NIKE : Q4FY25 EARNINGS CALL UNOFFICIAL TRANSCRIPT

Published: 2025-06-27 02:41:18 ET NKE

Published on 06/27/2025 at 02:41

‌REMARKS AS PREPARED FOR DELIVERY

Q4FY25 NIKE Inc. Conference Call

June 26, 2025

The following material represents prepared remarks for NIKE, Inc.'s earning conference call and is not an official transcript. These remarks are provided only for reference purposes until an official transcript is made available. These prepared remarks do not reflect questions asked by participants in the conference call or responses from NIKE, Inc. management, and information presented by NIKE, Inc. during the conference call may differ materially from these prepared remarks. Information contained in these remarks was current only as of the date of the conference call and may have subsequently changed materially. NIKE, Inc. does not update or delete outdated information contained in these prepared remarks and disclaims any obligation to do so.

‌Good afternoon, everyone. Welcome to NIKE, Inc.'s fiscal 2025 Fourth 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 Trussell, VP of Corporate Finance and Treasurer.

Now I would like to turn the call over to Paul Trussell.

Thank you, operator.

Hello everyone and thank you for joining us today to discuss NIKE, Inc.'s fiscal 2025 Fourth quarter results.

Joining us on today's call will be NIKE, Inc. President and CEO Elliott Hill, and our CFO, Matt Friend.

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-over 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 Elliott Hill.

Thank you, Paul and hello everyone. I'll kick it off with a reflection on Faith Kipyegon's attempt to run the mile in under four minutes today, called Breaking 4. While she crossed the line at a personal best of 4:06 today's attempt will always represent more than the pursuit of a specific, singular time.

We're super proud of Faith, our teams, and everyone who supported her. And we were all inspired by her effort. The Breaking 4 journey will live on as a symbol of courage and ambition. You have to dare to try, and I deeply admire the monumental effort.

What it showed is that no other brand offers athletes the depth of expertise that we can. No other brand dreams as big as we can. And more than anything, no other brand inspires 8 billion potential athletes to believe.

Faith's historic attempt comes at a unique moment for Nike and our consumers as the

sportswear industry continues to operate under geopolitical volatility and tariff uncertainty.

Specifically to our business, the results we're reporting today in Q4 and in FY25 are not up to the Nike standard. But as we said 90 days ago, the work we're doing to reposition the business through our Win Now actions is having an impact. From here, we expect our business results to improve. It's time to turn the page.

Just look at the pace of change we've embraced and the progress we've made over the

last 8 months.

It all started on October 14 my first day back at Nike with an all-employee meeting and a declaration to our teammates that we are a Sport and Growth Company and that we will put the athlete* at the center of everything we do and every decision we make.

In December, we aligned our team against 5 Win Now actions - culture, product, marketing, marketplace, and our ground game - with a sharp focus on 5 key sports, 3 key countries, and 5 key cities. We also set out to aggressively right-size three very important franchises: the AF 1, Dunk, and AJ 1 and to return Nike Digital to a premium destination.

With our team executing against our actions, I flattened my leadership structure and made changes to 11 of my 15 direct reports.

We pulled the lever we could pull the fastest, investing heavily in big sport moments and key product launches to win back our brand voice. That energy has ignited Nike performance product with consumers which is helping to better balance our portfolio.

Reclaiming our voice in sport, has turned out to be the jumpstart we needed for our team

culture, too. I see the fight in our teams. We believe and we're competing.

A sharp "sport" point of view and a less promotional Nike marketplace is helping us gain the confidence of wholesale partners. I'm personally meeting with our partners to reaffirm that we're prioritizing and investing in their businesses. We're also strategically adding more points of distribution, to be in the path of a wider range of consumers.

Nike Direct is showing early signs of being a more premium destination, especially when tied to a sport moment, a key product launch or a Nike-created, on-the-ground activation.

