Core Insights - In the era of information overload, brands face a "battle for attention," where visual elements are crucial for capturing consumer interest [2][6] - 93% of consumers' first impressions of a brand come from visual elements, and effective visual design can increase conversion rates by 80% [2] - Brands are now treating visual design as a fundamental infrastructure rather than just a marketing task [6] Group 1: Advantages of Visual Memory - Visual elements have four significant advantages: high perception, high retention, high dissemination, and high premium pricing [2] - Visual images are easier to recognize and remember, with a retention rate of 65% after three days compared to just 10% for text [2] - Social media content with images is shared 40 times more than text-only content [2] Group 2: Establishing Visual Dominance - Brands need to create a unified visual symbol system to establish a dominant position in consumers' minds [2][6] - This visual dominance can lead to a monopolistic status in the visual realm, making the brand synonymous with its category or culture [2] Group 3: Strategies for Visual Dominance - Symbolic dominance is exemplified by BMW's iconic kidney grille, which has remained a key identifier of the brand [7] - Nike's Swoosh symbol has evolved to be recognized independently of the brand name, showcasing the power of visual identity [9][11] - Color plays a critical role in brand identity, with 67% of consumers' purchase decisions influenced by color within the first seven seconds [12][16] Group 4: The Role of IP and Patterns - IP has become a significant asset for brands, with examples like Pokémon generating nearly $100 billion in revenue across various sectors [21] - Louis Vuitton's Monogram pattern serves as a powerful visual asset, recognized even in small sizes, and has become synonymous with luxury and status [25][26] Group 5: The Importance of Architectural Identity - The MARSFILL headquarters in Shenzhen has become a visual landmark, enhancing brand value and customer perception [31][34] - High-end brands are increasingly viewing their headquarters as strategic visual assets that represent their identity and values [32][34] Group 6: Future Outlook - Brands that fail to establish a visible identity risk being forgotten in the competitive landscape [34] - The ability to be seen and remembered is essential for future success in the market [34]

Core Insights - NIKE (NKE) and Target (TGT) have experienced significant underperformance in recent years, regularly posting weaker-than-expected results and facing inventory issues, particularly with Target's discretionary merchandise post-COVID [1][8][13] - Both companies have seen a rebound in stock prices over the past three months, raising questions about whether these stocks can recover [2][6] - Despite recent positive commentary, the near-term EPS outlook for both companies remains bearish, with analysts suggesting that investors may be better off waiting for positive revisions [7][11][14] NIKE (NKE) Summary - NIKE's recent quarterly results showed sales of $11.1 billion, a 12% decrease year-over-year, with gross margin contracting to 40.3% from 44.7% in the same period last year [3] - The company has faced challenges in capturing consumer demand, contributing to its struggles, although there is optimism that headwinds may moderate in the future [4][6] - Analysts remain bearish on NIKE's EPS outlook, with downward revisions following the latest earnings release [4][11][14] Target (TGT) Summary - Target's comparable store sales decreased by 5.7% year-over-year in its latest period, reflecting ongoing challenges with its discretionary inventory [8] - However, Target's digital sales grew by 4.7% year-over-year, and same-day delivery through Target Circle 360 increased by 36%, indicating strength in its digital efforts [9] - Similar to NIKE, analysts have a bearish outlook on Target's EPS, with widespread downward revisions noted [11][14]

Market Overview - The market capitalization of major US stocks shows varied performance, with Oracle at 762.30 billion, Mastercard at 321.36 billion, and Visa at 770.15 billion, reflecting increases of +0.66%, +0.86%, and +0.68% respectively [3] - Exxon Mobil's market cap is 679.53 billion, with a slight decrease of -0.98%, while Johnson & Johnson and Netflix show minor changes of -0.08% and -0.05% respectively [3] - Companies like Wells Fargo and Cisco have market caps of 270.15 billion and 279.59 billion, with respective increases of +0.98% and -0.58% [3] Notable Stock Movements - T-Mobile US Inc experienced a significant increase of +6.20%, reaching a market cap of 272.19 billion [3] - General Electric and Coca-Cola saw market caps of 285.05 billion and 298.76 billion, with increases of +0.37% and +0.91% respectively [3] - Companies like Disney and Goldman Sachs have market caps of 229.06 billion and 221.80 billion, with slight changes of +0.01% and -0.60% [3] Sector Performance - The technology sector shows mixed results, with Intel at 991.05 billion, down -3.28%, while AMD increased by +2.46% to 254.92 billion [5] - The consumer goods sector is represented by companies like Procter & Gamble and Coca-Cola, with market caps of 371.68 billion and 298.76 billion, showing slight increases [3][4] - The energy sector, represented by Exxon Mobil and Chevron, shows varied performance, with Exxon down -0.98% and Chevron up +0.66% [3] Summary of Key Companies - Oracle's market cap stands at 762.30 billion, reflecting a positive trend [3] - Mastercard and Visa show strong performance with market caps of 321.36 billion and 770.15 billion, both increasing [3] - Companies like Pfizer and Comcast have market caps of 1579.81 billion and 1332.00 billion, with Pfizer showing minimal change and Comcast down -3.16% [4][5]

