NIKE, Inc. Reports Fiscal 2025 Second Quarter Results

Rhea-AI Summary

NIKE (NYSE:NKE) reported fiscal 2025 Q2 results with revenues of $12.4 billion, down 8% year-over-year. NIKE Direct revenues decreased 13% to $5.0 billion, while wholesale revenues declined 3% to $6.9 billion. The company's gross margin decreased 100 basis points to 43.6%. Net income fell 26% to $1.2 billion, with diluted EPS at $0.78, down 24%.

The company maintained strong shareholder returns, returning approximately $1.6 billion through dividends ($557 million, up 7%) and share repurchases ($1.1 billion). Inventories remained flat at $8.0 billion, while cash and equivalents stood at $9.8 billion, down $0.2 billion from last year.

Positive

• Continued strong shareholder returns with $1.6 billion distributed
• Dividend payments increased 7% year-over-year
• Inventory levels maintained flat, showing improved management
• Substantial cash position of $9.8 billion

Negative

• Revenue declined 8% to $12.4 billion
• NIKE Direct revenues dropped 13% with Digital sales down 21%
• Net income decreased 26% to $1.2 billion
• Gross margin contracted 100 basis points to 43.6%
• Converse revenues declined 17% across all territories

Insights

Financial Analyst

Nike's Q2 FY25 results reveal significant headwinds, with $12.4 billion in revenue marking an 8% decline year-over-year. The most concerning metrics include:

• NIKE Direct revenues dropped 13%, with digital sales plummeting 21%
• Gross margin contracted 100 basis points to 43.6%, primarily due to increased discounting
• Net income fell 26% to $1.2 billion, with EPS down 24% to $0.78

The inventory situation remains flat at $8.0 billion, but the mix shift and increased discounting suggest challenges in moving products at full price. While the company maintains strong shareholder returns with $1.6 billion distributed through dividends and buybacks, the core business metrics indicate fundamental challenges in consumer demand and pricing power. The new CEO's emphasis on repositioning and sport-centricity signals a strategic pivot, but near-term pressure on margins and revenue growth appears likely to persist.

Market Research Analyst

The substantial decline in NIKE Direct revenues, particularly the 21% drop in digital sales, indicates shifting consumer behavior patterns and potential market share erosion. The wholesale channel's relatively smaller decline of 3% suggests a possible reversal of Nike's direct-to-consumer strategy's effectiveness. The Converse brand's 17% revenue decline across all territories points to broader lifestyle segment challenges. The need for increased discounting despite flat inventory levels reveals pricing pressure and potential brand positioning issues in key markets. Elliott Hill's strategy to refocus on sport represents a tactical retreat from recent lifestyle-focused initiatives, acknowledging the need to reinforce Nike's core competitive advantage in athletic performance.

Retail Industry Expert

The quarterly results expose critical challenges in Nike's retail execution. The 2% decline in NIKE-owned stores combined with the dramatic digital sales drop suggests omnichannel integration issues and potential market saturation. The increased discounting despite maintained inventory levels indicates a mismatch between product assortment and consumer demand. The company's strong cash position of $9.8 billion provides flexibility for strategic initiatives, but the immediate focus must be on revitalizing the direct-to-consumer channels that have been central to Nike's premium positioning strategy. The new leadership's emphasis on sport-centric positioning could help differentiate from competitors but may require significant investment in product innovation and marketing realignment.

BEAVERTON, Ore.--(BUSINESS WIRE)-- 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
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.
2 Global 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	%
1 The 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.
2 Global 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.
3 Corporate 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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241219682756/en/

Investor Contact:

Paul Trussell

investor.relations@nike.com

Media Contact:

Virginia Rustique-Petteni

media.relations@nike.com

Source: NIKE, Inc.

FAQ

What were NIKE's (NKE) Q2 fiscal 2025 earnings per share?

NIKE reported diluted earnings per share of $0.78, representing a 24% decrease compared to the same period last year.

How much did NIKE's (NKE) revenue decline in Q2 2025?

NIKE's revenue declined 8% to $12.4 billion on a reported basis and 9% on a currency-neutral basis.

How much did NIKE (NKE) return to shareholders in Q2 2025?

NIKE returned approximately $1.6 billion to shareholders, including $557 million in dividends and $1.1 billion in share repurchases.

What was NIKE's (NKE) gross margin in Q2 fiscal 2025?

NIKE's gross margin was 43.6%, decreasing 100 basis points compared to the prior year.

How much has NIKE (NKE) spent on its current share repurchase program?

As of November 30, 2024, NIKE has repurchased 112.8 million shares for approximately $11.3 billion under its $18 billion program.