To accelerate our Win Now actions, the next step is to realign into dedicated, cross-functional teams by sport. We're organizing into a sport offense to have deeper relationships with the athletes we serve to gain better insights to drive sport-specific innovation, tell inspiring stories and differentiate ourselves in the marketplace.

Instead of a Men's, Women's and Kids construct Nike, Jordan and Converse teams will now come to work every day with a mission to create the most innovative and coveted footwear, apparel and accessories for the specific athletes* they serve.

These sport-obsessed teams will create greater dimension & distinction for our three brands will make us more competitive and will accelerate our growth.

We will pay it off in an integrated marketplace of our own design. We'll invest in Nike Direct, digital & physical, and thoughtfully segment wholesale partners to serve specific sport consumers across channels and up-and-down price points.

Strategically, sharper marketplace segmentation in a sport offense allows us to deliver unique assortments and storytelling opportunities across different channels and partners to better serve our consumers and to help drive profitable, sustainable growth for all of our partners.

We're already moving on a number of these fronts. To better serve wholesale partners, we're in the process of hiring retail marketing, visual merchandising and account management teammates. And in Nike Direct, we're getting into the rhythm of lining up against sport moments and key product launches.

Two wholesale partnership examples this quarter were with Dick's through our 24.7 training collection and with JD through the Air Max '95. The result? Elevated presentations, better consumer connections and increased sell throughs!

Earlier this month, our Nike LA door at the Grove was home base for our highly successful, global After Dark Run Series. Hosting thousands of women runners in LA created energy throughout the week. The day before the race, we captured our best sales day at The Grove in 3 years.

And at the conclusion of the inspiring French Open Finals, Nike Digital posted the "pre, during, and post-game" looks of Carlos Alcaraz and Jannik Sinner - with a 30% bump in day-to-day sell-through!

Consumer-right, sport-led assortments, in-the moment storytelling and elevated presentations in segmented and differentiated marketplaces. These are some of the many ways we will compete brand by brand, sport-by-sport, geo-by-geo.

The truth is, we're in a fight in every sport we're in. And each sport has different competitors. As we begin to align each of our iconic brands by sport, we'll have a closer line of sight, so we can develop targeted plans to match up against each one of them. We're approaching every opportunity with an athlete mindset passion, commitment, and determination.

Our teams are also making strong progress in expanding our distribution with strategic partners. I'll focus briefly on North America, who in this quarter led a Gen-Z targeted experience with Urban Outfitters, becoming the #1 brand in select doors on the opening weekend. We entered over 200 new women's-led doors including boutiques like Aritzia. We hosted 30 running specialty accounts from around the world at the Nike campus for a 4-day immersion in our upcoming running innovations. We leveraged two of our iconic brands, Nike and Jordan, to create meaningful product activations with key city-specialty partners along the I-95 corridor.

And, finally, we announced a new partnership with Amazon. This Fall, they'll carry a select assortment of footwear, apparel and accessories and Nike will have a featured brand store on the platform, focused on running, training, basketball and sportswear.

The Nike integrated marketplace is beginning to take shape. Along with Nike Direct, these partners will play an important role in serving a wider range of consumers. This is Nike at its best leveraging our portfolio of brands and sport-led product offerings across multiple channels and up and down price points.

Q4 was also filled with a number of incredible sport moments for Nike, Jordan and Converse. All three brands showed up with louder brand statements to leverage the emotion of epic storylines at the golf majors with Rory and Scottie, with Aja to kick off a new WNBA season, at the Champions League Final with PSG and Inter Milan, with Shai for both his MVP and the Thunder's NBA Championship and at Roland Garros with Alcaraz and Sinner.

All of that is in 90 days. It's a reminder of the strength of Nike's athlete relationships and our brand's far-reaching influence across all sports.

Shifting to our product portfolio, we made progress this quarter in rebalancing sportswear and performance. We're getting back to executing our formula more consistently to create innovative and coveted product, accelerate demand through emotional storytelling and then scale at an unmatched level to meet the growing demand in the marketplace.