Core Insights - The article discusses the resurgence of international sports brands' interest in collaborating with K-pop artists, particularly female groups, to enhance their market presence in Asia, especially China [1][6][25] - Nike's recent signing of aespa member KARINA marks a strategic move to re-engage with the Korean wave and leverage the popularity of K-pop in the Asian market [1][7][25] - Other brands like alo, Puma, and Adidas are also actively signing K-pop artists to boost their brand visibility and sales in the competitive Asian sportswear market [5][6][9] Brand Collaborations - Nike has signed aespa member KARINA, following previous collaborations with other top K-pop artists, indicating a shift back to engaging with Korean talent [1][3][7] - Alo's flagship store opening in Korea featured appearances by K-pop stars, showcasing the brand's commitment to embracing the Korean wave [3][7] - Puma has announced a partnership with BLACKPINK's Rosé as a global ambassador, while Adidas has signed I-DLE member Song Yuqi to promote its Originals line [5][9] Market Strategy - The article highlights that international sports brands are not only focusing on athletic performance but are also betting on fashion trends to capture market share in Asia [6][22][25] - The opening of flagship stores in Korea by brands like alo and Vuori is seen as a strategic move to tap into the Asian market's potential [9][10] - The competition among sports brands has intensified, with a growing number of niche brands entering the market, prompting established brands like Nike and Adidas to adapt their strategies [13][22] Cultural Influence - The influence of K-pop on fashion and lifestyle is significant, with brands leveraging this trend to enhance their appeal among younger consumers [17][20][21] - The article notes that collaborations with K-pop artists serve as a powerful marketing tool, helping brands to connect with the cultural zeitgeist and drive sales [19][25] - The trend of integrating fashion with sportswear is becoming increasingly important, as brands seek to align themselves with contemporary cultural movements [22][23]

Core Insights - NIKE Inc. is focusing on inventory streamlining and marketplace reset as part of its turnaround strategy, but there are concerns about the timing of these efforts in relation to the broader growth slowdown [1][3] - In Q4 fiscal 2025, NIKE's revenues fell nearly 12% year-over-year, while inventory levels remained flat, indicating ongoing challenges despite aggressive discounting [1][8] - The company aims to achieve a "healthy and clean" inventory position by the end of the first half of fiscal 2026, which will involve more discounting and continued pressure on digital traffic [2][8] Inventory Management - NIKE is implementing a phased inventory reset, expecting improvements in inventory quality and sell-through rates in regions like North America and EMEA, while Greater China requires deeper discounting and supply cuts [2][3] - Analysts express skepticism about NIKE's reliance on markdowns and value channels, which may dilute the brand and weaken long-term consumer perception [3] Competitive Landscape - Competitors like adidas and lululemon are also managing inventory challenges, with adidas reporting double-digit declines in inventory levels and lululemon facing rising pressures but maintaining confidence in inventory quality [4][5][6] Financial Performance - NIKE's stock has declined 2.2% year-to-date, outperforming the industry's decline of 6.6% [7] - The forward price-to-earnings ratio for NIKE is 41.17X, significantly higher than the industry average of 29.33X [9] - The Zacks Consensus Estimate indicates a 22.7% year-over-year decline in earnings for fiscal 2025, followed by a projected growth of 55% for fiscal 2026 [10]

Investment Rating - The report maintains an "Outperform" rating for the sports brand industry [6][10]. Core Insights - The sports outdoor industry is projected to reach approximately $400 billion in 2024, with a year-on-year growth of 3.8%, indicating a stable growth phase post-pandemic, but with significant brand performance differentiation [1][17]. - Nike, Adidas, and Asics have shown distinct stock price trends since 2019, with Nike experiencing a V-shaped recovery, Adidas an N-shaped reversal, and Asics achieving nearly a tenfold increase [1][25][28]. - The underlying performance of these brands is driven more by their operational results than by valuation fluctuations [1][33]. Summary by Sections Industry Trends - The global sports outdoor industry is entering a stable growth phase post-pandemic, with a notable shift in competitive dynamics and brand performance differentiation [17]. - The market share of leading brands like Nike and Adidas has declined, while local brands such as Li Ning and FILA have gained traction [18]. Company Analysis Nike - Nike's stock price has shown a downward trend due to supply chain disruptions and inventory issues, with a significant drop of 50% from its peak in early 2023 to April 2025 [2][47]. - The company is facing challenges with over-reliance on classic models and a decline in consumer interest, as indicated by a drop in Google search index since Q2 2023 [2][47]. - Nike plans to revitalize its brand through enhanced sports marketing and new product launches [2]. Adidas - Adidas has successfully pivoted its product strategy, focusing on fashion and running categories, leading to a significant stock price recovery [3][27]. - The new CEO has driven a turnaround by optimizing inventory and enhancing brand performance, with a notable increase in marketing efficiency [3][27]. - The brand's focus on localized strategies and retro product lines has contributed to its resurgence [3]. Asics - Asics has experienced a remarkable stock price increase, driven by a strong product cycle and a focus on high-end professional running shoes [4][28]. - The brand has successfully capitalized on the running trend and has built a robust ecosystem around running events [4][28]. - Asics' marketing expenditures are lower than its competitors, yet it has effectively built brand strength through strategic sponsorships and collaborations [4]. Investment Recommendations - Investors are advised to track the product cycles of sports brands, focusing on key marketing events and the subsequent commercial performance [5]. - The report highlights the importance of identifying new product opportunities and adjusting supply strategies as brands transition through different product cycle phases [5]. - Specific recommendations include monitoring Nike's new product cycles and Adidas' ongoing product strategy, while also considering local brands like Anta and Li Ning for their growth potential [9].

