NIKE(US:NKE)2025-12-18 23:02Financial Data and Key Metrics Changes - For Q2 fiscal 2026, revenues increased by 1% on a reported basis and were flat on a currency-neutral basis, with Nike Direct down 9% and Nike Digital down 14% [24][21] - Gross margins declined by 300 basis points to 40.6% primarily due to increased product costs from higher tariffs and inventory obsolescence in Greater China [24][23] - Earnings per share was reported at $0.53, with inventory decreasing by 3% year-over-year [25][24] Business Line Data and Key Metrics Changes - The wholesale segment grew by 8%, while classic footwear franchises declined over 20% year-over-year, contributing to a top-line headwind of approximately $550 million [24][21] - Running grew by over 20% for the second consecutive quarter, with significant growth across all channels, including Nike Direct [14][21] - Nike's North America revenue grew by 9%, with wholesale growing by 24%, while Nike Direct declined by 10% [26][25] Market Data and Key Metrics Changes - In North America, gross margins only declined by 330 basis points despite a 520 basis point impact from new U.S. tariffs, indicating effective management of the marketplace [28][27] - Greater China saw a revenue decline of 16%, with Nike Direct down 18% and wholesale down 15% [30][29] - EMEA revenue was down 1%, with a decline in Nike Direct and Nike Stores, while wholesale remained flat [29][28] Company Strategy and Development Direction - The company is focused on executing "Win Now Actions" to reposition its business and drive growth through a diversified product portfolio and enhanced consumer connections [5][6] - The "Sport Offense" strategy aims to leverage athlete-centered innovation across various channels to drive growth [5][6] - The company is committed to returning to double-digit EBIT margins, with a focus on improving operational efficiency and managing costs [19][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the recovery will not be linear, with different brands and geographies recovering at varying speeds [22][21] - There is confidence in the long-term potential of the China market, despite current challenges, with plans to reset the approach to better align with local consumer preferences [11][30] - The company expects Q3 revenues to be down low single digits, with modest growth anticipated in North America [33][34] Other Important Information - The company is implementing changes in leadership to enhance decision-making and strategy execution across geographies [9][10] - Significant investments are being made in marketing and product innovation to support the recovery and growth strategy [19][20] Q&A Session Summary Question: Can you elaborate on the turnarounds and opportunities remaining? - Management highlighted that the path to sustainable growth is through "Win Now Actions" and the "Sport Offense," with North America showing strong growth and a healthier base for future growth [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 [57][58] Question: How deep is the reset necessary in China? - Management indicated that a reset is necessary to return to a premium brand position, with ongoing actions to clean up the marketplace and improve retail presentation [61][62]