NIKE, Inc. [NKE] Filings

10-Q 1 nke-20240831.htm 10-Q nke-20240831

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO .

Commission File No. 1-10635

NIKE, Inc.

(Exact name of Registrant as specified in its charter)


Oregon						93-0584541
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One Bowerman Drive, Beaverton, Oregon 97005-6453

(Address of principal executive offices and zip code)

(503) 671-6453

(Registrant's telephone number, including area code)


SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Class B Common Stock	NKE	New York Stock Exchange
(Title of each class)	(Trading symbol)	(Name of each exchange on which registered)

Indicate by check mark:

Yes

•

whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☐

•

whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☐

•

whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

•

if an emerging growth company, if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

•

whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

☐


As of September 30, 2024, the number of shares of the Registrant's Common Stock outstanding were:
Class A			297,897,252
Class B			1,190,598,484
			1,488,495,736

Table of Contents

NIKE, INC.

FORM 10-Q

TABLE OF CONTENTS


		PAGE
PART I - FINANCIAL INFORMATION		1
ITEM 1.	Financial Statements	1
	Unaudited Condensed Consolidated Statements of Income	1
	Unaudited Condensed Consolidated Statements of Comprehensive Income	2
	Unaudited Condensed Consolidated Balance Sheets	3
	Unaudited Condensed Consolidated Statements of Cash Flows	4
	Unaudited Condensed Consolidated Statements of Shareholders' Equity	5
	Notes to the Unaudited Condensed Consolidated Financial Statements	6
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	33
ITEM 4.	Controls and Procedures	33
PART II - OTHER INFORMATION		35
ITEM 1.	Legal Proceedings	35
ITEM 1A.	Risk Factors	35
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
ITEM 5.	Other Information	37
ITEM 6.	Exhibits	38
	Signatures	39

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NIKE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	THREE MONTHS ENDED AUGUST 31,
(In millions, except per share data)	2024		2023
Revenues	$	11,589	$	12,939
Cost of sales	6,332		7,219
Gross profit	5,257		5,720
Demand creation expense	1,226		1,069
Operating overhead expense	2,822		3,047
Total selling and administrative expense	4,048		4,116
Interest expense (income), net	(43)		(34)
Other (income) expense, net	(55)		(10)
Income before income taxes	1,307		1,648
Income tax expense	256		198
NET INCOME	$	1,051	$	1,450
Earnings per common share:
Basic	$	0.70	$	0.95
Diluted	$	0.70	$	0.94
Weighted average common shares outstanding:
Basic	1,497.7		1,528.4
Diluted	1,502.0		1,543.3

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

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NIKE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)	2024		2023
Net income	$	1,051	$	1,450
Other comprehensive income (loss), net of tax:
Change in net foreign currency translation adjustment	138		36
Change in net gains (losses) on cash flow hedges	(227)		(134)
Change in net gains (losses) on other	9		3
Total other comprehensive income (loss), net of tax	(80)		(95)
TOTAL COMPREHENSIVE INCOME	$	971	$	1,355

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

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NIKE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


	AUGUST 31,		MAY 31,
(In millions)	2024		2024
ASSETS
Current assets:
Cash and equivalents	$	8,485	$	9,860
Short-term investments	1,809		1,722
Accounts receivable, net	4,764		4,427
Inventories	8,253		7,519
Prepaid expenses and other current assets	1,729		1,854
Total current assets	25,040		25,382
Property, plant and equipment, net	4,948		5,000
Operating lease right-of-use assets, net	2,792		2,718
Identifiable intangible assets, net	259		259
Goodwill	240		240
Deferred income taxes and other assets	4,588		4,511
TOTAL ASSETS	$	37,867	$	38,110
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	1,000	$	1,000
Notes payable	12		6
Accounts payable	3,357		2,851
Current portion of operating lease liabilities	491		477
Accrued liabilities	5,075		5,725
Income taxes payable	693		534
Total current liabilities	10,628		10,593
Long-term debt	7,998		7,903
Operating lease liabilities	2,625		2,566
Deferred income taxes and other liabilities	2,672		2,618
Commitments and contingencies (Note 11)
Redeemable preferred stock	—		—
Shareholders' equity:
Common stock at stated value:
Class A convertible — 298 and 298 shares outstanding	—		—
Class B — 1,193 and 1,205 shares outstanding	3		3
Capital in excess of stated value	13,557		13,409
Accumulated other comprehensive income (loss)	(27)		53
Retained earnings	411		965
Total shareholders' equity	13,944		14,430
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	37,867	$	38,110