Core Viewpoint - NIKE Inc. (NKE) stock has experienced a significant recovery, rising 19.3% in the past month, outperforming key industry benchmarks and competitors [1][2][7] Group 1: Stock Performance - NKE shares have outpaced the broader Shoes and Retail Apparel industry growth of 15.3% and the Consumer Discretionary sector's growth of 3.9% [1] - Compared to competitors, NKE's performance is notably stronger, with lululemon athletica inc. (LULU) gaining 1.8% and adidas (ADDYY) gaining 3.9% in the same period [2] - The current share price of $72.47 is 38.6% above its 52-week low of $52.28 and 20% below its 52-week high of $90.62, indicating bullish sentiment as it trades above its 50 and 200-day moving averages [5][6] Group 2: Strategic Initiatives - The stock's momentum is attributed to NIKE's "Win Now" initiative, which focuses on revitalizing the brand's core strengths in sport and innovation [8] - NIKE has reorganized into dedicated teams by sport and launched impactful campaigns, leading to positive responses from wholesale partners and a gradual recovery of its premium positioning [9][10] - Operational improvements include managing down inventory and expanding through partnerships, signaling a path toward sustainable recovery [10] Group 3: Earnings Estimates and Challenges - Despite the stock's positive performance, earnings estimates for fiscal 2026 and 2027 have declined by 11.6% and 3%, respectively, indicating underlying challenges [11] - For fiscal 2026, the consensus estimates imply a 1.6% revenue decline and a 22.7% decline in EPS, while fiscal 2027 estimates indicate 6.1% revenue growth and 55% EPS growth [12] - The fourth-quarter fiscal 2025 results showed a 12% revenue decline and a 26% drop in NIKE Digital, with gross margin falling by 440 basis points due to various pressures [15] Group 4: Valuation Concerns - NIKE's forward 12-month price-to-earnings (P/E) multiple of 40.36X is significantly higher than the industry average of 29.34X and the S&P 500's average of 22.71X, raising concerns about valuation justification [18][19] - Compared to competitors like lululemon and adidas, which have lower P/E ratios, NIKE's elevated valuation may appear out of step with its growth trajectory [19][20] Group 5: Investment Outlook - NIKE remains a fundamentally strong player with a clear strategic roadmap, and recent stock rallies reflect growing investor optimism around its initiatives [21] - However, near-term challenges such as legacy inventory issues and tariff-related cost pressures cloud the outlook, leading to cautious guidance for the first quarter of fiscal 2026 [22] - Until NIKE demonstrates consistent top-line growth and margin stabilization, its premium valuation may struggle to attract broader investor interest [23]

Group 1 - Nike is the largest publicly traded footwear firm globally with a market cap exceeding $100 billion [1] - The Swoosh logo is highly recognizable and prevalent in public spaces [1] Group 2 - The article does not provide any financial performance data or specific earnings results for Nike [1]

Core Insights - The WNBA All-Star Game highlighted the growing commercial value of female athletes, with players advocating for better compensation through a collective bargaining meeting and demonstrations during the event [1][9] - Major sports brands, particularly Nike, are increasingly investing in women's sports, recognizing the market potential and the influence of female athletes [4][5][6] - The WNBA is experiencing significant growth in viewership and revenue, with record media rights deals and expansion plans that could reshape the financial landscape of women's sports [8][9] Group 1: Player Advocacy and Brand Engagement - Players utilized the All-Star weekend to showcase their value, wearing protest shirts demanding fair compensation [1] - Nike and other brands launched exclusive shoe lines during the All-Star event, indicating a competitive marketing environment focused on female athletes [3][4] - The engagement of brands like Under Armour and Reebok further emphasizes the importance of female athletes in the sports marketing landscape [3][4] Group 2: Financial Growth and Market Potential - The WNBA is set to benefit from a record $2.2 billion media rights deal, significantly increasing revenue compared to previous agreements [8] - Expansion plans for the league, including the addition of three new teams, are expected to further enhance financial prospects, with expansion fees rising to $250 million [8] - The valuation of teams is increasing, with the Golden State Warriors' women's team now valued at $500 million, reflecting the growing market for women's sports [8] Group 3: Labor Relations and Compensation - Current labor agreements in the WNBA are under scrutiny, with players advocating for a higher revenue share compared to the current 9.3% [9] - The disparity in compensation between WNBA and NBA players is significant, with WNBA's minimum salary at $66,000 compared to NBA's first-year salary exceeding $1.3 million [9] - The involvement of over 40 players in recent negotiations indicates a strong push for better financial terms and conditions within the league [9]

[Part I](index=4&type=section&id=PART%20I) Part I provides a comprehensive overview of NIKE's business, covering its products, markets, manufacturing, competitive landscape, human capital, executive leadership, and associated risks [Business](index=4&type=section&id=ITEM%201.%20Business) NIKE, Inc. is the world's largest athletic footwear and apparel seller, focusing on innovation, direct consumer connections, and global market segmentation with outsourced manufacturing [General Overview](index=4&type=section&id=General) NIKE, Inc. designs, develops, and markets athletic products globally, utilizing both direct-to-consumer and wholesale channels with outsourced international manufacturing - NIKE's principal business is the design, development, and worldwide marketing and selling of athletic footwear, apparel, equipment, accessories, and services, making it the **largest seller** in this category globally[11](index=11&type=chunk) - The company sells products through two main channels: **NIKE Direct** (owned retail stores and digital platforms) and **wholesale accounts**, which include distributors and licensees worldwide[11](index=11&type=chunk) - Nearly all of NIKE's footwear and apparel products are manufactured by **independent contractors** located outside the United