NIKE(US:NKE)2024-10-07 20:20Revenue Performance - NIKE, Inc. revenues for Q1 fiscal 2025 were $11.6 billion, a 10% decrease compared to $12.9 billion in Q1 fiscal 2024[75][83] - NIKE Direct revenues were $4.7 billion in Q1 fiscal 2025, representing 42% of total NIKE Brand revenues, a decrease from $5.4 billion in Q1 fiscal 2024[75] - NIKE Brand wholesale revenues decreased to $6.4 billion in Q1 fiscal 2025 from $7.0 billion in Q1 fiscal 2024[75] - Total NIKE, Inc. revenues decreased by 10% to $11,589 million, with North America revenues down 11% to $4,826 million and EMEA revenues down 13% to $3,143 million[92] - Greater China revenues decreased by 3% on a currency-neutral basis to $1,666 million, with footwear revenues down 2% and apparel revenues down 9%[98] - Asia Pacific & Latin America total revenues decreased 7% to $1,462 million, with footwear revenues down 8% and apparel revenues down 6%[102] - Converse revenues decreased 14% on a currency-neutral basis, with wholesale revenues down 16% and direct to consumer revenues down 15%[106] Gross Margin and Cost Management - Gross margin increased by 120 basis points to 45.4% in Q1 fiscal 2025, driven by lower product costs, warehousing, and logistics costs, and strategic pricing actions[75][85] - Gross margin expanded by 180 basis points in North America and 190 basis points in EMEA, driven by lower product costs and warehousing expenses[95][97] - Reported EBIT decreased 4% due to gross margin contraction of approximately 170 basis points and a 5% decrease in selling and administrative expenses[101] - Converse's earnings before interest and taxes decreased 28% to $121 million, reflecting lower revenues and gross margin contraction of approximately 50 basis points[106] Earnings and Profitability - EBIT for Q1 fiscal 2025 was $1.264 billion, a decrease from $1.614 billion in Q1 fiscal 2024, with EBIT margin dropping to 10.9% from 12.5%[77][78] - Net income for Q1 fiscal 2025 was $1.051 billion, a 28% decrease compared to $1.450 billion in Q1 fiscal 2024[81] - NIKE Brand EBIT decreased by 20% to $1,685 million, with North America EBIT down 15% to $1,216 million and EMEA EBIT down 15% to $792 million[92] - Global Brand Divisions' loss before interest and taxes increased 2%, driven by higher demand creation expense partially offset by lower operating overhead expense[105] - Corporate's loss before interest and taxes decreased by $109 million, primarily due to lower wage-related expenses and favorable foreign currency impacts[109] Inventory and Product Sales - Inventories as of August 31, 2024, were $8.3 billion, a 10% increase compared to May 31, 2024, primarily due to an increase in units[75] - NIKE Brand footwear revenues decreased 10% on a currency-neutral basis, with unit sales down 10% and average selling price (ASP) flat[84] - NIKE Brand apparel revenues decreased 9% on a currency-neutral basis, with unit sales down 12% but higher ASP contributing 3 percentage points of growth[84] - EMEA footwear revenues decreased by 12% on a currency-neutral basis, with unit sales down 13% and higher ASP contributing 1 percentage point of growth[96][97] - Footwear revenues decreased 2% on a currency-neutral basis, with unit sales down 1% and lower ASP per pair reducing revenues by approximately 1 percentage point[99] - Apparel revenues decreased 9% on a currency-neutral basis, with unit sales down 15% but higher ASP per unit contributing approximately 6 percentage points of revenue growth[99] Digital and Direct Sales - NIKE Brand Digital sales declined 20% on a currency-neutral basis, contributing to a 12% decrease in NIKE Direct revenues[84] - NIKE Direct revenues in North America decreased by 11% to $2,351 million, with digital sales declining by 15% and comparable store sales growing by 1%[94][95] - Greater China revenues decreased 3% on a currency-neutral basis, with NIKE Direct revenues down 16% due to digital sales declines of 34% and comparable store sales declines of 8%[99] - APLA revenues decreased 2% on a currency-neutral basis, with NIKE Direct revenues down 4% due to digital sales declines of 15%[103] Expenses and Overhead - Total selling and administrative expenses decreased by 2% to $4,048 million, with demand creation expense increasing by 15% to $1,226 million and operating overhead expense decreasing by 7% to $2,822 million[87] - Selling and administrative expenses in EMEA decreased by 2%, with lower operating overhead partially offset by higher demand creation expense[97] Foreign Exchange Impact - Foreign exchange rate fluctuations negatively impacted consolidated revenues by approximately $159 million for the three months ended August 31, 2024[114] - Foreign exchange rate fluctuations negatively impacted income before taxes by approximately $40 million for the three months ended August 31, 2024[114] Cash Flow and Share Repurchases - Cash provided by operations was an inflow of $394 million for the first three months of fiscal 2025, compared to an outflow of $66 million for the same period in fiscal 2024[116] - Net income, adjusted for non-cash items, generated $1,358 million of operating cash inflow for the first three months of fiscal 2025, compared to $1,757 million for the same period in fiscal 2024[116] - Cash used by investing activities was an outflow of $166 million for the first three months of fiscal 2025, compared to an inflow of $418 million for the same period in fiscal 2024[116] - Cash used by financing activities was an outflow of $1,622 million for the first three months of fiscal 2025, compared to an outflow of $1,599 million for the same period in fiscal 2024[116] - The company repurchased 14.8 million shares of Class B Common Stock for $1,193 million (average price of $80.60 per share) in the first three months of fiscal 2025[116] - As of August 31, 2024, the company had repurchased 99.7 million shares at a cost of approximately $10.2 billion (average price of $102.78 per share) under the $18 billion share repurchase program[116] Cash and Investments - The company had cash and equivalents and short-term investments totaling $10.3 billion as of August 31, 2024[118] - The weighted average days to maturity of the company's cash equivalents and short-term investments portfolio was 85 days as of August 31, 2024[118] Other Income and Tax - Other (income) expense, net increased from $10 million to $55 million, primarily due to favorable foreign currency conversion gains and losses[88][89] - Effective tax rate increased by 760 basis points to 19.6% in Q1 FY2025 compared to 12.0% in Q1 FY2024, driven by a one-time benefit in the prior year[90]