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

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NIKE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)	2024		2023
Cash provided (used) by operations:
Net income	$	1,051	$	1,450
Adjustments to reconcile net income to net cash provided (used) by operations:
Depreciation	188		191
Deferred income taxes	(53)		(68)
Stock-based compensation	183		196
Amortization, impairment and other	(4)		(5)
Net foreign currency adjustments	(7)		(7)
Changes in certain working capital components and other assets and liabilities:
(Increase) decrease in accounts receivable	(312)		(621)
(Increase) decrease in inventories	(679)		(263)
(Increase) decrease in prepaid expenses, operating lease right-of-use assets and other current and non-current assets	(265)		(225)
Increase (decrease) in accounts payable, accrued liabilities, operating lease liabilities and other current and non-current liabilities	292		(714)
Cash provided (used) by operations	394		(66)
Cash provided (used) by investing activities:
Purchases of short-term investments	(968)		(1,144)
Maturities of short-term investments	144		778
Sales of short-term investments	778		1,038
Additions to property, plant and equipment	(120)		(253)
Other investing activities	—		(1)
Cash provided (used) by investing activities	(166)		418
Cash provided (used) by financing activities:
Increase (decrease) in notes payable, net	6		—
Proceeds from exercise of stock options and other stock issuances	131		99
Repurchase of common stock	(1,184)		(1,133)
Dividends — common and preferred	(558)		(524)
Other financing activities	(17)		(41)
Cash provided (used) by financing activities	(1,622)		(1,599)
Effect of exchange rate changes on cash and equivalents	19		(16)
Net increase (decrease) in cash and equivalents	(1,375)		(1,263)
Cash and equivalents, beginning of period	9,860		7,441
CASH AND EQUIVALENTS, END OF PERIOD	$	8,485	$	6,178
Supplemental disclosure of cash flow information:
Non-cash additions to property, plant and equipment	$	48	$	148
Dividends declared and not paid	554		519

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

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NIKE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


	COMMON STOCK						CAPITAL IN EXCESS OF STATED VALUE		ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)		RETAINED EARNINGS		TOTAL
	CLASS A			CLASS B
(In millions, except per share data)	SHARES	AMOUNT		SHARES	AMOUNT
Balance at May 31, 2024	298	$	—	1,205	$	3	$	13,409	$	53	$	965	$	14,430
Stock options exercised				3			124						124
Repurchase of Class B Common Stock				(15)			(132)				(1,061)		(1,193)
Dividends on common stock ($0.370 per share) and preferred stock at $0.10 per share											(554)		(554)
Issuance of shares to employees, net of shares withheld for employee taxes							(27)				10		(17)
Stock-based compensation							183						183
Net income											1,051		1,051
Other comprehensive income (loss)									(80)				(80)
Balance at August 31, 2024	298	$	—	1,193	$	3	$	13,557	$	(27)	$	411	$	13,944


	COMMON STOCK						CAPITAL IN EXCESS OF STATED VALUE		ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)		RETAINED EARNINGS		TOTAL
	CLASS A			CLASS B
(In millions, except per share data)	SHARES	AMOUNT		SHARES	AMOUNT
Balance at May 31, 2023	305	$	—	1,227	$	3	$	12,412	$	231	$	1,358	$	14,004
Stock options exercised				2			106						106
Conversion to Class B Common Stock	(7)			7									—
Repurchase of Class B Common Stock				(10)			(85)				(1,047)		(1,132)
Dividends on common stock ($0.340 per share) and preferred stock at $0.10 per share											(519)		(519)
Issuance of shares to employees, net of shares withheld for employee taxes							(39)						(39)
Stock-based compensation							196						196
Net income											1,450		1,450
Other comprehensive income (loss)									(95)				(95)
Balance at August 31, 2023	298	$	—	1,226	$	3	$	12,590	$	136	$	1,242	$	13,971

