NIKE(US:NKE)2025-12-18 23:00Financial Data and Key Metrics Changes - Revenues for Q2 were up 1% on a reported basis and flat on a currency-neutral basis, with Nike Direct down 9% and Nike Digital declining 14% [20][22] - Gross margins declined 300 basis points to 40.6% on a reported basis, primarily due to increased product costs from higher tariffs and inventory obsolescence in Greater China [21][19] - Earnings per share was $0.53, with inventory decreasing 3% versus the prior year [22] Business Line Data and Key Metrics Changes - The Nike brand grew this quarter, with 8% wholesale growth and a strong mix, while classic footwear franchises are expected to decline by over $4 billion by fiscal year-end [7][17] - Running grew by over 20% for the second consecutive quarter, with significant growth in Nike-owned stores, Nike Digital, and wholesale [12][24] - Nike's Classics business is being right-sized, and the company is diversifying its product portfolio [5][6] Market Data and Key Metrics Changes - North America saw a revenue growth of 9%, with wholesale growing 24% and EBIT declining 8% [23][22] - Greater China experienced a revenue decline of 16%, with Nike Direct down 18% and wholesale down 15% [26][22] - EMEA revenue was down 1%, with a decline in Nike Direct and Nike Stores, while wholesale was flat [25] Company Strategy and Development Direction - The company is focused on executing its "Win Now Actions" and "Sport Offense" strategies to drive growth through athlete-centered innovation and a diversified product portfolio [5][6] - There is a strong emphasis on reconnecting with partners and enhancing consumer experiences, particularly in North America [8][9] - The company is adapting its approach in Greater China to better fit the local market dynamics and improve brand positioning [10][54] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the recovery will not be linear, with different brands and geographies recovering at varying speeds [18][45] - There is confidence in the long-term potential of the China market, despite current challenges, and a commitment to returning to a premium brand position [10][54] - The company expects Q3 revenues to be down low single digits, with gross margins projected to decline approximately 175-225 basis points [31] Other Important Information - The company is making significant investments in product innovation, with new launches planned across various sports and categories [12][59] - A leadership change was made to enhance operational efficiency and integrate technology across the company [15][16] Q&A Session Questions and Answers Question: Can you elaborate on the turnarounds and where opportunities remain? - Management highlighted that the path back to sustainable growth is through the Win Now Actions, with North America showing strong momentum and a healthier base for growth [36][38] Question: When will the recovery be more visible and less linear? - Management indicated that each geography and brand is at different stages, making it difficult to provide a specific timeline for recovery [44][45] Question: What is the timeline for returning to double-digit EBIT margins? - Management stated that improving margins is a top priority, with a clear path back to double-digit EBIT margins through growth and operational efficiency [48][50] Question: How deep of a reset is necessary in China? - Management acknowledged the need for a reset in China, focusing on cleaning up the marketplace and enhancing brand presentation [52][54]