• Revenue: Down 9% on a reported basis and down 7% on a currency-neutral basis.
• NIKE Direct: Declined 10%, with NIKE Digital down 15% and NIKE stores down 2%.
• Wholesale: Down 4%, largely due to declines in Greater China.
• Gross Margin: Declined 330 basis points to 41.5% on a reported basis.
• SG&A Expenses: Down 8% on a reported basis.
• Effective Tax Rate: 5.9%, compared to 16.5% for the same period last year.
• Earnings Per Share (EPS): $0.54.
• Inventory: Declined 2% versus the prior year.
• North America Revenue: Declined 4%, with NIKE Direct down 10% and Wholesale up 3%.
• EMEA Revenue: Declined 6%, with NIKE Direct down 12% and Wholesale down 3%.
• Greater China Revenue: Declined 15%, with NIKE Direct down 11% and Wholesale down 18%.
• APLA Revenue: Declined 4%, with NIKE Direct down 4% and Wholesale down 4%.

• Warning! GuruFocus has detected 4 Warning Sign with FDX.

Release Date: March 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Nike Inc (NYSE:NKE) is making significant progress in diversifying its product portfolio, with a focus on performance and sportswear across various categories, including men's, women's, and kids' footwear, apparel, and accessories.
• The company is actively working to reignite brand momentum through strategic investments in brand marketing and sports marketing, resulting in high single-digit growth in demand creation expenses.
• Nike Inc (NYSE:NKE) has successfully launched new innovative products like the Peg Premium and Vomero 18, which have shown strong consumer response and sell-through rates.
• The company is committed to creating a more integrated marketplace, aligning both direct and wholesale channels to provide a consistent consumer experience.
• Nike Inc (NYSE:NKE) is taking proactive steps to clean up the marketplace, particularly in Greater China, to ensure a healthier inventory and better brand positioning.

Negative Points

• Nike Inc (NYSE:NKE) reported a 9% decline in revenues on a reported basis and a 7% decline on a currency-neutral basis for the third quarter, reflecting significant headwinds.
• Gross margins declined by 330 basis points to 41.5% due to higher markdowns, wholesale discounts, and inventory obsolescence.
• The company is facing challenges in its classic footwear franchises, with double-digit declines impacting overall business performance.
• Nike Inc (NYSE:NKE) is experiencing elevated inventory levels across all geographies, which are expected to take several quarters to normalize.
• The company anticipates continued headwinds in revenue and gross margin in the near term, particularly due to the ongoing cleanup of the marketplace and promotional activities.

Q & A Highlights

Q: Elliott, can you provide a timeline on when you think classic shoe inventories will be clean in the wholesale channel? And then same question for the direct channel as well. A: Elliott Hill, President and CEO, explained that Nike is focused on rightsizing their classic shoe inventories, particularly Air Force 1, Dunk, and AJ1, rather than sunsetting them. He emphasized the importance of running a balanced and complete portfolio across all brands and categories. By the end of Q4, Nike expects to reduce the contribution of these franchises by 10 percentage points as a percent of their overall footwear mix, with further reductions planned for fiscal year '26. The company is taking actions to clean up the marketplace, including transitioning excess inventory to factory stores and value channels.

Q: Elliott, I was hoping to get your latest thoughts on innovation within NIKE. How do you feel about the strength of your innovation team and the pipeline ahead? A: Elliott Hill, President and CEO, expressed confidence in Nike's innovation team and pipeline. He highlighted the long-term innovation efforts at the LeBron James Nike Sports Research Lab and the near-term focus on driving newness and freshness across performance and sportswear categories. Hill mentioned successful innovations like the 24/7 apparel collection and new footwear models such as Vomero 5 and P-6000. He also noted excitement about the upcoming Spring '26 product line.

Q: Elliott, based on some of the comments earlier from Matt around performance growth almost offsetting Classics declines, do you expect that inflection point to be in Spring '26? A: Elliott Hill, President and CEO, stated that Nike is gaining confidence in their product pipeline and expects performance growth to offset declines in classic footwear franchises. The key focus is on cleaning up the marketplace to make room for new innovations and ensuring proper presentation at point of sale. Hill emphasized the importance of driving sell-through to support the order book and return to profitable, sustainable growth.

Q: Elliot, I'm curious how are you going to balance the promotional? Just like as you think about the presentation and bring out promotions at the same time that it's clear we can hear your excitement around the new product and you're amplifying storytelling. A: Elliott Hill, President and CEO, explained that Nike is moving both digital and physical retail spaces to full price as quickly as possible, using value channels to clear excess inventory. He highlighted successful examples of new product launches like Peg Premium and Vomero 18, which have seen strong sell-through. The focus is on resetting the marketplace to full price and maintaining urgency in the transition.

Q: I just wanted to focus on wholesale here. And maybe for Elliott, as you've kind of returned to that channel gotten back in the mix, I'm just curious, your biggest learnings there, any surprises to the upside or downside versus how you've historically operated there with all your knowledge? A: Elliott Hill, President and CEO, noted that Nike had been working too siloed between direct and wholesale channels. He emphasized the need for an integrated, consumer-led marketplace approach. Hill highlighted the importance of working closely with wholesale partners, aligning growth plans, and elevating brand presentation. He expressed confidence in the progress being made and the commitment to rebuilding relationships with wholesale partners.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.