Take Nike Running, as an example, which grew high-single-digits overall for the quarter. The energy was led by the Vomero 18, which in just over 90 days has already become a

$100 million dollar plus franchise with strong sell through.

In basketball, our women's business expanded more than 50% this fiscal year, proving that product demand is catching up to the spike in energy surrounding the women's game.

The biggest Nike basketball headline this quarter was the retail release of A'ja Wilson's signature collection and her first shoe - the A-ONE. It showed how effective we are when we line everything up for a thoughtful journey, closely planned with the athlete. The first

launch sold out in 3 minutes on Nike Digital in North America. And we'll double the amount of A'ja pairs in coming seasons.

In sportswear, the look of running footwear saw continued strength through products like P6000, Vomero 5 and Shox.

And we're reintroducing the Air Max 95 to a new generation of consumers through a more thoughtful seeding journey of energy-driving models through different channels, account by account, and through early adopters like athletes and creative partners in our key cities.

While we have a ways to go to return to a truly diversified Sportswear lineup at scale, I'm

pleased with the progress the team is making.

I'll close out by saying a few words on Fiscal Year 26. As we put the sport offense in place we're building a full pipeline of innovative product and driving momentum in the marketplace. I see a clear path to recovery ahead.

A strong signal of our progress is the momentum we're seeing in Nike performance

product which we expect to continue throughout Fiscal 26.

In Running, our 9-Box footwear lineup will continue to deliver new innovation. We'll approach basketball through multiple dimensions and we'll build on apparel opportunities in training, golf and tennis that span the spectrum of sport and style.

In Global football, the stage is set for an intense World Cup battle. We're prepared with an upgrade of all 3 football boot silos in a 12-month window. Our kits look phenomenal, and we'll debut an exciting apparel innovation that'll scale across multiple sports.

The early feedback to the product pipeline from our wholesale partners at our engagement meetings has been positive.

For example, our order book is improving sequentially with our holiday orders up. We're finding a better balance with our portfolio of sport performance and new dimensions of sportswear expected to offset the declines in our classic franchises with wholesale partners.

As I step back and look at the overall progress against our Win Now actions by geography momentum and confidence are building in North America and EMEA. APLA's progress varies by individual country and China will take longer due to the unique characteristics of the marketplace. We've been operating in China for over four decades and our team knows what is required to return to growth.

We're executing our plans and trending in the right direction, but a full recovery will take

time.

I believe we have everything we need to win and we are ready for the new fiscal year. We're laser-focused on what we can control, inspiring and innovating for the 8 billion consumers we have the privilege to serve. We know what it'll take to set off the next wave of growth for Nike. From here, it's on us to get back to executing at the level we expect.

And like Faith Kipyegon our entire team is ready to run towards something bigger and is committed to writing the next great chapter for our beloved company.

From here, I'll pass it to Matt.

Thanks Elliott, and hello to everyone on the call.

In Fiscal 25, we reclaimed our identity through sport, and implemented the Win Now actions to reposition our Brands and business for future growth.

While inline with our expectations, we are not pleased with our financial performance. However, as I said last quarter, the fourth quarter reflected the largest financial impact from our Win Now actions. We expect the headwinds to revenue and gross margin to begin to moderate from here.

Today, I will review our financial results, highlighting progress made against our Win Now actions. Then I will explain our approach to the newly issued tariffs. Last, I will provide guidance for the first quarter of Fiscal 26, as well as additional insight for how we expect Win Now to shape our financial performance over the next fiscal year.

I'll begin with our financial results.

For the fourth quarter, revenues were down 12% on a reported basis and down 11% on a currency-neutral basis. Nike Direct was down 14%, with Nike Digital declining 26% and Nike Stores increasing 2%. Wholesale was down 9%.

