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NIKE, Inc. Reports Fiscal 2025 Second Quarter Results
BEAVERTON, Ore., December 19, 2024--(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
Revenuesfor 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.
