NIKE(NKE) - 2026 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q3 2026 were flat on a reported basis and down 3% on a currency-neutral basis [21] - NIKE Direct declined 7%, with NIKE Digital down 9% and NIKE stores down 5% [21] - Gross margins decreased by 130 basis points to 40.2%, primarily due to higher tariffs in North America [22] - Earnings per share was $0.35 [23] - Inventory decreased by 1% versus the prior year, with units down mid-single digits [23] Business Line Data and Key Metrics Changes - Nike Running grew over 20% for the quarter, while sportswear declined low double digits [9][20] - Wholesale grew 1%, but NIKE Direct and NIKE Digital saw declines [21] - The performance business showed double-digit growth in running, while sportswear continued to be a headwind [20][28] Market Data and Key Metrics Changes - North America revenue grew 3%, with running and global football showing double-digit growth [25] - EMEA revenue was down 7%, with NIKE Direct declining 13% and wholesale down 4% [27] - Greater China revenue declined 10%, with NIKE Direct down 5% and wholesale down 13% [29] - APLA revenue was down 2%, with NIKE Direct declining 8% [31] Company Strategy and Development Direction - The company is focused on a "win now" strategy to improve the health and quality of its business, with a clear plan to complete these actions by the end of the calendar year [7][34] - Emphasis on athlete-centered innovation and building platforms that can scale across multiple sports and price points [5][12] - The company is rebalancing its approach from a NIKE Direct first offense to an integrated marketplace strategy [12][60] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the comeback is taking longer than expected but remains confident in the strategic direction [34][38] - The company is addressing structural challenges in various markets, particularly in Greater China, and is optimistic about future growth opportunities [18][29] - Management expects revenues to be down low single digits for the next nine months, with North America showing modest growth [33][54] Other Important Information - The company plans to share a more detailed long-term view of the business at an Investor Day later in the year [8] - Significant actions have been taken to clean up the marketplace and manage inventory effectively [21][44] Q&A Session Summary Question: EMEA performance issues and strategy to fix it - Management noted that EMEA faced both progress and challenges, with running showing growth but sportswear underperforming due to macro pressures and increased promotions [42][43] Question: Revenue guidance and impact of Greater China - Management confirmed that while North America is expected to grow, Greater China will face headwinds due to reduced sell-in and marketplace management actions [48][54] Question: Health of D2C gross margins and severance costs - Management emphasized the importance of a balanced marketplace and noted improvements in the quality of D2C sales, particularly in North America [58][60] Question: Stabilization of the sportswear business - Management indicated a shift from defense to offense in sportswear, with some positive signs in classic franchises like Air Force 1 and AJ1 [70][72] Question: Internal vs. external challenges in turnaround efforts - Management acknowledged both internal restructuring and external market conditions as factors in the turnaround taking longer than expected [76][79] Question: Global sportswear outlook - Management provided insights into the current state of the sportswear market and the company's strategies to navigate challenges and capitalize on opportunities [81]