Gross margins declined 440 basis points to 40.3% on a reported basis, due to higher wholesale discounts, higher discounts in our Nike factory stores, supply chain cost deleverage and channel mix headwinds.

SG&A was up 1% on a reported basis. This was driven by increased investment in demand creation, up 15%, partially offset by a 3% decline in operating overhead.

Our effective tax rate was 33.6% compared to 13.1% for the same period last year due primarily to decreased benefits from stock-based compensation, and one-time items.

Earnings per share was $0.14.

For the full year, revenue was down 10% on a reported basis and 9% on a currency-neutral basis. Diluted earnings per share was $2.16.

Inventory was flat versus the prior year and down 1% versus the prior quarter. Inventory remains elevated, but we are making progress. We closed the year in line with our plans, and remain on track to exit the first half of Fiscal 26 in a healthy and clean position.

Now, let me go deeper into our performance over the last 90 days.

As I shared last quarter, our geographies are at different stages of progress against our Win Now actions, and as a result, business recovery is trending on different timelines. Today, I will focus my geography remarks on the specific context and insights of our Win Now progress.

In North America, Q4 revenue declined 11%. Nike Direct declined 14%, with Nike Digital down 25%, and Nike Stores up 3%. Wholesale declined 8%. EBIT declined 29% on a reported basis.

North America made meaningful progress cleaning up the marketplace and repositioning Nike digital as a full-price model. Momentum is building in wholesale, with newness in the product portfolio.

Sportswear declined in the quarter, driven by a near 40% reduction in our classic footwear franchises; Performance also declined, however, we saw strong sell-thru for new products offered in Running and Training.

North America inventory actions continued with higher sales related returns and higher discounts to liquidate aged inventory. Inventory dollars and units increased, due partially to investment to support new distribution, unfavorable shipment timing, and new tariffs.

On Digital, we saw a meaningful improvement in markdown rates, as well as a higher share of demand at full price in the quarter.

In EMEA, Q4 revenue declined 10%. Nike Direct declined 19%, with Nike Digital down

36%, and Nike Stores up 5%. Wholesale declined 4%. EBIT declined 41% on a reported basis.

EMEA is furthest along in cleaning up the marketplace and repositioning Nike Digital within an integrated marketplace. The team has demonstrated progress by delivering growth in key performance dimensions of our portfolio, and diversifying sportswear with new product journeys.

In Q4, Running and Training delivered growth, offset by declines in our Sportswear business. Within Sportswear we have taken meaningful steps forward to diversify our portfolio. In fact, Sportswear grew overall in wholesale in Q4, and Women's sportswear footwear returned to growth in the quarter.

As it relates to inventory in EMEA, we ended the quarter slightly ahead of our target with inventory dollars flat and units down mid-single digits versus the prior year.

Nike Digital also delivered improvement in markdown rates, as well as a double digit increase in the share of demand at full price.

In Greater China, Q4 revenue declined 20%, largely in line with our plan. Nike Direct declined 15%, with Nike Digital down 31%, and Nike Stores down 6%. Wholesale declined 24%. EBIT declined 45% on a reported basis.

Greater China executed a deeper reset of inventory relative to our other geographies, with higher sales related reserves, higher discounts and supply reductions. Traffic remains challenged, and our priority is to refresh local monobrand store concepts and elevate brand presentation through Sport.

On product, we saw bright spots this quarter when we launched sport-led innovation like Vomero 18, or utilized our geography express lane to tell hyperlocal stories. Consumers continue to have strong reaction to brand activations in the marketplace. Running

returned to growth in the quarter, offset by declines in Sportswear and Jordan.

Inventory was down 11% versus the prior year, driven by aggressive actions to clean and reset the marketplace.

Digital remains highly promotional across the marketplace, and we have taken initial steps to reposition our owned platform, with plans to extend our efforts to the broader ecosystem in Fiscal 26.

