NIKE, Inc. (NYSE:NKE) today reported fiscal 2025 financial
results for its first quarter ended August 31, 2024.
- First quarter revenues were $11.6 billion, down 10 percent on a
reported basis compared to the prior year and down 9 percent on a
currency-neutral basis*
- NIKE Direct revenues were $4.7 billion, down 13 percent on a
reported basis and down 12 percent on a currency-neutral basis
- Wholesale revenues were $6.4 billion, down 8 percent on a
reported basis and down 7 percent on a currency-neutral basis
- Gross margin increased 120 basis points to 45.4 percent
- Diluted earnings per share was $0.70 for the first quarter,
down 26 percent
On September 19, 2024, NIKE, Inc. announced that the Board of
Directors of the Company appointed Elliott Hill as President and
CEO of the Company, effective as of October 14, 2024. Given the
Company is reporting Q1 results in the midst of a CEO transition,
it will address its approach to guidance on the conference call. In
addition, the Company's previously announced Investor Day is being
postponed.
"NIKE's first quarter results largely met our expectations. A
comeback at this scale takes time, but we see early wins — from
momentum in key sports to accelerating our pace of newness and
innovation," said Matthew Friend, Executive Vice President and
Chief Financial Officer, NIKE, Inc. "Our teams are energized as
Elliott Hill returns to lead NIKE's next stage of growth."
First Quarter Income Statement Review
- Revenues for NIKE, Inc. were $11.6 billion, down 10
percent on a reported basis compared to the prior year and down 9
percent on a currency-neutral basis.
- NIKE Brand Revenues were $11.1 billion, down 10 percent on a
reported basis and down 9 percent on a currency-neutral basis, due
to declines across all geographies.
- NIKE Direct revenues were $4.7 billion, down 13 percent on a
reported basis and down 12 percent on a currency-neutral basis,
primarily due to a 20 percent decrease in NIKE Brand Digital,
partially offset by a 1 percent increase in NIKE-owned stores.
- Wholesale revenues were $6.4 billion, down 8 percent on a
reported basis and down 7 percent on a currency-neutral basis.
- Revenues for Converse were $501 million, down 15 percent on a
reported basis and down 14 percent on a currency-neutral basis, due
to declines across all territories.
- Gross margin increased 120 basis points to 45.4 percent,
primarily due to lower NIKE Brand product costs, lower warehousing
and logistics costs, and benefits from strategic pricing actions
from the prior year.
- Selling and administrative expense decreased 2 percent
to $4.0 billion.
- Demand creation expense was $1.2 billion, up 15 percent,
primarily due to an increase in brand marketing expense, reflecting
investment in key sports events.
- Operating overhead expense decreased 7 percent to $2.8 billion,
primarily due to lower wage-related expenses.
- The effective tax rate was 19.6 percent compared to 12.0
percent for the same period last year, primarily due to a one-time
item benefit in the first quarter of the prior year provided by the
delay of the effective date of U.S. foreign tax credit
regulations.
- Net income was $1.1 billion, down 28 percent, and
Diluted earnings per share was $0.70, a decrease of 26
percent.
August 31, 2024 Balance Sheet Review
- Inventories for NIKE, Inc. were $8.3 billion, down 5
percent compared to the prior year, reflecting product mix shifts
and lower product input costs.
- Cash and equivalents and short-term investments were
$10.3 billion, up approximately $1.5 billion from last year, as
cash generated by operations was partially 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 22 consecutive years
of increasing dividend payouts.
In the first quarter, the Company returned approximately $1.8
billion to shareholders, including:
- Dividends of $558 million, up 6 percent from the prior
year.
- Share repurchases of $1.2 billion, reflecting 14.8
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 August 31, 2024, a total of 99.7 million shares have been
repurchased under the program for a total of approximately $10.2
billion.
Conference Call
NIKE, Inc. management will host a conference call beginning at
approximately 2:00 p.m. PT on October 1, 2024, to review fiscal
first 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, October 22, 2024.
