Financial Data and Key Metrics Changes - Revenues for the quarter were up 1% on a reported basis and down 1% on a currency-neutral basis [20] - Gross margins declined 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [21] - Earnings per share was $0.49 [21] - Inventory decreased 2% versus the prior year, indicating progress towards a healthier marketplace [22] Business Line Data and Key Metrics Changes - Nike Direct was down 5%, with Nike Digital declining 12% and Nike stores down 1% [21] - Wholesale grew 5%, indicating a positive trend in that segment [21] - The running business grew over 20% this quarter, showcasing strong performance in that category [9] - Sportswear continued to decline, with a 30% drop in classic footwear franchises [23][15] Market Data and Key Metrics Changes - North America revenue grew 4%, with wholesale up 11% [22] - Greater China revenue declined 10%, with Nike Digital down 27% and Nike stores down 4% [25] - EMEA revenue grew 1%, with Nike Digital down 13% and Nike stores up 1% [24] - APLA revenue grew 1%, with Nike Digital down 8% and Nike stores down 5% [26] Company Strategy and Development Direction - The company is focusing on the "Sport Offense" strategy, which aims to align teams by sport for better consumer insights and innovation [6] - There is a commitment to improving the sportswear segment and addressing challenges in Greater China and Nike Direct [15][17] - The company is investing in innovative products and emotional storytelling to connect with consumers [19] - The goal is to serve consumers across multiple channels, including specialty sporting goods and Nike Direct [63] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a cautious consumer environment and tariff uncertainties impacting business recovery [19] - There is confidence in the Win Now actions and the potential for growth, particularly in North America [19] - The company expects Q2 revenues to be down low single digits, reflecting ongoing challenges [30] - Management remains focused on long-term health and profitability despite short-term pressures [34] Other Important Information - The company is facing a significant cost headwind from new tariffs, estimated at approximately $1.5 billion annually [28] - The strategic decision to reduce reliance on classic franchises and pull back on promotions is aimed at long-term brand health [18] - The company is actively working on refreshing retail environments and improving consumer experiences in Greater China [70] Q&A Session Summary Question: Can you help us think about the spring order book in the context of the holiday book? - Management noted that the spring order book is positive and reflects growth across North America, EMEA, and APLA, offsetting headwinds in Greater China [39][44] Question: How is the current marketplace in September trading? - Management indicated that the environment is dynamic, with good sell-throughs for recent product launches, but they are closely monitoring consumer behavior [49][51] Question: Can you elaborate on the early wins in North America and running? - Management highlighted a 20% growth in running and positive momentum in North America, attributing success to the Win Now actions and the Sport Offense strategy [57][59] Question: How much of the pressure in Nike Digital is due to reduced promotions? - Management confirmed that the organic traffic decline is primarily due to strategic repositioning and reduced promotional activity, with a focus on building momentum with wholesale partners [63][66] Question: What strategies are being used to turn the digital business in China? - Management emphasized leading with sport, innovative products, and local athlete activations to improve the digital marketplace, while also focusing on store refreshes [68][70]