Our priority in Greater China, is to refresh the monobrand marketplace, creating greater brand distinction through sport-led consumer concepts, and full price growth. We have launched a pilot across select doors, however, our actions to energize and reset this marketplace, will take time.

In APLA, Q4 revenue declined 3%. Nike Direct declined 1%, with Nike Digital down 6%, and Nike Stores up 4%. Wholesale declined 5%. EBIT declined 33% on a reported basis.

APLA delivered mixed results across countries, with further work required to clean up inventory. The team has also taken initial steps to reposition Nike Digital.

In the fourth quarter, our Performance business returned to growth, driven by Running and Training. This momentum was more than offset by declines in Sportswear and Jordan.

Our teams took aggressive actions to clean up the marketplace and further tightened the buys on Nike Digital, however inventory remains elevated.

Ok, let me spend a few minutes talking through our approach to the newly issued tariffs.

Over the past fifty years Nike has built a globally expansive supply chain that is responsive and resilient, we have strong relationships with our factory partners, and our leadership team is experienced in managing through disruption. Nike has consistently been a top

payer of US duties, with an average duty rate on footwear imported into the US in the mid-teens range.

Therefore, these tariffs represent a new and meaningful cost headwind, and we are taking actions that balance the consumer, our partners, our Win Now actions, as well as the long-term positioning of our brands in the marketplace.

First, we will optimize our sourcing mix and allocate production differently across countries to mitigate the new cost headwind in the United States. Despite the current elevated tariffs for Chinese products imported into the United States, manufacturing capacity and capability in China remains important to our global source base. Currently, China represents roughly 16% of the footwear we import into the United States, and we expect this to reduce to the high-single digit range by the end of Fiscal 26, with supply from China re-allocated to other countries around the world.

Second, we are partnering with our suppliers and our retail partners to mitigate this structural cost increase, in order to minimize the overall impact to the consumer. These partner arrangements will come into effect at different times throughout Fiscal 26.

Third, as part of our regular approach to seasonal planning, we have implemented a surgical price increase in the United States, with phased implementation beginning in Fall 25.

And last, we will evaluate corporate cost reduction as appropriate; however, our highest priority right now continues to be reigniting brand momentum through sport and stabilizing our business.

With the new tariff rates in place today, we estimate a gross incremental cost increase to Nike of approximately $1 billion. We intend to fully mitigate the impact of these headwinds over time, as we implement and annualize the actions I've outlined. For Fiscal 26, we expect the financial impact, net of the actions described earlier, to be approximately 75

basis points to gross margin, with a greater impact in the first half.

We will continue to monitor developments closely and I am confident in our ability to lean on our strengths, our experience, and our scale, to navigate through this disruption.

Looking forward, we intend to continue to provide specific quarterly guidance during this period of transition. Today, I will also share some additional insights for how we expect our Win Now actions to shape elements of our financial performance throughout Fiscal 26.

Momentum is building in our new product franchises, and with the holiday order book in hand, we are beginning to see more clearly around the corner of our product portfolio transition. In Fiscal 25, we made significant progress managing down our classic footwear franchises, with year over year declines of more than 20%. In Q4, these declines accelerated to more than 30%, representing almost a $1 billion headwind to revenue; we also finished Q4 down approximately 10 points from the peak as a percent of our total footwear mix. We expect these headwinds to continue through the first half of Fiscal 26, with signals that the Air Force 1 is stabilizing, while we plan for larger reductions for the Dunk.

We remain on track for a healthy and clean market by the end of the first half of Fiscal 26. Over the next two quarters, Nike will continue liquidating excess inventory through our value stores and select value partners. In the second half, we then expect to see a modest headwind to revenue as we lap aggressive clearance activity in the prior year.

We continue to expect Digital traffic to be down double-digits in Fiscal 26, as we reposition Nike Digital as a full price model and reduce the mix of our classic footwear franchises.