The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1	Summary of Significant Accounting Policies	7
NOTE 2	Accrued Liabilities	7
NOTE 3	Fair Value Measurements	8
NOTE 4	Income Taxes	10
NOTE 5	Stock-Based Compensation	11
NOTE 6	Earnings Per Share	11
NOTE 7	Risk Management and Derivatives	12
NOTE 8	Accumulated Other Comprehensive Income (Loss)	14
NOTE 9	Revenues	15
NOTE 10	Operating Segments	16
NOTE 11	Commitments and Contingencies	18
NOTE 12	Restructuring	18
NOTE 13	Supplier Finance Programs	18

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NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Unaudited Condensed Consolidated Financial Statements include the accounts of NIKE, Inc. and its subsidiaries (the "Company" or "NIKE") and reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results of operations for the interim period. The year-end Condensed Consolidated Balance Sheet data as of May 31, 2024, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). The interim financial information and notes thereto should be read in conjunction with the Company's latest Annual Report on Form 10-K for the fiscal year ended May 31, 2024 (the "Annual Report"). The results of operations for the three months ended August 31, 2024, are not necessarily indicative of results to be expected for the entire fiscal year.

RECENTLY ISSUED ACCOUNTING STANDARDS AND DISCLOSURE RULES

In November 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses regularly provided to the chief operating decision maker and included within segment profit and loss. The amendments are effective for the Company's annual periods beginning June 1, 2024, and interim periods beginning June 1, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company's annual periods beginning June 1, 2025, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

In March 2024, the U.S. Securities and Exchange Commission ("SEC") adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule would require registrants to disclose certain climate-related information in registration statements and annual reports. In April 2024, the SEC voluntarily stayed the final rule as a result of pending and legal challenges. The disclosure requirements would apply to the Company's fiscal year beginning June 1, 2025, pending resolution of the stay. The Company is currently evaluating the final rule to determine its impact on the Company's disclosures.


NOTE 2 — ACCRUED LIABILITIES

Accrued liabilities included the following:


	AUGUST 31,		MAY 31,
(Dollars in millions)	2024		2024
Compensation and benefits, excluding taxes	$	1,073	$	1,291
Sales-related reserves	1,200		1,282
Dividends payable	559		563
Endorsement compensation	283		578

Other	1,960		2,011
TOTAL ACCRUED LIABILITIES	$	5,075	$	5,725

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NOTE 3 — FAIR VALUE MEASUREMENTS

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including derivatives, equity securities and available-for-sale debt securities.

The following tables present information about the Company's financial assets measured at fair value on a recurring basis as of August 31, 2024 and May 31, 2024, and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:


	AUGUST 31, 2024
(Dollars in millions)	ASSETS AT FAIR VALUE		CASH AND EQUIVALENTS		SHORT-TERM INVESTMENTS
Cash	$	1,768	$	1,768	$	—
Level 1:
U.S. Treasury securities	1,194		13		1,181
Level 2:
Commercial paper and bonds	615		19		596
Money market funds	6,456		6,456		—
Time deposits	236		229		7
U.S. Agency securities	25		—		25
Total Level 2	7,332		6,704		628
TOTAL	$	10,294	$	8,485	$	1,809


	MAY 31, 2024
(Dollars in millions)	ASSETS AT FAIR VALUE		CASH AND EQUIVALENTS		SHORT-TERM INVESTMENTS
Cash	$	1,222	$	1,222	$	—
Level 1:
U.S. Treasury securities	1,175		155		1,020
Level 2:
Commercial paper and bonds	591		17		574
Money market funds	8,119		8,119		—
Time deposits	440		347		93
U.S. Agency securities	35		—		35
Total Level 2	9,185		8,483		702
TOTAL	$	11,582	$	9,860	$	1,722

As of August 31, 2024, the Company held $1,038 million of available-for-sale debt securities with maturity dates within one year and $771 million with maturity dates greater than one year and less than five years in Short-term investments on the Unaudited Condensed Consolidated Balance Sheets. The fair value of the Company's available-for-sale debt securities approximates their amortized cost.

