NIKE(NKE) - 2026 Q1 - Quarterly Results

1. Fiscal 2026 First Quarter Results Overview 1.1 Executive Summary of Financial Performance NIKE, Inc. reported fiscal 2026 first quarter revenues of $11.7 billion, a 1% increase reported, with gross margin down 320 bps and diluted EPS decreasing 30% to $0.49 Fiscal 2026 First Quarter Key Financial Highlights | Metric | Value (millions) | Reported % Change YoY | Currency-Neutral % Change YoY | | :--- | :--- | :--- | :--- | | Total Revenues | $11,700 | 1 % | -1 % | | NIKE Direct Revenues | $4,500 | -4 % | -5 % | | Wholesale Revenues | $6,800 | 7 % | 5 % | | Gross Margin | 42.2 % | -320 bps | | | Diluted EPS | $0.49 | -30 % | | 1.2 Management Commentary Management noted progress in North America and Wholesale, expressing confidence in the 'Sport Offense' strategy despite non-linear recovery and external headwinds - NIKE drove progress through Win Now actions in priority areas of North America, Wholesale, and Running[3] - Confidence in the new alignment in the Sport Offense as key to maximizing NIKE, Inc.'s complete portfolio over the long-term[3] - Progress will not be linear as dimensions of the business recover on different timelines, navigating several external headwinds[3] 2. Consolidated Financial Statements 2.1 Consolidated Statements of Income Revenues increased 1% to $11.72 billion, but gross profit decreased 6% due to a 320 bps margin decline, leading to a 31% net income drop to $727 million Consolidated Statements of Income (Three Months Ended August 31) | Metric (in millions, except per share data) | 8/31/2025 | 8/31/2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $11,720 | $11,589 | 1 % | | Cost of sales | $6,777 | $6,332 | 7 % | | Gross profit | $4,943 | $5,257 | -6 % | | Gross margin | 42.2 % | 45.4 % | | | Total selling and administrative expense | $4,016 | $4,048 | -1 % | | Income before income taxes | $922 | $1,307 | -29 % | | Income tax expense | $195 | $256 | -24 % | | Effective tax rate | 21.1 % | 19.6 % | | | NET INCOME | $727 | $1,051 | -31 % | | Diluted EPS | $0.49 | $0.70 | -30 % | 2.1.1 Revenue Breakdown This section details revenue and cost of sales performance, showing a slight revenue increase but a notable rise in cost of sales Revenue and Cost of Sales Performance | Metric (in millions) | 8/31/2025 | 8/31/2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $11,720 | $11,589 | 1 % | | Cost of sales | $6,777 | $6,332 | 7 % | | Gross profit | $4,943 | $5,257 | -6 % | 2.1.2 Gross Margin and Profitability Gross margin significantly declined by 320 basis points to 42.2%, primarily due to lower average selling prices and higher tariffs Gross Margin Performance | Metric | 8/31/2025 | 8/31/2024 | Change | | :--- | :--- | :--- | :--- | | Gross margin | 42.2 % | 45.4 % | -320 bps | - Gross margin decreased primarily due to lower average selling price, reflecting higher discounts and channel mix, as well as higher tariffs in North America[6] 2.1.3 Operating Expenses Total selling and administrative expense saw a slight decrease, driven by lower demand creation expense offset by flat operating overhead Selling and Administrative Expense (Three Months Ended August 31) | Expense Category (in millions) | 8/31/2025 | 8/31/2024 | % Change | | :--- | :--- | :--- | :--- | | Demand creation expense | $1,188 | $1,226 | -3 % | | Operating overhead expense | $2,828 | $2,822 | 0 % | | Total selling and administrative expense | $4,016 | $4,048 | -1 % | | % of revenues | 34.3 % | 34.9 % | | - Demand creation expense decreased primarily due to lower brand marketing expense reflecting higher investment in key sports events in the prior year, partially offset by higher sports