NIKE, Inc. Reports Fiscal 2025 Second Quarter Results

12/19/24 4:15:00 PM ET

$NKE

Shoe Manufacturing

Consumer Discretionary

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NIKE, Inc. (NYSE:NKE) today reported fiscal 2025 financial results for its second quarter ended November 30, 2024.

Second quarter revenues were $12.4 billion, down 8 percent on a reported basis compared to the prior year and down 9 percent on a currency-neutral basis*
NIKE Direct revenues were $5.0 billion, down 13 percent on a reported basis and down 14 percent on a currency-neutral basis
Wholesale revenues were $6.9 billion, down 3 percent on a reported basis and down 4 percent on a currency-neutral basis
Gross margin decreased 100 basis points to 43.6 percent
Diluted earnings per share was $0.78

"After an energizing 60 days of being back with my NIKE teammates, our clear priority is to return sport to the center of everything we do," said Elliott Hill, President & CEO, NIKE, Inc. "We're taking immediate action to reposition our business, so we can get back to driving long-term shareholder value. Our team is ready to go, and I'm confident you will see more moments of NIKE being NIKE again."

"NIKE's second-quarter financial performance largely met our expectations, as we continue to make progress in shifting our portfolio," said Matthew Friend, Executive Vice President and Chief Financial Officer, NIKE, Inc. "Under Elliott's leadership, we are accelerating our pace and reigniting brand momentum through sport."

Second Quarter Income Statement Review

Revenues for NIKE, Inc. were $12.4 billion, down 8 percent on a reported basis compared to the prior year and down 9 percent on a currency-neutral basis.
- NIKE Brand revenues were $12.0 billion, down 7 percent on a reported basis and down 8 percent on a currency-neutral basis, driven by declines across all geographies.
- NIKE Direct revenues were $5.0 billion, down 13 percent on a reported basis and down 14 percent on a currency-neutral basis, primarily due to a 21 percent decrease in NIKE Brand Digital and a 2 percent decrease in NIKE-owned stores.
- Wholesale revenues were $6.9 billion, down 3 percent on a reported basis and down 4 percent on a currency-neutral basis.
- Revenues for Converse were $429 million, down 17 percent on a reported basis and down 18 percent on a currency-neutral basis, due to declines across all territories.
Gross margin decreased 100 basis points to 43.6 percent, primarily due to higher discounts and changes in channel mix, partially offset by lower product input costs as well as lower warehousing and logistics costs.
Selling and administrative expense decreased 3 percent to $4.0 billion.
- Demand creation expense was $1.1 billion, up 1 percent, primarily due to an increase in sports marketing expense offset by a decrease in brand marketing expense.
- Operating overhead expense decreased 5 percent to $2.9 billion, due to lower wage-related expenses and lower other administrative costs.
The effective tax rate was 17.9 percent compared to 17.9 percent for the same period last year.
Net income was $1.2 billion, down 26 percent, and Diluted earnings per share was $0.78, a decrease of 24 percent.

November 30, 2024 Balance Sheet Review

Inventories for NIKE, Inc. were $8.0 billion, flat compared to the prior year, reflecting an increase in units offset by lower product input costs and product mix shifts.
Cash and equivalents and short-term investments were $9.8 billion, down approximately $0.2 billion from last year, as cash generated by operations was more than offset by share repurchases, cash dividends and capital expenditures.

Shareholder Returns

NIKE continues to have a strong track record of consistently increasing returns to shareholders, including 23 consecutive years of increasing dividend payouts.

In the second quarter, the Company returned approximately $1.6 billion to shareholders, including:

Dividends of $557 million, up 7 percent from the prior year.
Share repurchases of $1.1 billion, reflecting 13.1 million shares retired as part of the Company's four-year, $18 billion program approved by the Board of Directors in June 2022.

As of November 30, 2024, a total of 112.8 million shares have been repurchased under the program for a total of approximately $11.3 billion.

Conference Call

NIKE, Inc. management will host a conference call beginning at approximately 2:00 p.m. PT on December 19, 2024, to review fiscal second quarter results. The conference call will be broadcast live via the Internet and can be accessed at https://investors.nike.com. For those unable to listen to the live broadcast, an archived version will be available at the same location through approximately 9:00 p.m. PT, January 10, 2025.

About NIKE, Inc.

NIKE, Inc., based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Converse, a wholly-owned NIKE, Inc. subsidiary brand, designs, markets and distributes athletic lifestyle footwear, apparel and accessories. For more information, NIKE, Inc.'s earnings releases and other financial information are available on the Internet at https://investors.nike.com. Individuals can also visit https://news.nike.com and follow @NIKE.

Forward-Looking Statements

This press release contains forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed from time to time in reports filed by NIKE with the U.S. Securities and Exchange Commission (SEC), including Forms 8-K, 10-Q and 10-K.

