NIKE, Inc. Q1 FY2026 earnings call

• Win-now actions drove momentum in running, North America, and wholesale partners. • Introduced sport offense, aligning brands into nimble teams by sport for sharper insights and innovation. • Running business grew over 20% this quarter, with redesigned Pegasus, Structure, and Vomero. • Global football team preparing for 2026 World Cup, relaunched Phantom six with good sell-through. • Sportswear business continues to decline, but Air Force One is stabilizing, Air Jordan one inventory returning to health, etc. • Greater China facing structural challenges, business down 10% in Q1. • NIKE Digital working to reposition, reducing promo days and markdown rates.

North America: Q1 revenue grew 4%. NIKE Direct declined 3% (NIKE Digital down 10%, NIKE Stores flat), wholesale grew 11%. EMEA: Q1 revenue grew 1%, wholesale grew 4%, NIKE Direct declined 6% (NIKE Digital down 13%, NIKE Stores up 1%). Greater China: Q1 revenue declined 10%, NIKE Direct declined 12% (NIKE Digital down 27%, NIKE Stores down 4%), wholesale declined 9%. APLA: Q1 revenue grew 1%, NIKE Direct declined 6% (NIKE Digital down 8%, NIKE Stores down 5%), wholesale grew 6%.

• Expect Q2 revenues to be down low single digits, including one point of benefit from foreign exchange. • Expect Q2 gross margins to be down approximately 300 to 375 basis points, including a net headwind of 175 basis points from new incremental tariffs. • Expect Q2 SG&A dollars to be up high single digits, with acceleration of demand creation investment and low single-digit increase in operating overhead. • Expect other expense net of interest income to be an expense of $10 to $20 million in the second quarter. • Expect tax rate for the second quarter and full year to be in the low 20% range. • Expect wholesale revenue to return to modest growth for fiscal 2026, NIKE Direct not to return to growth for fiscal 2026, and headwinds from Greater China and Converse to continue.

• Cautious consumer. • Tariff uncertainty. • Teams still settling into the sport offense.

Q: Hey, guys. Thanks for all the detail today. Congrats on a nice quarter. Nice to see all the progress. Elliott, if you look at the spring order book and then that said it's positive, can you help us think about that within the context of the holiday book that you said was positive last quarter, maybe just qualitatively, even what's incremental on the build and composition of spring so you can track the progress out of season? And then last quarter, Matt, you said there's a commitment to returning to double-digit margins over time. Obviously, I'm sure you're looking at historical levels as a goal. It was a helpful backstop. How are you thinking about the medium-term margin levels you can target and maybe some of the phases of recovery and the inputs we should look at as you start that journey?

A: Michael, thanks for the question. Here's what I'd start with. Let me start first with product. I think what we're doing a great job is we're getting back to leading with a sharp focus on sport. We're making certain we can leverage the entire portfolio, and you can see that whether, you know, how we're approaching performance and sportswear. NIKE running, I think, gives us our very best example of where we're having some success, and we did just announce that we grew over 20% in the quarter. So great success in running, and our teams are taking that offense. And how we're the learnings that we have in running, and we're applying it to other parts of our business, and we're running that playbook global football training, basketball, etcetera. We do have work still to do in sportswear. But I think the team is getting much sharper on the consumers that we're serving there. And so I'm really excited and encouraged by the work that we've done around the product. We've continued to work really hard from a brand marketing perspective. And then ultimately, clearly, we gotta pay it off like you're asking in the marketplace. And I think the team's doing a really nice job of elevating and then growing the entire marketplace. And so, you know, our goal is to serve consumers wherever and however they choose to shop across, you know, multiple channels, specialty sporting goods, athletic specialty, department store, family footwear, and NIKE Direct. And I think, again, the teams are seeing the power of running the complete offense across the entire marketplace. And North America, again, is our best example. Where we're seeing growth there. Overall, I know, our partners are gaining trust in us, and it shows our spring order book is up year over year. So excited with the progress that we're making from a product perspective, a marketing, and positioning perspective. And then how we're paying it off in a more thoughtful and integrated marketplace.

Q: Okay. Thank you very much for taking my question. Apologies if there's any background noise. I was just wondering if you could give any update as to how September has progressed because we're seeing mixed indicators out there in the marketplace and potentially some evidence that there was a bit of pull forward in terms of consumer demand into the back-to-school period in August, which should have benefited your Q1? So just curious about how you're seeing the current marketplace in September trading, if possible?

A: Yeah. Thanks for the question. Yeah. Here's what I'd say. There's no question that the environment in which we're working in and operating in is dynamic. And my message to our team is to continue to control what we can control. I'm confident that our teams and product brand marketing and the marketplace are closely monitoring our consumers around the world. We're watching for signals. We're staying close with our partners and we're looking at it even reading, you know, of course, our own door and digital performance across geos and countries and cities and, you know, it is dynamic, and I just keep telling the team remain focused on inspiring through sport because when we do line up, innovative product and emotional storytelling across the integrated marketplace, consumers respond. I mean, there's some great examples this quarter. Even into September, you know, when we did launch around running Vomero and the Vomero Plus, we had good sell-throughs. The work we did around the US Open, and on the ground and emotional storytelling, we had good sell-through. John LeBron in China. You know, when we do that, the consumer shows up. So yes, it's a dynamic environment. We're keeping our team focused on the win-now actions and really, that's our fastest path back to growth. And to hit on the timing element, you mentioned pull forward. I guess what I'd say is that our performance in the first quarter didn't have anything to do with pull forwards. I referenced wholesale growth in North America. Wholesale was up 11%. And one of the factors in the quarter was the amount of the fall season that we shipped in Q1 versus what we shipped in Q1 of the prior year. And so that did create a timing benefit year on year. As we look ahead to Q2, we guided revenue down low single digits. And I'd say that there are probably two drivers to that that are most significant. One is because we started the win-now actions following the holiday season last year, NIKE Digital is facing a more significant headwind in Q2. And we significantly cut back on the amount of promotional activity that we were doing in the channel. As we're lapping that this year, there's going to be a bigger headwind in Q2 than we had in Q1. And then secondarily, we're only planning for one point of FX benefit in Q2, whereas we saw two points of FX benefit in Q1. So, hopefully, that helps provide a little bit of dimension on some of the seasonality. The last thing I would say related to the seasonality or the comparison is that the actions that we're taking on the dunk that Elliott and I both referenced are more significant in Q2. And so that's also creating a quarter-over-quarter comparison, if you will, as you compare Q1 to Q2. There was a lot of dunk business in Q2 of last year, and we're managing that franchise back as Elliott mentioned and feel great about our plans.