing and our investment behind the brand.

This quarter, our SG and A was down 3%, but our demand creation was up 1% and we expect demand creation to continue to lead our SG and A growth over the next few quarters. The other thing I would just add is when I think of investment, I'm thinking up and down the P and L. And we are making meaningful investments beginning in the third quarter to clean up the marketplace. That means liquidating inventory. That means our sales return reserves in order to be able to clear aged inventory, so we can create space to sell in our new assortments and the innovation that we're excited about in fall and holiday 2025.

And it also means planning for markdowns in our factory stores. And so that's reflected in the guidance that we provided for Q3 and we do expect that to continue for the near term until we can get ourselves back to a balanced and repositioned business to drive growth looking forward.

From Bank of America, Lorraine Hutchinson has the next question.

Hi, good afternoon. Thanks, Elliot. You're accelerating a lot of

the work around lifestyle in fiscal twenty twenty five, but how much incremental pressure do you expect on 2026 sales? And based on your analysis of the pipeline, when will newness gain sufficient scale to offset that pressure?

Thank you, Marie. Again, as we look at where we are today, we touched on it for a number of times already and the concentration that we have in a few key franchise styles. And one of the core competencies that we have at Nike is franchise management, and it's foundational to this company. And what we will as we already talked about, we're taking actions to reduce the amount of inventory in the marketplace. Within it, it opens up shelf space open to buy for new innovative products.

And I am excited about the product that is coming. We are we have three brands that we can drive from Nike, Jordan and Converse, from performance to sportswear with over 10 different sports, men's, women's, kids, footwear, apparel, equipment, accessories and up and down price points. And I've seen now the product that's coming from our fields of play. I was able to sit through a fall twenty five, a few of the presentations with our key retailers and they're excited about the product that's coming and it will be led with running, training and sportswear. And again, I think these small cross functional teams are doing a really nice job of now starting to flow innovative product into the marketplace.

And that's the quickest way to return to health.

Lorraine, we took another step forward this quarter and those three franchises decelerated at a rate that was faster than the overall business for the second straight quarter and the rate this quarter was greater than we drove in the first quarter. And so as I mentioned last quarter, that has had a disproportionate effect on the NIKE digital business results because of the concentration of those franchises on digital. And so what we had highlighted was that these actions would result in a mid single digit headwind on our financials for the balance of this year. And with Elliot being sixty days in and looking at the current plans and where he wants to take our product portfolio, we have accelerated those actions. And so I expect the impact to be bigger for the balance of this year and getting very sharp and specific on reducing the weeks of supply over the next few seasons to ensure that across the entire marketplace, these franchises are back at a healthy full price level.

I made a comment in my prepared remarks that summer twenty twenty five is down slightly versus the prior year and that reflects this accelerated level of actions that Elliot outlined. I'd note that even with these actions, we almost offset it by the contribution of newness and innovation. And so even that as a signal for me gives me confidence that the work we started over a year ago to build the pipeline is taking root with our partners.

Adrian Yee from Barclays has the next question.

Great. Thank you very much. And Elliot, welcome. Look forward to meeting you.

You're welcome. I apologize if my phone is crackly. Sorry about that. I appreciate the notion of margins before sales. And so when we look at kind of what you're doing, you're accelerating sort of the reset actions.

Nike (NKE) Q2 2025 Earnings Call Transcript

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