*	Non-GAAP financial measure. See additional information in the accompanying Divisional Revenues.

NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


	THREE MONTHS ENDED						%		SIX MONTHS ENDED						%
(In millions, except per share data)	11/30/2024			11/30/2023			Change		11/30/2024			11/30/2023			Change
Revenues	$	12,354		$	13,388		-8	%	$	23,943		$	26,327		-9	%
Cost of sales		6,965			7,417		-6	%		13,297			14,636		-9	%
Gross profit		5,389			5,971		-10	%		10,646			11,691		-9	%
Gross margin		43.6	%		44.6	%				44.5	%		44.4	%

Demand creation expense		1,122			1,114		1	%		2,348			2,183		8	%
Operating overhead expense		2,883			3,032		-5	%		5,705			6,079		-6	%
Total selling and administrative expense		4,005			4,146		-3	%		8,053			8,262		-3	%
% of revenues		32.4	%		31.0	%				33.6	%		31.4	%

Interest expense (income), net		(24	)		(22	)	—			(67	)		(56	)	—
Other (income) expense, net		(8	)		(75	)	—			(63	)		(85	)	—
Income before income taxes		1,416			1,922		-26	%		2,723			3,570		-24	%
Income tax expense		253			344		-26	%		509			542		-6	%
Effective tax rate		17.9	%		17.9	%				18.7	%		15.2	%

NET INCOME	$	1,163		$	1,578		-26	%	$	2,214		$	3,028		-27	%

Earnings per common share:
Basic	$	0.78		$	1.04		-25	%	$	1.48		$	1.99		-26	%
Diluted	$	0.78		$	1.03		-24	%	$	1.48		$	1.97		-25	%

Weighted average common shares outstanding:
Basic		1,486.8			1,520.8					1,492.3			1,524.6
Diluted		1,490.0			1,532.1					1,495.9			1,537.7

Dividends declared per common share	$	0.400		$	0.370				$	0.770		$	0.710

NIKE, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)


		November 30,		November 30,	% Change
(Dollars in millions)		2024		2023	% Change
ASSETS
Current assets:
Cash and equivalents	$	7,979	$	7,919	1	%
Short-term investments		1,782		2,008	-11	%
Accounts receivable, net		5,302		4,782	11	%
Inventories		7,981		7,979	0	%
Prepaid expenses and other current assets		1,936		1,943	0	%
Total current assets		24,980		24,631	1	%
Property, plant and equipment, net		4,857		5,153	-6	%
Operating lease right-of-use assets, net		2,736		2,943	-7	%
Identifiable intangible assets, net		259		269	-4	%
Goodwill		240		281	-15	%
Deferred income taxes and other assets		4,887		3,926	24	%
TOTAL ASSETS	$	37,959	$	37,203	2	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	1,000	$	—	100	%
Notes payable		49		6	717	%
Accounts payable		3,255		2,709	20	%
Current portion of operating lease liabilities		481		456	5	%
Accrued liabilities		5,694		5,470	4	%
Income taxes payable		767		358	114	%
Total current liabilities		11,246		8,999	25	%
Long-term debt		7,973		8,930	-11	%
Operating lease liabilities		2,562		2,785	-8	%
Deferred income taxes and other liabilities		2,141		2,343	-9	%
Redeemable preferred stock		—		—	—
Shareholders' equity		14,037		14,146	-1	%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	37,959	$	37,203	2	%

NIKE, Inc.
DIVISIONAL REVENUES
(Unaudited)


									% Change Excluding Currency Changes¹										% Change Excluding Currency Changes¹
	THREE MONTHS ENDED										SIX MONTHS ENDED
(Dollars in millions)	11/30/2024			11/30/2023			% Change				11/30/2024			11/30/2023			% Change
North America
Footwear	$	3,236		$	3,757		-14	%	-14	%	$	6,448		$	7,490		-14	%	-14	%
Apparel		1,693			1,668		1	%	1	%		3,024			3,147		-4	%	-4	%
Equipment		250			200		25	%	25	%		533			411		30	%	30	%
Total		5,179			5,625		-8	%	-8	%		10,005			11,048		-9	%	-9	%
Europe, Middle East & Africa
Footwear		1,982			2,186		-9	%	-12	%		3,934			4,446		-12	%	-12	%
Apparel		1,136			1,200		-5	%	-8	%		2,129			2,337		-9	%	-10	%
Equipment		185			181		2	%	-1	%		383			394		-3	%	-4	%
Total		3,303			3,567		-7	%	-10	%		6,446			7,177		-10	%	-11	%
Greater China
Footwear		1,203			1,361		-12	%	-14	%		2,449			2,648		-8	%	-8	%
Apparel		472			469		1	%	-3	%		832			870		-4	%	-6	%
Equipment		36			33		9	%	9	%		96			80		20	%	21	%
Total		1,711			1,863		-8	%	-11	%		3,377			3,598		-6	%	-7	%
Asia Pacific & Latin America
Footwear		1,234			1,303		-5	%	-4	%		2,286			2,444		-6	%	-3	%
Apparel		437			437		0	%	0	%		785			808		-3	%	-1	%
Equipment		73			65		12	%	10	%		135			125		8	%	10	%
Total		1,744			1,805		-3	%	-2	%		3,206			3,377		-5	%	-2	%
Global Brand Divisions²		13			12		8	%	-2	%		27			25		8	%	9	%
TOTAL NIKE BRAND		11,950			12,872		-7	%	-8	%		23,061			25,225		-9	%	-9	%
Converse		429			519		-17	%	-18	%		930			1,107		-16	%	-16	%
Corporate³		(25	)		(3	)	—		—			(48	)		(5	)	—		—
TOTAL NIKE, INC. REVENUES	$	12,354		$	13,388		-8	%	-9	%	$	23,943		$	26,327		-9	%	-9	%

