NIKE, Inc. Q1 FY2025 earnings call

• CEO transition: John retires as President and CEO, Elliott Hill joins on Oct 14th. Deep appreciation for John's contributions, excited about Elliott's return. - Business trends: Q1 revenue largely in line with plan 90 days ago but lower unit sales, NIKE Direct traffic declines more than expected, esp. in Greater China partner stores and NIKE Digital. - Product portfolio shift: Intentionally reducing classic footwear franchises' business proportion, which declined more than total business. - Early wins: Growth in multiple sport dimensions, e.g., men's fitness, men's global football, men's and women's running footwear; some performance franchises double-digit growth. - Investments and cost control: Investing to grow while controlling costs, e.g., Paris Olympics campaign, partnerships with DICK'S and Foot Locker to elevate brand in retail.

NIKE, Inc. reported Q1 revenue declined 10% on a reported basis and 9% on a currency neutral basis. NIKE Direct was down 12% with NIKE stores up 1% and NIKE Digital down 20%; Wholesale was down 7%. North America: Q1 revenue down 11%, NIKE Direct down 11% (NIKE Digital down 15%, NIKE stores up 1%), Wholesale down 11%. EMEA: Q1 revenue down 12%, NIKE Direct down 12% (NIKE Digital down 24%, NIKE stores up 3%), Wholesale down 11%. APLA: Q1 revenue down 2%, NIKE Direct down 4% (NIKE Digital down 15%, NIKE stores up 9%), Wholesale down 1%. Greater China: Q1 revenue down 3%, NIKE Direct down 16% (NIKE Digital down 34%, NIKE stores down 4%), Wholesale up 10%.

• Q2 expected: Revenue down 8%-10%, gross margins down approx 150 basis points, SG&A roughly flat vs prior year, other income and expense $30M-$40M, effective tax rate in high-teens range. - Full year: Not providing full year guidance, revenue expectations moderated since年初, Q2后下半年收入趋势略有改善, gross margins expected to decline due to factors, remain disciplined on cost while investing in brand momentum.

• Macro environment uncertainty: Soft retail sales in Greater China, elevated inventory requiring more promotional activity. - Supply chain risk: East Coast port strike possibility. - Product portfolio adjustment impact: Short-term revenue and margin pressure from product mix shift.

Q: About inventory situation, especially in Greater China and North America classic footwear regionally?

A: Retail sales below plan led to slightly elevated inventory, need more aggressive promotions, and focus on full price realization of new products in right channels.

Q: Reasons for unit sales disappointment and key metrics to monitor comeback progress?

A: Greater China performance underplan, general macro weakness across geos; monitor new product growth, running business momentum, etc.

Q: Reconciliation of spring order books below expectation and H2 highlights, DTC investment?

A: H2 newness and innovation growth, running business momentum, DTC investment continues to optimize profitability.

Q: Size of core franchises and margin situation?

A: Classic franchises important but need portfolio adjustment, short-term margin transitory pressure from portfolio right-sizing.

Q: Wholesale partners' acceptance of new launches and inventory in wholesale channel?

A: Partners actively engaged, focus on building deep consumer connections through sport to elevate brand in wholesale.

Q: North America running business from peak to trough and Q2 margin regional pressure?

A: Running specialty channel lost market share, now reinvesting; Q2 margin pressure multi-dimensional, not single region specific.

Q: Greater China business macro vs NIKE's own situation, inventory and franchise product vs innovation consumer engagement?

A: Greater China traffic soft, more promotional activity; performance innovation products well-received, long-term optimistic about China sport market.