States[11](index=11&type=chunk) [Products](index=4&type=section&id=Products) NIKE's product portfolio spans NIKE, Jordan, and Converse brands, driven by innovation and direct consumer connections for both athletic and leisure use - NIKE offers products under the **NIKE, Jordan, and Converse brands**, with a strategy focused on leading with sport, innovation, and direct consumer connections[13](index=13&type=chunk) - The **Jordan Brand** designs and distributes athletic and casual footwear, apparel, and accessories focused on sport performance and streetwear[17](index=17&type=chunk) - **Converse**, a wholly-owned subsidiary, designs and licenses casual sneakers, apparel, and accessories under trademarks like Chuck Taylor and All Star[18](index=18&type=chunk) [Sales and Marketing](index=5&type=section&id=Sales%20and%20Marketing) NIKE's sales exhibit moderate seasonality, with success dependent on adapting to consumer preferences and design trends through continuous product adjustment and marketing - Revenues historically show slight peaks in the **first and fourth fiscal quarters**, though product mix can vary significantly due to seasonal and geographic demand[21](index=21&type=chunk) - The company must actively respond to changing consumer preferences and trends by adjusting its product mix and leveraging marketing to influence sports and fitness activities[22](index=22&type=chunk) [Our Markets](index=5&type=section&id=Our%20Markets) NIKE operates across four NIKE Brand geographic segments and Converse, with U.S. sales at 43% and international sales at 57% of total fiscal 2025 revenues Revenue by Market (Fiscal 2025) | Market | Percentage of Total Revenues | | :--- | :--- | | U.S. Sales | 43% | | Non-U.S. Sales | 57% | Company-Operated Retail Stores | Region | Number of Stores | | :--- | :--- | | U.S. Total | 376 | | Non-U.S. Total | 658 | - For fiscal 2025, NIKE's three largest U.S. customers accounted for approximately **25% of U.S. sales**, while the three largest non-U.S. customers accounted for about **16% of total non-U.S. sales**[25](index=25&type=chunk)[28](index=28&type=chunk) - No single customer accounted for **10% or more of consolidated net revenues** in fiscal 2025[30](index=30&type=chunk) [Product Research, Design and Development](index=6&type=section&id=Product%20Research,%20Design%20and%20Development) NIKE prioritizes technical innovation in product research, design, and development to enhance athletic performance, collaborating with internal specialists and external experts - The company emphasizes **technical innovation** in design and manufacturing to create products that enhance performance, reduce injury, and maximize comfort[31](index=31&type=chunk) - NIKE utilizes internal specialists and external advisory boards of athletes, coaches, and experts to consult on product designs and materials[32](index=32&type=chunk) - Key product technologies include **Nike Air, Zoom, Free, Dri-FIT, Flyknit, FlyEase, ZoomX, Air Max, and React**[33](index=33&type=chunk) [Manufacturing](index=6&type=section&id=Manufacturing) NIKE primarily outsources footwear and apparel manufacturing to independent contractors outside the U.S., with key production in Vietnam, Indonesia, and China NIKE Brand Footwear Manufacturing by Country (FY 2025) | Country | Percentage of Total Production | | :--- | :--- | | Vietnam | 51% | | Indonesia | 28% | | China | 17% | NIKE Brand Apparel Manufacturing by Country (FY 2025) | Country | Percentage of Total Production | | :--- | :--- | | Vietnam | 31% | | China | 15% | | Cambodia | 15% | - As of May 31, 2025, manufacturing was conducted by independent contractors in **97 footwear factories** across 11 countries and **303 apparel factories** across 34 countries[35](index=35&type=chunk)[36](index=36&type=chunk) - **Four footwear contract manufacturers** accounted for approximately **59% of NIKE Brand footwear production** in fiscal 2025[35](index=35&type=chunk) [International Operations and Trade](index=7&type=section&id=International%20Operations%20and%20Trade) NIKE's international operations face risks from trade policies, tariffs, and political instability, leading to increased costs and potential supply disruptions, managed with a compliance program - International operations face risks from **foreign trade policies, import duties, quotas, political instability, and terrorism**[43](index=43&type=chunk) - Protectionist measures have increased product costs, and the company actively works with industry groups to mitigate these impacts[44](index=44&type=chunk) - The company is subject to the U.S. Foreign Corrupt Practices Act (FCPA) and other anti-bribery laws, and maintains a **compliance program** to address these risks[48](index=48&type=chunk) [Competition](index=8&type=section&id=Competition) The athletic industry is highly competitive, with NIKE competing globally on product quality, innovation, brand strength, marketing, and efficient sourcing and distribution - NIKE faces intense global competition from numerous companies, including **adidas, Anta, ASICS, Deckers, Li Ning, lululemon athletica, New Balance, On, Puma, Under Armour, and V.F. Corporation**[49](index=49&type=chunk) - Key competitive areas include **product attributes** (quality, innovation, design), **consumer connection** (marketing, endorsements), and **effective sourcing and distribution**[56](index=56&type=chunk) [Trademarks and Patents](index=8&type=section&id=Trademarks%20and%20Patents) NIKE considers its intellectual property, especially the NIKE name and Swoosh Design, as valuable assets, actively protecting them globally through trademarks and patents - The **NIKE and Swoosh Design trademarks** are considered among the company's most valuable assets and are registered in over **190 jurisdictions**[51](index=51&type=chunk) - The company holds many U.S. and foreign **utility and design patents** protecting components, technologies, manufacturing techniques, and designs for its products[53](index=53&type=chunk) [Human Capital Resources](index=9&type=section&id=Human%20Capital%20Resources) As of May 31, 2025, NIKE employed approximately 77,800 people globally, emphasizing a diverse, inclusive culture with competitive compensation and comprehensive benefits - As of May 31, 2025, NIKE had approximately **77,800 employees worldwide**, including retail and part-time staff[62](index=62&type=chunk) - The company is committed to a **diverse and inclusive culture**, supported by employee resource