At the same time, we see encouraging signals of progress in the marketplace with our wholesale partners. As Elliott said, our Holiday order book is up versus the prior year, with growth in North America, EMEA and APLA, partially offset by Greater China.

We expect SG&A to grow low-single digits in Fiscal 26. We are investing to reignite growth in the business, particularly demand creation, and rebuilding both our sport and commercial offense. At the same time, we recognize that SG&A has deleveraged relative to historical levels. We are focused on returning to sustainable organic sales growth, with improving gross margins and disciplined expense management over time.

We have moderated our share repurchases in the near term due to a more dynamic and uncertain environment, as well as the impact of the Win Now actions on our financial results. We have a strong balance sheet, and it remains a competitive advantage for our business.

Overall, we are pleased with the progress our teams are making against our Win Now actions. As I said last quarter, these are the building blocks for Nike to return to sustainable, profitable growth.

Last, I'll finish with our first quarter guidance.

We will continue navigating through several factors that create uncertainty in this operating environment, including for the consumer, and so our outlook reflects our best assessment of these factors based on the data we have available today.

We expect Q1 revenues to be down mid-single digits.

We expect Q1 gross margins to be down approximately 350 to 425 basis points. This includes approximately 100 basis points negative impact, due to the new tariffs, based on the rates that are in place today.

We expect Q1 SG&A dollars to be up low single-digits.

We expect other income and expense, including net interest income, to be 0 to $10 million

in the first quarter.

And we expect the tax rate for the full year to be 19 to 20%, due primarily to anticipated changes in earnings mix.

With that I'll pass it back to Elliott.

Before taking questions, I want to share some final thoughts on another historic sports moment this past quarter: Rory McIlroy's Masters win. I was lucky enough to be at Augusta earlier that week and I couldn't help but relate Rory's experience to Nike's recent journey.

To me, his final round performance was a "masterclass" on the power of the athlete mindset. And I've been asking my Nike teammates to hold onto some of the lessons he taught us.

For those that don't know, Rory's been chasing a Masters' victory for 14 years. It would complete his Career Grand Slam, the holy grail of golf, something only 5 others have ever accomplished. He was also battling a decade-long drought of winning a major. He's had his share of close calls, and heartbreaks, and more than enough doubters.

Sunday's final round at Augusta was no different. What made it so much fun to watch was how aggressive Rory was playing. He was taking the shots that others wouldn't, putting the pressure on the rest of the field. The one time he did play it safe he laid it up on the 13th and rolled it into Rae's Creek for a double bogey. Lesson learned. He played better when he was attacking.

Despite another up-and-down round, the win was still in his grasp. All he needed to do was sink a five-foot putt on the 18th. He stepped up and missed wide left. He was heading to a playoff.

His caddy Harry Diamond, his lifelong friend and biggest supporter, knew just what to

say. "You would've given your right arm to be in a playoff at the start of the week."

And that was it. The mindset shift Rory needed. He didn't "have" to play a playoff, he "got" to play a playoff it was his for the taking.

An amazing reminder for Nike that no matter the situation we face, we're the leader in an exciting industry. It's a privilege to "get' to compete every day. And with all the advantages we have, we're in control of our own destiny here.

Rory went back to the 18th and stuck his second shot four feet from the pin. And this time, he sunk the putt. Dead center. Rory finally had his green jacket and his career grand slam. And we were all treated to one of the most memorable Sundays in golf. For over a decade his patience was tested. But he stayed the course.

Whether it was Rory, Alcaraz, Shai or Faith these past 90 days we worked alongside some of the most mentally-tough human beings on the planet. Lately, I've been talking a lot about that athlete mindset that special ability to keep believing to keep competing.

I'm asking my teammates at Nike to do just that to show up with passion, commitment, and determination and to compete every day. I think we're on our way.

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Nike Inc. published this content on June 27, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on June 27, 2025 at 06:40 UTC.