Included in Interest expense (income), net was interest income related to the Company's investment portfolio of $120 million and $99 million for the three months ended August 31, 2024 and 2023, respectively.

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The following tables present information about the Company's derivative assets and liabilities measured at fair value on a recurring basis and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:


	AUGUST 31, 2024
	DERIVATIVE ASSETS						DERIVATIVE LIABILITIES
(Dollars in millions)	ASSETS AT FAIR VALUE		OTHER CURRENT ASSETS		OTHER LONG-TERM ASSETS		LIABILITIES AT FAIR VALUE		ACCRUED LIABILITIES		OTHER LONG-TERM LIABILITIES
Level 2:
Foreign exchange forwards and options(1)	$	175	$	165	$	10	$	198	$	167	$	31
Interest rate swaps(1)	63		—		63		—		—		—
TOTAL	$	238	$	165	$	73	$	198	$	167	$	31

(1)If the derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $141 million as of August 31, 2024. As of that date, the Company received $34 million of cash collateral and $12 million of securities from various counterparties on the derivative asset balance and posted $45 million cash collateral on the derivative liability balance.


	MAY 31, 2024
	DERIVATIVE ASSETS						DERIVATIVE LIABILITIES
(Dollars in millions)	ASSETS AT FAIR VALUE		OTHER CURRENT ASSETS		OTHER LONG-TERM ASSETS		LIABILITIES AT FAIR VALUE		ACCRUED LIABILITIES		OTHER LONG-TERM LIABILITIES
Level 2:
Foreign exchange forwards and options(1)	$	343	$	299	$	44	$	120	$	115	$	5
Interest rate swaps(1)	—		—		—		31		—		31
TOTAL	$	343	$	299	$	44	$	151	$	115	$	36

(1)If the derivative instruments had been netted on the Consolidated Balance Sheets, the asset and liability positions each would have been reduced by $142 million as of May 31, 2024. As of that date, the Company received $112 million of cash collateral from various counterparties on the derivative asset balance and posted $10 million cash collateral on the derivative liability balance.

For additional information related to the Company's derivative financial instruments and credit risk, refer to Note 7 — Risk Management and Derivatives.

The carrying amounts of other current financial assets and other current financial liabilities approximate fair value.

FINANCIAL ASSETS AND LIABILITIES NOT RECORDED AT FAIR VALUE

The Company's Long-term debt is recorded at adjusted cost, net of unamortized premiums, discounts, debt issuance costs and interest rate swap fair value adjustments. The fair value of long-term debt is estimated based upon quoted prices for similar instruments or quoted prices for identical instruments in inactive markets (Level 2). The fair value of the Company's Long-term debt was approximately $7,932 million at August 31, 2024 and $7,631 million at May 31, 2024.

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NOTE 4 — INCOME TAXES

The effective tax rate was 19.6% and 12.0% for the three months ended August 31, 2024 and 2023, respectively. The increase in the Company's effective tax rate was primarily due to a one-time benefit recognized in the first three months of fiscal 2024 from the impact of temporary relief provided by the Internal Revenue Service ("IRS") relating to U.S. foreign tax credit regulations. On July 21, 2023, the IRS issued Notice 2023-55 which specifically delayed the application of certain U.S. foreign tax credit regulations that had previously limited the Company's ability to claim credits on certain foreign taxes for the fiscal year ended May 31, 2023. As a result of this guidance, the Company recognized a one-time tax benefit related to fiscal 2023 tax positions in the first three months of fiscal 2024.