Financial Data and Key Metrics Changes - Revenues for Q1 2026 were up 1% on a reported basis and down 1% on a currency-neutral basis [20] - Gross margins declined 320 basis points to 42.2% due to higher wholesale discounts, increased product costs, and channel mix headwinds [21] - Earnings per share was $0.49 [22] - Inventory decreased 2% versus the prior year, indicating progress towards a healthier marketplace [23] Business Line Data and Key Metrics Changes - Nike Direct was down 5%, with Nike Digital declining 12%, while wholesale grew 5% [21] - The running business grew over 20% this quarter, showcasing strong consumer response to new innovations [10] - Sportswear business continues to decline, with a 30% drop in classic footwear franchises [24][15] Market Data and Key Metrics Changes - North America revenue grew 4%, with wholesale up 11% [23] - Greater China revenue declined 10%, with Nike Digital down 27% [26] - EMEA revenue grew 1%, with Nike Digital down 13% [25] Company Strategy and Development Direction - The company is focusing on a "sport offense" strategy to align its brands (Nike, Jordan, Converse) into more nimble teams by sport [6] - There is a commitment to improving the marketplace through innovative product offerings and emotional storytelling [19] - The company aims to enhance its digital presence while reducing reliance on classic franchises [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a cautious consumer environment and tariff uncertainties impacting business recovery [19] - There is confidence in the win-now actions and the potential for growth in North America, despite challenges in Greater China [34] - The company expects Q2 revenues to be down low single digits, with gross margins declining due to new tariffs [32] Other Important Information - The company has activated 12 sport takeover moments in the past 10 months to connect athlete performances with commercial assortments [14] - New partnerships, such as with Skims, are aimed at expanding product offerings and reaching new consumers [12] Q&A Session Summary Question: Insights on the spring order book and holiday book context - Management noted that the spring order book is positive, reflecting growth in North America and EMEA, offsetting headwinds in Greater China [41][46] Question: Update on September trading and consumer demand - Management confirmed that Q1 performance was not influenced by pull forwards, with wholesale growth contributing to the results [51][54] Question: Early wins in North America and running growth - The company highlighted a 20% growth in running and positive signals from wholesale partners as indicators of success [58][59] Question: Traffic headwinds in Nike Digital - Management acknowledged that the decline in organic traffic is primarily due to strategic reductions in promotions and repositioning efforts [63][64] Question: Strategies for Greater China and store refresh costs - The company is focused on innovative products and local athlete activations to drive growth in China, with ongoing investments in the marketplace [66][69]

Investment Rating - The report maintains a "Buy" rating for key companies in the sportswear sector, including Anta Sports, Li Ning, and Xtep International, indicating a positive outlook for their long-term growth potential [4][8]. Core Insights - The sportswear industry is experiencing resilience in demand despite economic fluctuations, driven by increased health awareness and government policies promoting sports participation [1][13]. - In the U.S. and Japan, the growth of the sports industry is attributed to historical factors, including economic recovery, government support, and major sporting events like the Olympics [1][20]. - In China, the running and outdoor segments are key growth drivers, with a projected compound annual growth rate (CAGR) of 16% for high-performance outdoor apparel from 2024 to 2029 [3][30]. Summary by Sections Industry Analysis - The U.S. fitness club membership increased by 3.7% to 68.9 million in 2022, and outdoor activity participation among Americans aged 6 and above grew by 4.1% in 2023 [1][19]. - Japan's sports consumption has been steadily increasing, supported by economic recovery and the Tokyo Olympics, with a focus on low-barrier sports like running and fitness [20][25]. Competitive Factors - Product strength and brand value are critical for leading international sports brands like Nike and Adidas, which focus on product development and brand building [2][32]. - Domestic brands in China, such as Anta and Li Ning, are enhancing their product innovation and brand image through sponsorships and professional athlete endorsements [3][37]. Investment Recommendations - The report highlights Anta Sports as a key player with strong operational capabilities and a projected price-to-earnings (PE) ratio of 18 times for 2025 [4][8]. - Li Ning is recommended for its long-term earnings potential, with a PE ratio of 17 times for 2025, while Xtep International is noted for its stable performance and growth prospects in the running segment, with a PE ratio of 11 times for 2025 [4][8].

Core Viewpoint - UBS indicates that Nike's transformation is underway but will take at least a year to translate into sustainable revenue growth [1][2][3] Group 1: Transformation Progress - Nike's transformation is progressing, but the pace may not meet investor expectations, with the market anticipating a return to mid-single-digit revenue growth and healthy EBIT margins [1] - UBS emphasizes that improvements in franchise management are a key advancement, as the product team previously over-relied on classic franchise products, sacrificing innovation [1][2] Group 2: Strategic Direction and Challenges - UBS notes that the over-distribution of core classic series is being corrected, and Hill's clear strategic direction is expected to enhance operational efficiency and corporate culture [2] - The full implementation of Elliott Hill's changes may take at least a year or longer due to three main factors: the new team needing time to adapt, the complexity of global operations requiring fine coordination across regions and product categories, and a product delivery cycle exceeding one year delaying consumer impact [2]