groups (NikeUNITED) and inclusive leadership training[59](index=59&type=chunk) - NIKE provides a comprehensive rewards package including **competitive pay, bonus plans, family care benefits, mental health support, and a hybrid work model**[64](index=64&type=chunk)[67](index=67&type=chunk) [Information about our Executive Officers](index=11&type=section&id=Information%20about%20our%20Executive%20Officers) This section provides biographical information for NIKE, Inc.'s executive officers as of July 17, 2025, including key leadership roles and functional responsibilities - **Mark Parker** serves as Executive Chairman, having previously been CEO from 2006 to 2020[68](index=68&type=chunk) - **Elliott Hill** became President and Chief Executive Officer in October 2024, having been with NIKE since 1988[68](index=68&type=chunk) - **Matthew Friend** has served as Executive Vice President and Chief Financial Officer since 2020[68](index=68&type=chunk) [Risk Factors](index=13&type=section&id=ITEM%201A.%20Risk%20Factors) This section outlines significant risks to NIKE's business, categorized into economic, operational, global business, legal, and financial factors, which could adversely affect performance [Economic and Industry Risks](index=14&type=section&id=Economic%20and%20Industry%20Risks) NIKE faces economic and industry risks including global volatility, intense competition, currency fluctuations, climate change, and public health emergencies impacting consumer spending and operations - Volatile global economic conditions, including **inflation and interest rates**, could reduce consumer discretionary spending, leading to lower demand, higher inventories, and reduced revenues[73](index=73&type=chunk)[76](index=76&type=chunk) - The company faces **intense competition** from a significant number of companies, which requires continuous innovation, effective marketing, and competitive pricing to maintain market share[74](index=74&type=chunk)[75](index=75&type=chunk) - A majority of products are manufactured and sold outside the U.S., exposing the company to **currency exchange rate volatility**, which can adversely affect reported revenues and earnings[77](index=77&type=chunk) - Climate change and extreme weather events pose **physical risks** to operations, supply chains, and retail traffic, while evolving stakeholder expectations on sustainability could increase costs and reputational risk[80](index=80&type=chunk)[81](index=81&type=chunk)[83](index=83&type=chunk) [Business and Operational Risks](index=17&type=section&id=Business%20and%20Operational%20Risks) NIKE's operational risks include brand reputation damage, failure to anticipate consumer trends, reliance on technology and concentrated manufacturing, and challenges with NIKE Direct investments - Maintaining and enhancing brand image is critical and can be damaged by **negative publicity**, failure to adapt to changing media environments, or issues with endorsers or suppliers[89](index=89&type=chunk)[90](index=90&type=chunk) - Failure to anticipate consumer preferences and develop new products in a timely manner can lead to **lower sales, excess inventory, and reduced profits**[91](index=91&type=chunk)[93](index=93&type=chunk) - The **NIKE Direct strategy** requires substantial investment in retail stores and digital platforms, which may not yield a satisfactory return and is subject to risks like credit card fraud and supply chain mismanagement[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - Heavy dependence on information technology for supply chain, retail, and financial operations creates vulnerability to **system failures, interruptions, and cyberattacks**, which could harm business operations[106](index=106&type=chunk) - The company relies on a **concentrated number of contract manufacturers** for footwear, and any disruption with a significant supplier could materially affect operations and sales[116](index=116&type=chunk) [Risks Related to Operating a Global Business](index=22&type=section&id=Risks%20Related%20to%20Operating%20a%20Global%20Business) NIKE's global operations face risks from political instability, changing trade policies, supply chain disruptions, and compliance with international anti-corruption laws - With nearly all manufacturing and a majority of sales occurring outside the U.S., the company is subject to risks from **foreign laws, political unrest, and economic instability**[123](index=123&type=chunk) - The business is exposed to risks from overseas sourcing, including **disruptions in the supply of raw materials, labor cost increases, and transportation delays**, which can impact product availability and profit margins[125](index=125&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) - Changes in U.S. or other countries' trade policies, including **tariffs and sanctions**, can require changes to business operations and adversely affect results[130](index=130&type=chunk)[131](index=131&type=chunk) - The company's ability to meet customer expectations depends on the proper operation of its **global distribution facilities**, which are vulnerable to disruptions from IT problems, disasters, or disease outbreaks[136](index=136&type=chunk) [Legal, Regulatory, and Compliance Risks](index=24&type=section&id=Legal,%20Regulatory,%20and%20Compliance%20Risks) NIKE faces legal and compliance risks globally, including intellectual property protection, data privacy, changing tax laws, and ensuring supplier adherence to codes of conduct - The company is subject to extensive laws and regulations worldwide, and failure to comply could result in **fines, sanctions, or reputational damage**[137](index=137&type=chunk) - Failure to adequately protect or enforce **intellectual property rights** against counterfeiting and infringement could adversely affect sales and brand value[138](index=138&type=chunk) - The company handles sensitive personal data and is subject to complex **data privacy regulations** (e.g., GDPR); a data breach could lead to fines, lawsuits, and reputational harm[145](index=145&type=chunk)[146](index=146&type=chunk) - Earning a substantial portion of income in foreign countries exposes NIKE to **changes in tax laws**, new regulations (such as OECD's Pillar Two), and potential tax liabilities from audits[147](index=147&type=chunk)[148](index=148&type=chunk) [Risks Related to Our Securities, Investments and Liquidity](index=26&type=section&id=Risks%20Related%20to%20Our%20Securities,%20Investments%20and%20Liquidity) NIKE's