The Organization for Economic Co-operation and Development (OECD) and the G20 Inclusive Framework on Base Erosion and Profit Shifting (the “Inclusive Framework”) have put forth Pillar Two proposals that ensure a minimal level of taxation. Several countries in which the Company operates, including several European Union member states, have adopted domestic legislation to implement the Inclusive Framework’s global corporate minimum tax rate of fifteen percent. This legislation became effective for the Company beginning June 1, 2024. Based on the Company’s current analysis of Pillar Two provisions, these tax law changes did not have a material impact on the Company's financial statements for the first three months of fiscal 2025 and are not expected to for fiscal 2025.

As of August 31, 2024, total gross unrecognized tax benefits, excluding related interest and penalties, were $999 million, $709 million of which would affect the Company's effective tax rate if recognized in future periods. The majority of the total gross unrecognized tax benefits are long-term in nature and included within Deferred income taxes and other liabilities on the Unaudited Condensed Consolidated Balance Sheets. As of May 31, 2024, total gross unrecognized tax benefits, excluding related interest and penalties, were $990 million. As of August 31, 2024 and May 31, 2024, accrued interest and penalties related to uncertain tax positions were $346 million and $332 million, respectively, (excluding federal benefit) and included within Deferred income taxes and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.

The Company is subject to taxation in the U.S., as well as various state and foreign jurisdictions. The Company is currently under audit by the U.S. IRS for fiscal years 2017 through 2019. The Company has closed all U.S. federal income tax matters through fiscal 2016, with the exception of certain transfer pricing adjustments.

Tax years after 2011 remain open in certain major foreign jurisdictions. Although the timing of resolution of audits is not certain, the Company evaluates all domestic and foreign audit issues in the aggregate, along with the expiration of applicable statutes of limitations, and estimates that it is reasonably possible the total gross unrecognized tax benefits could decrease by up to $20 million within the next 12 months.

In January 2019, the European Commission opened a formal investigation to examine whether the Netherlands has breached State Aid rules when granting certain tax rulings to the Company. The Company believes the investigation is without merit. If this matter is adversely resolved, the Netherlands may be required to assess additional amounts with respect to prior periods, and the Company's income taxes related to prior periods in the Netherlands could increase.

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NOTE 5 — STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

The NIKE, Inc. Stock Incentive Plan (the "Stock Incentive Plan") provides for the issuance of up to 798 million previously unissued shares of Class B Common Stock in connection with equity awards granted under the Stock Incentive Plan. The Stock Incentive Plan authorizes the grant of non-statutory stock options, incentive stock options, stock appreciation rights and stock awards, including restricted stock and restricted stock units. Restricted stock units include both time-vesting restricted stock units ("RSUs") as well as performance-based restricted stock units ("PSUs"). In addition to the Stock Incentive Plan, the Company gives employees the right to purchase shares at a discount from the market price under employee stock purchase plans ("ESPPs").

The following table summarizes the Company's total stock-based compensation expense recognized in Cost of sales or Operating overhead expense, as applicable:


	THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)	2024		2023
Stock options(1)	$	71	$	76
ESPPs	13		21
Restricted stock and restricted stock units(1)(2)	99		99
TOTAL STOCK-BASED COMPENSATION EXPENSE	$	183	$	196

(1)Expense for stock options includes the expense associated with stock appreciation rights.

(2)Expense for restricted stock units includes an immaterial amount of expense for PSUs.

STOCK OPTIONS

As of August 31, 2024, the Company had $324 million of unrecognized compensation costs from stock options, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.4 years.

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

As of August 31, 2024, the Company had $517 million of unrecognized compensation costs from restricted stock and restricted stock units, net of estimated forfeitures, to be recognized in Cost of sales or Operating overhead expense, as applicable, over a weighted average remaining period of 2.3 years.