Core Insights - Nike's brand connection with China has weakened over the past two decades, leading to a significant decline in revenue and brand narrative clarity [4][5][6] - The latest financial report indicates a 21% year-over-year revenue drop in the Greater China region, with e-commerce down 31% and wholesale channels down 24% [4][17] - The company's shift towards a Direct to Consumer (DTC) model has created initial efficiencies but has also led to a disconnect with local market dynamics [16][29] Group 1 - Nike's advertising strategy in the early 2000s effectively resonated with a nation eager for recognition and success, exemplified by Liu Xiang's Olympic victory [1][2] - The brand's previous dominance in the market was characterized by consistent double-digit growth, with little competition, leading to complacency [8][12] - The rise of the sneaker resale market in 2019 marked a shift in consumer behavior, focusing more on investment potential rather than product experience [9][10] Group 2 - Under CEO John Donahoe, Nike adopted a DTC approach, which initially seemed effective but ultimately led to a loss of brand identity and connection with consumers [15][21] - The restructuring of the organization to prioritize efficiency over brand essence has diluted Nike's core narrative centered around sports [23][28] - The company's response to market challenges has been slow and ineffective, revealing deeper issues within its global structure and decision-making processes [30][32] Group 3 - The introduction of the "Win Now" strategy aims to restore Nike's brand spirit by focusing on local market needs and empowering regional leadership [36][38] - The shift back to professional and technical products reflects a recognition of changing consumer preferences towards lifestyle and comfort [45][46] - Nike's recent organizational changes indicate a move towards greater local adaptability, essential for regaining market relevance in China [40][46]

Core Viewpoint - Nike's stock experienced a significant increase of 16% following its fiscal fourth-quarter earnings report, marking the largest one-day percentage gain in several years [1] Financial Performance - The fourth-quarter results showed a revenue decline of 12% to $11.1 billion, surpassing expectations of $10.72 billion [3] - Gross margin contracted by 440 basis points to 40.3% due to increased discounts and a shift to the wholesale channel [3] - Earnings per share fell to $0.14 from $0.99 a year ago, slightly exceeding expectations of $0.12 [3] Future Guidance - Management provided guidance for the first quarter, expecting revenue to decline in the mid-single digits and gross margins to compress by 350 to 425 basis points, including a 100 basis point impact from tariffs [4][5] - Selling, general, and administrative expenses are projected to increase in low single digits, indicating a sharp fall in profits despite better-than-expected guidance [5] Operational Changes - CEO Elliott Hill emphasized an operational turnaround, including a refreshed management team and a realignment of leadership structures [8] - The company is focusing on revitalizing classic sneaker brands and has seen growth in key areas such as running, which grew in high-single digits [9] Market Relationships and Brand Engagement - Nike is improving wholesale relationships with key partners, leading to increased sell-through of products [10] - Local events, such as the After Dark run series, have helped to reignite brand excitement and boost sales [10] Analyst Sentiment - Following the stock surge, analysts have issued positive notes and price target increases, with HSBC upgrading the stock to buy [11] - Despite the challenges faced under former CEO John Donahoe, there is a belief on Wall Street that a turnaround is underway [11] Long-term Outlook - Even after the recent stock increase, Nike's stock remains nearly 60% down from its all-time high, with expectations that it may take years to return to previous levels [12] - Upcoming product launches, including Caitlin Clark's signature shoe and new products for the World Cup, are seen as potential positive catalysts for the company [13]