financial risks include potential for failed investments, stock price volatility from large share sales, increased borrowing costs from credit rating changes, and ineffective internal controls - Substantial investments in new businesses, technology, or operations like NIKE Direct are subject to risks and may not produce expected returns[153](index=153&type=chunk) - A negative change to the company's credit rating, such as the **July 2025 downgrade by Standard & Poor's**, increases borrowing costs and may limit financing options[156](index=156&type=chunk) - Failure to maintain effective internal controls over financial reporting could harm operating results and the ability to meet reporting obligations[157](index=157&type=chunk) - Failure to meet the financial estimates or expectations of securities analysts and investors has caused the **stock price to decline** in the past and could do so again[160](index=160&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[161](index=161&type=chunk) [Cybersecurity](index=28&type=section&id=ITEM%201C.%20Cybersecurity) NIKE's cybersecurity risk management, guided by the NIST framework, is overseen by management and the Board, including risk assessments, vulnerability management, and incident response - Cybersecurity risk management is overseen at the management level by the **VP, Corporate Information Security, Risk & Compliance**, and at the board level by the Board of Directors, with delegated oversight to the **Audit & Finance Committee**[163](index=163&type=chunk)[167](index=167&type=chunk) - The company's approach is guided by the **NIST Cybersecurity Framework** and includes tools like risk assessments, penetration testing, and a third-party cyber risk management program[164](index=164&type=chunk) - An incident response plan is in place to manage cybersecurity events, and its effectiveness is routinely tested. Employees receive annual mandatory cybersecurity training[166](index=166&type=chunk) [Properties](index=29&type=section&id=ITEM%202.%20Properties) NIKE's properties include its Oregon World Headquarters, leased regional HQs, a global distribution network, Air-Sole manufacturing facilities, and 1,029 leased retail stores worldwide - The **NIKE World Headquarters** is an owned **400-acre site** near Beaverton, Oregon, with over 40 buildings[170](index=170&type=chunk) - In the U.S., NIKE has **eight significant distribution centers**, five of which are near Memphis, Tennessee. The most significant international distribution facilities are owned and located in Belgium, China, Japan, and Korea[171](index=171&type=chunk) - The company leases approximately **1,029 retail stores worldwide**, with leases expiring at various dates through fiscal year 2058[173](index=173&type=chunk) [Legal Proceedings](index=29&type=section&id=ITEM%203.%20Legal%20Proceedings) The company reports no material pending legal proceedings beyond ordinary routine litigation incidental to its business - Other than ordinary routine litigation, the company reports **no material pending legal proceedings**[174](index=174&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[175](index=175&type=chunk) [Part II](index=30&type=section&id=PART%20II) Part II provides detailed financial information, including stock market data, share repurchases, MD&A of fiscal 2025 results, market risk disclosures, and consolidated financial statements with internal control reports [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=ITEM%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) NIKE's Class B Common Stock trades on NYSE, with an ongoing $18 billion share repurchase program, having repurchased $12.0 billion as of May 31, 2025 - The Board of Directors approved a four-year, **$18 billion share repurchase program** in June 2022. As of May 31, 2025, approximately **$12.0 billion** has been spent to repurchase **122.6 million shares**[178](index=178&type=chunk) Share Repurchases for Quarter Ended May 31, 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares Remaining for Purchase (in millions) | | :--- | :--- | :--- | :--- | | March 1 – March 31, 2025 | 936,074 | $72.39 | $6,124 | | April 1 – April 30, 2025 | 1,189,613 | $56.01 | $6,058 | | May 1 – May 31, 2025 | 1,116,872 | $60.77 | $5,990 | | **Total** | **3,242,559** | **$62.38** | **$5,990** | [RESERVED](index=32&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2025 saw NIKE's revenues decrease 10% to $46.3 billion and net income fall 44% to $3.2 billion, driven by NIKE Direct traffic decline and increased markdowns [Overview and Fiscal 2025 Financial Highlights](index=33&type=section&id=OVERVIEW) Fiscal 2025 results show a 10% revenue decrease to $46.3 billion and a 190 basis point gross margin decline, impacted by reduced NIKE Direct traffic and increased markdowns Fiscal 2025 Financial Highlights | Metric | Fiscal 2025 | Fiscal 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $46.3 billion | $51.4 billion | -10% | | NIKE Direct Revenues | $18.8 billion | $21.5 billion | -13% | | Gross Margin | 42.7% | 44.6% | -190 bps | | Inventories | $7.5 billion | $7.5 billion | Flat | | Shareholder Returns | $5.3 billion | - | - | - The company is navigating external factors like geopolitical dynamics and new tariffs, which are expected to negatively impact gross margin in fiscal 2026[191](index=191&type=chunk) - Strategic actions include reducing supply of certain footwear, repositioning NIKE Brand Digital as a full-price platform, reinvesting in wholesale, and increasing brand marketing investment[196](index=196&type=chunk) [Results of Operations](index=36&type=section&id=RESULTS%20OF%20OPERATIONS) For fiscal 2025, revenues decreased 10% to $46.3 billion, with gross margin contracting 190 basis points, leading to a 44% net income decline to $3.2 billion Consolidated Operating Results (FY2025 vs FY2024) | (in millions) | Fiscal 2025 | Fiscal 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $46,309 | $51,362 | -10% | | Gross Profit | $19,790 | $22,887 | -14% | | Gross Margin | 42.7% | 44.6% | -190 bps | | Total S&A Expense | $16,088 | $16,576 | -3% | | Income Before Taxes | $3,885 | $6,700 | -42% | | Net Income | $3,219 | $5,700 | -44% | | Diluted EPS | $2.16 | $3.73 | -42% | - On a currency-neutral basis, NIKE Brand footwear revenues decreased **11%**, driven by an **8% decrease in unit sales** and a **3 percentage point reduction from lower average selling prices (ASP)**[210](index=210&type=chunk) - **NIKE