marketing expense in the current year[6] - Operating overhead expense was flat, primarily due to higher wage-related expense, offset by lower other administrative costs[6] 2.1.4 Net Income and Earnings Per Share Net income decreased significantly by 31% to $727 million, with diluted EPS falling 30% to $0.49, impacted by a higher effective tax rate Net Income and EPS (Three Months Ended August 31) | Metric | 8/31/2025 | 8/31/2024 | % Change | | :--- | :--- | :--- | :--- | | NET INCOME | $727 million | $1,051 million | -31 % | | Basic EPS | $0.49 | $0.70 | -30 % | | Diluted EPS | $0.49 | $0.70 | -30 % | Effective Tax Rate | Metric | 8/31/2025 | 8/31/2024 | | :--- | :--- | :--- | | Effective tax rate | 21.1 % | 19.6 % | - The effective tax rate increased to 21.1% from 19.6% primarily due to decreased benefits from stock-based compensation[6] 2.2 Consolidated Balance Sheets Total assets decreased 1% to $37.33 billion, driven by lower cash and investments, while current liabilities rose 3% and shareholders' equity fell 3% Consolidated Balance Sheet Summary (August 31) | Metric (in millions) | 8/31/2025 | 8/31/2024 | % Change | | :--- | :--- | :--- | :--- | | TOTAL ASSETS | $37,334 | $37,867 | -1 % | | Total current liabilities | $10,911 | $10,628 | 3 % | | Shareholders' equity | $13,468 | $13,944 | -3 % | 2.2.1 Assets Total current assets decreased by 5%, primarily due to significant reductions in cash and equivalents and short-term investments Current Assets (August 31) | Asset Category (in millions) | 8/31/2025 | 8/31/2024 | % Change | | :--- | :--- | :--- | :--- | | Cash and equivalents | $7,024 | $8,485 | -17 % | | Short-term investments | $1,551 | $1,809 | -14 % | | Accounts receivable, net | $4,962 | $4,764 | 4 % | | Inventories | $8,114 | $8,253 | -2 % | | Prepaid expenses and other current assets | $2,247 | $1,729 | 30 % | | Total current assets | $23,898 | $25,040 | -5 % | - Inventories were down 2% compared to the prior year, reflecting a decrease in units, partially offset by increased product costs, primarily due to higher tariffs in North America[12] - Cash and equivalents and short-term investments were down approximately $1.7 billion from last year, as cash generated by operations was more than offset by cash dividends, share repurchases, bond repayment and capital expenditures[12] 2.2.2 Liabilities and Shareholders' Equity Total current liabilities increased by 3%, driven by higher accounts payable and accrued liabilities, while shareholders' equity decreased by 3% Current Liabilities and Shareholders' Equity (August 31) | Category (in millions) | 8/31/2025 | 8/31/2024 | % Change | | :--- | :--- | :--- | :--- | | Current portion of long-term debt | $0 | $1,000 | -100 % | | Accounts payable | $3,772 | $3,357 | 12 % | | Accrued liabilities | $5,923 | $5,075 | 17 % | | Total current liabilities | $10,911 | $10,628 | 3 % | | Shareholders' equity | $13,468 | $13,944 | -3 % | 3. Divisional and Brand Performance 3.1 NIKE Brand Divisional Revenues NIKE Brand revenues grew 2% reported to $11.4 billion, flat currency-neutral, with North America growing and Greater China declining significantly NIKE Brand Divisional Revenues (Reported % Change, Three Months Ended August 31) | Region | Footwear | Apparel | Equipment | Total | | :--- | :--- | :--- | :--- | :--- | | North America | 0 % | 11 % | 16 % | 4 % | | Europe, Middle East & Africa | 4 % | 11 % | 3 % | 6 % | | Greater China | -11 % | 1 % | -32 % | -9 % | | Asia Pacific & Latin America | 1 % | 7 % | -6 % | 2 % | | TOTAL NIKE BRAND | -1 % | 9 % | 4 % | 2 % | NIKE Brand Divisional Revenues (Currency-Neutral % Change, Three Months Ended August 31) | Region | Footwear | Apparel | Equipment | Total | | :--- | :--- | :--- | :--- | :--- | | North America | 0 % | 11 % | 16 % | 4 % | | Europe, Middle East & Africa | -2 % | 6 % | -2 % | 1 % | | Greater China | -12 % | 0 % | -33 % | -10 % | | Asia Pacific & Latin America | 0 % | 5 % | -7 % | 1 % | | TOTAL NIKE BRAND | -2 % | 7 % | 3 % | 0 % | - Currency-neutral growth in North America was offset by a decline in Greater China for the NIKE Brand[6] 3.2 Converse Brand Revenues Converse revenues significantly declined by 27% reported and 28% currency-neutral, driven by declines across all territories Converse Revenues (Three Months Ended August 31) | Metric (in millions) | 8/31/2025 | 8/31/2024 | Reported % Change | Currency-Neutral % Change | | :--- | :--- | :--- | :--- | :--- | | Converse Revenues | $366 | $501 | -27 % | -28 % | - Converse revenues declined due to declines across all territories[6] 3.3 Earnings Before Interest and Taxes (EBIT) by Segment Total NIKE, Inc. EBIT decreased 28% to $904 million, with EBIT margin at 7.7%, as all segments, especially Converse and Greater China, saw declines EBIT by Segment (Three Months Ended August 31) | Segment (in millions) | 8/31/2025 | 8/31/2024 | % Change | | :--- | :--- | :--- | :--- | | North America | $1,134 | $1,216 | -7 % | | Europe, Middle East & Africa | $735 | $792 | -7 % | | Greater China | $377 | $502 | -25 % | | Asia Pacific & Latin America | $350 | $402 | -13 % | | TOTAL NIKE BRAND | $1,404 | $1,685 | -17 % | | Converse | $39 | $121 | -68 % | | TOTAL NIKE, INC. EBIT | $904 | $1,264 | -28 % | | EBIT margin | 7.7 % | 10.9 % | | 4. Shareholder Returns 4.1 Shareholder Returns Overview NIKE, Inc. returned approximately $714 million to shareholders in Q1 through dividends and share repurchases, maintaining 23 years of dividend increases - The Company returned approximately $714 million to shareholders in the first quarter[8] Shareholder Returns Q1 Fiscal 2026 | Metric | Amount (millions) | % Change YoY | | :--- | :--- | :--- | | Dividends | $591 | 6 % | | Share repurchases | $123 | | - NIKE has a strong track record of returns to shareholders, including 23 consecutive years of increasing dividend payouts[8] - 1.8 million shares were retired as part of the Company's four-year, $18 billion share repurchase program approved in June 2022[12] 5. Company Information and Disclosures 5.1 About NIKE, Inc. NIKE, Inc. is a global leader in athletic footwear, apparel, and equipment, with Converse as its athletic lifestyle subsidiary - NIKE, Inc. is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities[10] - Converse, a wholly-owned NIKE, Inc. subsidiary brand, designs, markets and distributes athletic lifestyle footwear, apparel and accessories[10] 5.2 Forward-Looking Statements This section discloses forward-looking statements, which are subject to risks and uncertainties detailed in SEC filings, potentially causing actual results to differ - This press release contains forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially[11] - These risks and uncertainties are detailed from time to time in reports filed by NIKE with the U.S. Securities and Exchange Commission (SEC), including Forms 8-K, 10-Q and 10-K[11] 5.3 Conference Call Information NIKE, Inc. management hosted a conference call on September 30, 2025, to discuss Q1 results, with a live broadcast and archived version available online - NIKE, Inc. management hosted a conference call on September 30, 2025, at approximately 2:00 p.m. PT to review fiscal first quarter results[9] - The conference call was broadcast live via the Internet and an archived version is available at https://investors.nike.com through approximately October 21, 2025[9]