Core Viewpoint - Nike's stock surged 17% after the company indicated that it has overcome the worst of its struggles, following a better-than-expected fiscal fourth-quarter earnings report [1][2] Financial Performance - In the fourth quarter, Nike experienced a 12% drop in sales and an 86% decline in net income, with profit margins also decreasing [2] - The company reported that sales of classic products like Air Force 1, Air Jordan 1, and Dunks fell over 20% year-over-year, with a 30% decline in the fourth quarter alone, impacting sales by nearly $1 billion [9] Turnaround Strategy - CEO Elliott Hill emphasized that the company is beginning to see the effects of its turnaround plan, "Win Now," and expects business results to improve moving forward [3][4] - Nike is focusing on new product launches and efforts to regain wholesale partners, including selling on Amazon for the first time since 2019 and targeting female shoppers [4][5] Market Reactions - Following the earnings report, several banks issued positive commentary, with HSBC upgrading Nike to a "buy" rating and raising its price target to $80, indicating a potential 28% upside [5] - Analyst Erwan Rambourg noted that there is tangible evidence of a potential sales rebound for Nike, despite challenges such as tariffs [6] Future Outlook - Nike anticipates a mid-single-digit percentage decline in sales for the current quarter, aligning with Wall Street's expectations of a 7% drop [7] - The company expects profits to remain under pressure through the first half of fiscal 2026 due to inventory clearance and higher tariff costs, with improvements anticipated in the second half [10]

Financial Data and Key Metrics Changes - For Q3 2025, revenues decreased by 9% on a reported basis and 7% on a currency-neutral basis, with strong holiday results in December followed by double-digit declines in January and February [45][46] - Gross margins declined by 330 basis points to 41.5% due to higher markdowns, wholesale discounts, inventory obsolescence, and product costs [46] - Earnings per share was reported at $0.54, with an effective tax rate of 5.9% compared to 16.5% for the same period last year [47] Business Line Data and Key Metrics Changes - NIKE Direct revenues decreased by 10%, with NIKE Digital down 15% and NIKE Stores down 2% [46] - Performance business showed growth, particularly in training and running, while NIKE sportswear and the Jordan brand experienced declines, especially in classic footwear franchises [49] - The Vomero 5 doubled its revenue this quarter, and NIKE Shox grew its revenue by over 10 times in the last three quarters [30] Market Data and Key Metrics Changes - In North America, Q3 revenue declined by 4%, with NIKE Direct down 10% and NIKE Digital down 12% [55] - In EMEA, Q3 revenue declined by 6%, with NIKE Digital down 25% and NIKE Stores up 9% [58] - In Greater China, Q3 revenue declined by 15%, with NIKE Direct down 11% and wholesale down 18% [60] Company Strategy and Development Direction - The company is focusing on five strategic actions termed "Win Now," which include igniting a winning culture, shaping the brand for distinction, accelerating a complete product portfolio, elevating the marketplace, and winning on the ground [11][12] - The strategy emphasizes a balanced approach to product offerings, with a focus on performance and innovation across various sports and demographics [25][34] - The company aims to clean up the marketplace and reposition NIKE Digital as a full-price business, reducing promotional days and markdown rates [68][70] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by global economic uncertainty but expressed confidence in the strategic actions taken to drive progress [11][41] - The company expects Q4 revenues to decline in the mid-teens range, with gross margins projected to decrease by approximately 400 to 500 basis points [74][75] - Management is optimistic about the potential for performance growth to offset declines in classic footwear franchises in the upcoming quarters [110][116] Other Important Information - The company is launching a new brand, NIKESKIMS, aimed at creating a new market of style-led products [33] - The integrated marketplace strategy focuses on creating consumer-led experiences across both NIKE Direct and wholesale partners [35] Q&A Session Summary Question: Timeline for cleaning classic shoe inventories in wholesale and direct channels - Management emphasized the importance of right-sizing inventory for classic franchises and expects to reduce their contribution significantly in the upcoming fiscal year [91][94] Question: Thoughts on innovation strength and pipeline - Management expressed confidence in the innovation team and highlighted upcoming products, particularly in performance and sportswear categories [106][108] Question: Expectation for performance growth to offset classic declines - Management indicated growing confidence in the product pipeline and the need to reset the marketplace for better sell-through [114][116] Question: Balancing promotions while presenting new products - Management outlined plans to liquidate non-selling products through value channels while elevating the presentation of new innovations [125][126] Question: Long-term balance of overhead versus demand creation - Management is focused on tightly managing overhead while increasing investment in demand creation, reflecting a shift in strategy [130][132]