Direct revenues decreased 13% to $18.8 billion**, reflecting a **20% decline in digital sales**, while NIKE store sales were flat[210](index=210&type=chunk) - The **190 basis point gross margin decline** was primarily driven by lower NIKE Brand ASP (approx. **-180 bps**) and higher other costs including inventory obsolescence reserves (approx. **-90 bps**), partially offset by lower product costs (approx. **+80 bps**)[211](index=211&type=chunk)[215](index=215&type=chunk) [Segment Information](index=41&type=section&id=SEGMENT%20INFORMATION) In fiscal 2025, all NIKE Brand geographic segments and Converse experienced revenue and EBIT declines due to lower sales volumes and gross margin pressure Revenues by Segment (FY2025 vs FY2024) | Segment (in millions) | FY2025 Revenues | FY2024 Revenues | % Change | | :--- | :--- | :--- | :--- | | North America | $19,572 | $21,396 | -9% | | EMEA | $12,257 | $13,607 | -10% | | Greater China | $6,586 | $7,545 | -13% | | APLA | $6,251 | $6,729 | -7% | | Converse | $1,692 | $2,082 | -19% | EBIT by Segment (FY2025 vs FY2024) | Segment (in millions) | FY2025 EBIT | FY2024 EBIT | % Change | | :--- | :--- | :--- | :--- | | North America | $4,735 | $5,822 | -19% | | EMEA | $2,575 | $3,388 | -24% | | Greater China | $1,602 | $2,309 | -31% | | APLA | $1,527 | $1,885 | -19% | | Converse | $240 | $474 | -49% | [Foreign Currency Exposures and Hedging Practices](index=48&type=section&id=FOREIGN%20CURRENCY%20EXPOSURES%20AND%20HEDGING%20PRACTICES) NIKE manages foreign currency risks from transactions and translation through a centralized hedging program using derivatives, which had an unfavorable $188 million impact on fiscal 2025 pre-tax income - The company's foreign exchange risk management program is designed to lessen the effects of currency fluctuations on results by using natural offsets and hedging with derivatives[248](index=248&type=chunk) - Significant transactional exposures arise from product purchases denominated in currencies other than the functional currency of the purchasing entity and from non-functional currency denominated sales[251](index=251&type=chunk)[252](index=252&type=chunk) - For FY2025, the combination of translating foreign currency profits and the change in foreign currency gains/losses had an estimated **unfavorable impact of $188 million on Income before income taxes**[258](index=258&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) NIKE's liquidity remains solid despite a $3.7 billion decrease in operating cash flow in fiscal 2025, with access to $3 billion in credit facilities and significant future commitments Cash Flow Activity (FY2025 vs FY2024) | (in millions) | Fiscal 2025 | Fiscal 2024 | $ Change | | :--- | :--- | :--- | :--- | | Cash from Operating Activities | $3,698 | $7,429 | ($3,731) | | Cash from Investing Activities | ($275) | $894 | ($1,169) | | Cash from Financing Activities | ($5,820) | ($5,888) | $68 | - In July 2025, Standard and Poor's downgraded the company's debt rating from **AA- to A+**, which will increase facility fees and interest rates on its credit facilities[266](index=266&type=chunk) - As of May 31, 2025, material cash requirements included **$16.2 billion in endorsement contracts** and **$7.9 billion in product purchase obligations**[275](index=275&type=chunk) - The company repurchased **37.6 million shares for $3.0 billion** in fiscal 2025 and intends to continue moderating share repurchases[262](index=262&type=chunk) [Critical Accounting Estimates](index=52&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) NIKE's critical accounting estimates involve significant judgment for sales reserves, inventory valuation, hedge accounting effectiveness, and income tax provision determination - Sales-related reserves for returns and discounts are estimated based on historical rates, specific identification, and current marketplace needs[282](index=282&type=chunk) - Inventory reserves are established to account for the difference between inventory cost and its estimated net realizable value, based on assumptions about future demand and market conditions[284](index=284&type=chunk) - Hedge accounting requires that the notional value of derivative contracts does not exceed the amount of anticipated transactions, which are estimates and may fluctuate[287](index=287&type=chunk) - The income tax provision requires significant judgment in interpreting complex tax laws and estimating the annual effective tax rate and the sustainability of uncertain tax positions[289](index=289&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=54&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) NIKE manages foreign currency and interest rate market risks using derivatives, with foreign currency VaR at $107 million and $2.4 billion in interest rate swaps as of May 31, 2025 - The company uses financial instruments to manage exposure to foreign currency and interest rate fluctuations, not for speculative purposes[294](index=294&type=chunk) - The Value-at-Risk (VaR) for foreign currency sensitive derivatives was estimated at a maximum one-day loss of **$107 million** as of May 31, 2025, compared to **$57 million** as of May 31, 2024[301](index=301&type=chunk) Long-Term Debt and Interest Rate Swaps (as of May 31, 2025) | Instrument | Total Principal/Notional (in millions) | Fair Value (in millions) | | :--- | :--- | :--- | | Long-term U.S. Dollar debt — Fixed rate | $8,000 | $6,673 | | Interest Rate Swaps — Fixed to variable | $2,400 | $21 | [Financial Statements and Supplementary Data](index=56&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents NIKE's audited consolidated financial statements for fiscal 2025, including management's report on internal controls and the independent auditor's report [Management's Annual Report on Internal Control Over Financial Reporting](index=57&type=section&id=Management's%20Annual%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting) Management concluded that NIKE's internal control over financial reporting was effective as of May 31, 2025, based on the COSO framework - Management concluded that the company's internal control over financial reporting was **effective as of May 31, 2025**[312](index=312&type=chunk) - The evaluation was based on the framework in **Internal Control — Integrated Framework (2013)** issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)[312](index=312&type=chunk) [Report of Independent Registered Public Accounting