Nike (NKE) Q2 FY2025 Earnings Breakdown

Key Highlights:

 

• Revenue Decline:

  • Total revenue down 8% (reported) and 9% (currency-neutral) to $12.4B.
  • Nike Brand revenue dropped 7% (reported) and 8% (currency-neutral); Converse down 17% (reported) and 18% (currency-neutral).
  • NIKE Direct (-13%) and Wholesale (-3%) channels declined; NIKE Brand Digital fell 21%.

• Gross Margin Compression:

  • Gross margin decreased by 100 basis points to 43.6%, due to higher discounts and channel mix changes.

• Profitability Impact:

  • Net income fell 26% to $1.2B; diluted EPS down 24% to $0.78.
  • Operating income dropped 27%, from $1,900M to $1,392M.

• Re-energizing the Brand:

  • New CEO Elliott Hill emphasizes a return to sport and reigniting brand momentum.
  • Management is repositioning the business to drive long-term shareholder value.

• Expense Management:

  • Selling and administrative expenses down 3%; demand creation expenses up 1%, reflecting a shift in marketing focus.

• Balance Sheet Stability:

  • Inventories flat at $8B; cash and equivalents at $9.8B.
  • Increased debt, with $1B in current long-term debt (from $0).

• Shareholder Returns:

  • $1.1B in share repurchases and a 7% dividend increase in Q2.
  • 23 consecutive years of dividend growth.

• Geographical Performance:

  • Revenue declines in all regions: North America (-8%), EMEA (-7%), Greater China (-8%), and APAC/Latin America (-3%).
  • Significant EBIT drops in Greater China (-27%) and Converse (-54%).