NIKE(US:NKE) Changjiang Securities·2025-07-03 23:30Investment Rating - The industry investment rating is "Positive" and maintained [6] Core Insights - For FY2025, Nike achieved revenue of $46.31 billion, slightly above expectations (Bloomberg consensus expected $45.91 billion), with a year-over-year decline of 9% at constant exchange rates. The gross margin decreased by 1.9 percentage points to 42.7%. In FY2025Q4, revenue was $11.10 billion, down 11% year-over-year at constant exchange rates, with a gross margin decline of 4.4 percentage points to 40.3%, primarily impacted by high discounts in wholesale and factory stores, increased supply chain costs, and significant declines in direct sales channels [2][4][9]. Summary by Sections Revenue Breakdown - For FY2025, Nike's revenue by region showed declines: North America -8%, EMEA -10%, APLA -3%, and Greater China -12%, with respective revenues of $19.57 billion, $12.26 billion, $6.25 billion, and $6.59 billion. North America and EMEA showed improved sales confidence, while Greater China faced significant inventory clearance challenges [9]. Channel Performance - Direct-to-Consumer (DTC) and wholesale revenues were down 12% and 6%, respectively, totaling $18.78 billion and $25.88 billion. The DTC decline was mainly due to significant drops in e-commerce sales [9]. Product Performance - Revenue from footwear, apparel, and equipment declined by 11%, 5%, and increased by 6%, totaling $29.51 billion, $12.97 billion, and $2.19 billion, respectively. The footwear segment faced pressure primarily due to inventory clearance of classic products, which is expected to continue into FY2026H1 [9]. Inventory Situation - As of FY2025Q4, Nike's inventory stood at $7.49 billion, remaining stable year-over-year but down 1% quarter-over-quarter. The company plans to continue inventory clearance over the next two quarters to restore healthy inventory levels by FY2026H1 [9]. Tariff Impact - The average tariff rate on Nike's imported footwear to the U.S. is approximately 15%, with new tariff rates expected to add about $1 billion in costs. The company plans to mitigate these costs through supply chain reallocation and selective price increases starting in Fall 2025 [9]. Performance Guidance - Following a challenging FY2025Q4, Nike anticipates that revenue and gross margin pressures will begin to ease, with expectations of a single-digit revenue decline and a gross margin decrease of 0.35 to 0.425 percentage points in FY2026Q1 [9].