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 http://investors.nike.com. Individuals
can also visit http://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
%
(In millions, except per share data)
8/31/2024
8/31/2023
Change
Revenues
$
11,589
$
12,939
-10
%
Cost of sales
6,332
7,219
-12
%
Gross profit
5,257
5,720
-8
%
Gross margin
45.4
%
44.2
%
Demand creation expense
1,226
1,069
15
%
Operating overhead expense
2,822
3,047
-7
%
Total selling and administrative
expense
4,048
4,116
-2
%
% of revenues
34.9
%
31.8
%
Interest expense (income), net
(43
)
(34
)
—
Other (income) expense, net
(55
)
(10
)
—
Income before income taxes
1,307
1,648
-21
%
Income tax expense
256
198
29
%
Effective tax rate
19.6
%
12.0
%
NET INCOME
$
1,051
$
1,450
-28
%
Earnings per common share:
Basic
$
0.70
$
0.95
-26
%
Diluted
$
0.70
$
0.94
-26
%
Weighted average common shares
outstanding:
Basic
1,497.7
1,528.4
Diluted
1,502.0
1,543.3
Dividends declared per common share
$
0.370
$
0.340
NIKE, Inc.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
August 31,
August 31,
% Change
(Dollars in millions)
2024
2023
ASSETS
Current assets:
Cash and equivalents
$
8,485
$
6,178
37
%
Short-term investments
1,809
2,612
-31
%
Accounts receivable, net
4,764
4,749
0
%
Inventories
8,253
8,698
-5
%
Prepaid expenses and other current
assets
1,729
2,013
-14
%
Total current assets
25,040
24,250
3
%
Property, plant and equipment, net
4,948
5,109
-3
%
Operating lease right-of-use assets,
net
2,792
2,939
-5
%
Identifiable intangible assets, net
259
272
-5
%
Goodwill
240
281
-15
%
Deferred income taxes and other assets
4,588
3,935
17
%
TOTAL ASSETS
$
37,867
$
36,786
3
%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt
$
1,000
$
—
100
%
Notes payable
12
6
100
%
Accounts payable
3,357
2,738
23
%
Current portion of operating lease
liabilities
491
435
13
%
Accrued liabilities
5,075
4,987
2
%
Income taxes payable
693
295
135
%
Total current liabilities
10,628
8,461
26
%
Long-term debt
7,998
8,929
-10
%
Operating lease liabilities
2,625
2,807
-6
%
Deferred income taxes and other
liabilities
2,672
2,618
2
%
Redeemable preferred stock
—
—
—
Shareholders’ equity
13,944
13,971
0
%
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
37,867
$
36,786
3
%
NIKE, Inc.
DIVISIONAL REVENUES
(Unaudited)
% Change Excluding Currency
Changes1
THREE MONTHS ENDED
%
(Dollars in millions)
8/31/2024
8/31/2023
Change
North America
Footwear
$
3,212
$
3,733
-14
%
-14
%
Apparel
1,331
1,479
-10
%
-10
%
Equipment
283
211
34
%
34
%
Total
4,826
5,423
-11
%
-11
%
Europe, Middle East &
Africa
Footwear
1,952
2,260
-14
%
-12
%
Apparel
993
1,137
-13
%
-11
%
Equipment
198
213
-7
%
-6
%
Total
3,143
3,610
-13
%
-12
%
Greater China
Footwear
1,246
1,287
-3
%
-2
%
Apparel
360
401
-10
%
-9
%
Equipment
60
47
28
%
29
%
Total
1,666
1,735
-4
%
-3
%
Asia Pacific & Latin
America
Footwear
1,052
1,141
-8
%
-3
%
Apparel
348
371
-6
%
-2
%
Equipment
62
60
3
%
9
%
Total
1,462
1,572
-7
%
-2
%
Global Brand Divisions2
14
13
8
%
20
%
TOTAL NIKE BRAND
11,111
12,353
-10
%
-9
%
Converse
501
588
-15
%
-14
%
Corporate3
(23
)
(2
)
—
—
TOTAL NIKE, INC. REVENUES
$
11,589
$
12,939
-10
%
-9
%
TOTAL NIKE BRAND
Footwear
$
7,462
$
8,421
-11
%
-10
%
Apparel
3,032
3,388
-11
%
-9
%
Equipment
603
531
14
%
15
%
Global Brand Divisions2
14
13
8
%
20
%
TOTAL NIKE BRAND REVENUES
$
11,111
$
12,353
-10
%
-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
%
(Dollars in millions)
8/31/2024
8/31/2023
Change
North America
$
1,216
$
1,434
-15
%
Europe, Middle East & Africa
792
930
-15
%
Greater China
502
525
-4
%
Asia Pacific & Latin America
402
414
-3
%
Global Brand Divisions2
(1,227
)
(1,205
)
-2
%
TOTAL NIKE BRAND1
1,685
2,098
-20
%
Converse
121
167
-28
%
Corporate3
(542
)
(651
)
17
%
TOTAL NIKE, INC. EARNINGS BEFORE
INTEREST AND TAXES1
1,264
1,614
-22
%
EBIT margin1
10.9
%
12.5
%
Interest expense (income), net
(43
)
(34
)
—
TOTAL NIKE, INC. INCOME BEFORE INCOME
TAXES
$
1,307
$
1,648
-21
%
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/20241001791667/en/
Investor Contact: Paul Trussell
investor.relations@nike.com
Media Contact: Virginia
Rustique-Petteni media.relations@nike.com
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