NOTE 6 — EARNINGS PER SHARE

The following is a reconciliation from basic earnings per common share to diluted earnings per common share. The computations of diluted earnings per common share exclude restricted stock, restricted stock units and options, including shares under ESPPs, to purchase an estimated additional 61.1 million and 33.7 million shares of common stock outstanding for the three months ended August 31, 2024 and 2023, respectively, because the awards were assumed to be anti-dilutive.


	THREE MONTHS ENDED AUGUST 31,
(In millions, except per share data)	2024		2023
Net income available to common stockholders	$	1,051	$	1,450
Determination of shares:
Weighted average common shares outstanding	1,497.7		1,528.4
Assumed conversion of dilutive stock options and awards	4.3		14.9
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	1,502.0		1,543.3
Earnings per common share:
Basic	$	0.70	$	0.95
Diluted	$	0.70	$	0.94

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NOTE 7 — RISK MANAGEMENT AND DERIVATIVES

The Company is exposed to global market risks, including the effect of changes in foreign currency exchange rates and interest rates, and uses derivatives to manage financial exposures that occur in the normal course of business. As of and for the three months ended August 31, 2024, there have been no material changes to the Company's hedging program or strategy from what was disclosed within the Annual Report.

The majority of derivatives outstanding as of August 31, 2024, are designated as foreign currency cash flow hedges, primarily for Euro/U.S. Dollar, British Pound/Euro, Chinese Yuan/U.S. Dollar and Japanese Yen/U.S. Dollar currency pairs. All derivatives are recognized on the Unaudited Condensed Consolidated Balance Sheets at fair value and classified based on the instrument's maturity date.

The following tables present the fair values of derivative instruments included within the Unaudited Condensed Consolidated Balance Sheets:


	DERIVATIVE ASSETS
	BALANCE SHEET LOCATION	AUGUST 31,		MAY 31,
(Dollars in millions)		2024		2024
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	$	139	$	269
Foreign exchange forwards and options	Deferred income taxes and other assets	10		44
Interest rate swaps	Deferred income taxes and other assets	63		—
Total derivatives formally designated as hedging instruments		212		313
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Prepaid expenses and other current assets	26		30



Total derivatives not designated as hedging instruments		26		30
TOTAL DERIVATIVE ASSETS		$	238	$	343

	DERIVATIVE LIABILITIES
	BALANCE SHEET LOCATION	AUGUST 31,		MAY 31,
(Dollars in millions)		2024		2024
Derivatives formally designated as hedging instruments:
Foreign exchange forwards and options	Accrued liabilities	$	161	$	110
Foreign exchange forwards and options	Deferred income taxes and other liabilities	31		5
Interest rate swaps	Deferred income taxes and other liabilities	—		31
Total derivatives formally designated as hedging instruments		192		146
Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	Accrued liabilities	6		5



Total derivatives not designated as hedging instruments		6		5
TOTAL DERIVATIVE LIABILITIES		$	198	$	151

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The following tables present the amounts affecting the Unaudited Condensed Consolidated Statements of Income:


(Dollars in millions)	AMOUNT OF GAIN (LOSS) RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS) ON DERIVATIVES(1)				AMOUNT OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME(1)
	THREE MONTHS ENDED AUGUST 31,				LOCATION OF GAIN (LOSS) RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) INTO INCOME	THREE MONTHS ENDED AUGUST 31,
	2024		2023			2024		2023
Derivatives designated as cash flow hedges:
Foreign exchange forwards and options	$	(44)	$	(18)	Revenues	$	(21)	$	1
Foreign exchange forwards and options	(98)		(2)		Cost of sales	70		86
Foreign exchange forwards and options	—		—		Demand creation expense	—		—
Foreign exchange forwards and options	(29)		(10)		Other (income) expense, net	30		35
Interest rate swaps(2)	—		—		Interest expense (income), net	(2)		(2)
TOTAL DESIGNATED CASH FLOW HEDGES	$	(171)	$	(30)		$	77	$	120

(1)For the three months ended August 31, 2024 and 2023, the amounts recorded in Other (income) expense, net as a result of the discontinuance of cash flow hedges because the forecasted transactions were no longer probable of occurring were immaterial.