Firm](index=58&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers LLP issued an unqualified opinion on NIKE's financial statements and internal controls, identifying accounting for income taxes as a critical audit matter - The auditor, **PricewaterhouseCoopers LLP**, issued an **unqualified opinion** on both the consolidated financial statements and the effectiveness of internal control over financial reporting[316](index=316&type=chunk) - The accounting for income taxes was identified as a **critical audit matter** due to the significant management judgment and complexity involved[323](index=323&type=chunk)[325](index=325&type=chunk) [Consolidated Financial Statements](index=60&type=section&id=Consolidated%20Financial%20Statements) NIKE's fiscal 2025 consolidated financial statements show net income of $3.2 billion on $46.3 billion revenues, with total assets of $36.6 billion and a $2.4 billion net cash decrease Consolidated Statement of Income (Year Ended May 31) | (In millions) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Revenues | $46,309 | $51,362 | $51,217 | | Gross Profit | $19,790 | $22,887 | $22,292 | | Net Income | $3,219 | $5,700 | $5,070 | | Diluted EPS | $2.16 | $3.73 | $3.23 | Consolidated Balance Sheet (As of May 31) | (In millions) | 2025 | 2024 | | :--- | :--- | | Total Current Assets | $23,362 | $25,382 | | Total Assets | $36,579 | $38,110 | | Total Current Liabilities | $10,566 | $10,593 | | Total Liabilities | $23,366 | $23,680 | | Total Shareholders' Equity | $13,213 | $14,430 | Consolidated Statement of Cash Flows (Year Ended May 31) | (In millions) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Cash from Operations | $3,698 | $7,429 | $5,841 | | Cash from Investing | ($275) | $894 | $564 | | Cash from Financing | ($5,820) | ($5,888) | ($7,447) | | Net (Decrease) in Cash | ($2,396) | $2,419 | ($1,133) | [Notes to Consolidated Financial Statements](index=65&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail NIKE's accounting policies and financial data, covering revenue recognition, debt, taxes, segment performance, hedging, and significant charges and claims [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=93&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in accountants or disagreements on accounting or financial disclosure matters - There has been **no change of accountants** nor any disagreements with accountants on accounting or financial disclosure matters[504](index=504&type=chunk) [Controls and Procedures](index=93&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded that NIKE's disclosure controls and procedures were effective as of May 31, 2025, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures were effective** as of May 31, 2025[506](index=506&type=chunk) - No material changes were made to the internal control over financial reporting during the most recent fiscal quarter[507](index=507&type=chunk) [Other Information](index=93&type=section&id=ITEM%209B.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the fiscal quarter ended May 31, 2025 - No directors or officers adopted or terminated a **Rule 10b5-1 trading arrangement** during the fourth quarter of fiscal 2025[508](index=508&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=93&type=section&id=ITEM%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[509](index=509&type=chunk) [Part III](index=94&type=section&id=PART%20III) Part III incorporates by reference information from NIKE's 2025 Proxy Statement, covering directors, executive officers, compensation, security ownership, related transactions, and accountant fees [Directors, Executive Officers and Corporate Governance](index=94&type=section&id=ITEM%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, corporate governance, and related policies is incorporated by reference from the 2025 Proxy Statement - Required information is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[511](index=511&type=chunk) [Executive Compensation](index=94&type=section&id=ITEM%2011.%20Executive%20Compensation) Information regarding executive and director compensation and Compensation Committee matters is incorporated by reference from the 2025 Proxy Statement - Required information is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[512](index=512&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=94&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on equity compensation plans and security ownership by beneficial owners and management is incorporated by reference from the 2025 Proxy Statement - Required information is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[513](index=513&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=94&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information on related person transactions and director independence is incorporated by reference from the 2025 Proxy Statement - Required information is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[514](index=514&type=chunk) [Principal Accountant Fees and Services](index=94&type=section&id=ITEM%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2025 Proxy Statement - Required information is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[515](index=515&type=chunk) [Part IV](index=95&type=section&id=PART%20IV) Part IV lists exhibits and financial statement schedules filed with the Form 10-K, along with the report's certifying signatures from principal officers and directors [Exhibits and Financial Statement Schedules](index=95&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Annual Report, including financial statements, consents, corporate governance documents, and certifications - Lists all financial statements, exhibits, and schedules filed with the report. All financial statement schedules are omitted as the required information is shown elsewhere[517](index=517&type=chunk) [Form 10-K Summary](index=98&type=section&id=ITEM%2016.%20Form%2010-K%20Summary) The company reports that no Form 10-K summary is provided - None[522](index=522&type=chunk) [Signatures](index=100&type=section&id=Signatures) The report is signed by the President and CEO, Principal Financial Officer, Principal Accounting Officer, and the majority of the Board of Directors on July 17, 2025 - The report is signed by **Elliott Hill** (President and CEO), **Matthew Friend** (EVP and CFO), **Johanna Nielsen** (VP, Chief Accounting Officer), and the Board of Directors on July 17, 2025[527](index=527&type=chunk)[528](index=528&type=chunk)