TOTAL NIKE BRAND
Footwear	$	7,655		$	8,607		-11	%	-12	%	$	15,117		$	17,028		-11	%	-11	%
Apparel		3,738			3,774		-1	%	-2	%		6,770			7,162		-5	%	-6	%
Equipment		544			479		14	%	12	%		1,147			1,010		14	%	13	%
Global Brand Divisions²		13			12		8	%	-2	%		27			25		8	%	9	%
TOTAL NIKE BRAND REVENUES	$	11,950		$	12,872		-7	%	-8	%	$	23,061		$	25,225		-9	%	-9	%
¹The percent change has been calculated using actual exchange rates in use during the comparative prior year period and is provided to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure. Management uses this non-GAAP financial measure when evaluating the Company's performance, including when making financial and operating decisions. Additionally, management believes this non-GAAP financial measure provides investors with additional financial information that should be considered when assessing the Company's underlying business performance and trends. References to this measure should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies.
²Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
³ Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through the Company's central foreign exchange risk management program.

NIKE, Inc.
EARNINGS BEFORE INTEREST AND TAXES¹
(Unaudited)


	THREE MONTHS ENDED						%		SIX MONTHS ENDED						%
(Dollars in millions)	11/30/2024			11/30/2023			Change		11/30/2024			11/30/2023			Change
North America	$	1,371		$	1,526		-10	%	$	2,587		$	2,960		-13	%
Europe, Middle East & Africa		831			927		-10	%		1,623			1,857		-13	%
Greater China		375			514		-27	%		877			1,039		-16	%
Asia Pacific & Latin America		460			521		-12	%		862			935		-8	%
Global Brand Divisions²		(1,133	)		(1,168	)	3	%		(2,360	)		(2,373	)	1	%
TOTAL NIKE BRAND¹		1,904			2,320		-18	%		3,589			4,418		-19	%
Converse		53			115		-54	%		174			282		-38	%
Corporate³		(565	)		(535	)	-6	%		(1,107	)		(1,186	)	7	%
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES¹		1,392			1,900		-27	%		2,656			3,514		-24	%
EBIT margin¹		11.3	%		14.2	%				11.1	%		13.3	%
Interest expense (income), net		(24	)		(22	)	—			(67	)		(56	)	—
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	1,416		$	1,922		-26	%	$	2,723		$	3,570		-24	%
¹The Company evaluates the performance of individual operating segments based on earnings before interest and taxes (commonly referred to as "EBIT"), which represents Net income before Interest expense (income), net and Income tax expense. Total NIKE Brand EBIT, Total NIKE, Inc. EBIT and EBIT margin are considered non-GAAP financial measures. Management uses these non-GAAP financial measures when evaluating the Company's performance, including when making financial and operating decisions. Additionally, management believes these non-GAAP financial measures provide investors with additional financial information that should be considered when assessing the Company's underlying business performance and trends. EBIT margin is calculated as total NIKE, Inc. EBIT divided by total NIKE, Inc. Revenues. References to EBIT and EBIT margin should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled non-GAAP measures used by other companies.
²Global Brand Divisions primarily represent demand creation and operating overhead expense, including product creation and design expenses that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
³Corporate consists primarily of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company's corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses.

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5/6/2025	$80.00 → $70.00	Market Perform	Telsey Advisory Group
4/30/2025	$55.00	Overweight → Equal Weight	Wells Fargo
4/15/2025	$58.00	Hold	Berenberg
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2/7/2025	$102.00 → $72.00	Buy → Neutral	Citigroup
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NIKE, Inc. Reports Fiscal 2025 Second Quarter Results

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