(2)Gains and losses associated with terminated interest rate swaps, which were previously designated as cash flow hedges and recorded in Accumulated other comprehensive income (loss), will be released through Interest expense (income), net over the term of the issued debt.


	AMOUNT OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES				LOCATION OF GAIN (LOSS) RECOGNIZED IN INCOME ON DERIVATIVES
	THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)	2024		2023


Derivatives not designated as hedging instruments:
Foreign exchange forwards and options	$	—	$	(27)		Other (income) expense, net

CASH FLOW HEDGES

The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was approximately $16.6 billion and $16.2 billion as of August 31, 2024 and May 31, 2024, respectively. Approximately $63 million of deferred net gains (net of tax) on both outstanding and matured derivatives in Accumulated other comprehensive income (loss) as of August 31, 2024, are expected to be reclassified to Net income during the next 12 months concurrent with the underlying hedged transactions also being recorded in Net income. Actual amounts ultimately reclassified to Net income are dependent on the exchange rates in effect when derivative contracts currently outstanding mature. As of August 31, 2024, the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted transactions was 27 months.

FAIR VALUE HEDGES

The total notional amount of outstanding interest rate swap contracts designated as fair value hedges was $1.8 billion as of August 31, 2024 and May 31, 2024.

UNDESIGNATED DERIVATIVE INSTRUMENTS

The total notional amount of outstanding undesignated derivative instruments was $3.8 billion and $4.4 billion as of August 31, 2024 and May 31, 2024, respectively.

CREDIT RISK

As of August 31, 2024, the Company was in compliance with all credit risk-related contingent features and considers the impact of the risk of counterparty default to be immaterial. For additional information related to the Company's derivative financial instruments and collateral, refer to Note 3 — Fair Value Measurements.

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NOTE 8 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in Accumulated other comprehensive income (loss), net of tax, were as follows:


(Dollars in millions)	FOREIGN CURRENCY TRANSLATION ADJUSTMENT(1)		CASH FLOW HEDGES		NET INVESTMENT HEDGES(1)		OTHER		TOTAL
Balance at May 31, 2024	$	(256)	$	247	$	115	$	(53)	$	53
Other comprehensive income (loss):
Other comprehensive gains (losses) before reclassifications(2)	137		(151)		—		7		(7)
Reclassifications to net income of previously deferred (gains) losses(2)(3)	1		(76)		—		2		(73)
Total other comprehensive income (loss)	138		(227)		—		9		(80)
Balance at August 31, 2024	$	(118)	$	20	$	115	$	(44)	$	(27)

(1)The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or upon complete or substantially complete liquidation of the respective entity.

(2)Net of immaterial tax impact.

(3)Reclassifications to net income of previously deferred (gains) losses are recorded within Other (income) expense, net for foreign currency translation adjustment, net investment hedges, and other.


(Dollars in millions)	FOREIGN CURRENCY TRANSLATION ADJUSTMENT(1)		CASH FLOW HEDGES		NET INVESTMENT HEDGES(1)		OTHER		TOTAL
Balance at May 31, 2023	$	(253)	$	431	$	115	$	(62)	$	231
Other comprehensive income (loss):
Other comprehensive gains (losses) before reclassifications(2)	36		(23)		—		—		13
Reclassifications to net income of previously deferred (gains) losses(2)(3)	—		(111)		—		3		(108)
Total other comprehensive income (loss)	36		(134)		—		3		(95)
Balance at August 31, 2023	$	(217)	$	297	$	115	$	(59)	$	136

(2)Net of immaterial tax impact.

(3)Reclassifications to net income of previously deferred (gains) losses are recorded within Other (income) expense, net for foreign currency translation adjustment, net investment hedges, and other.

For additional information related to the Company's cash flow hedges refer to Note 7 — Risk Management and Derivatives.

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NOTE 9 — REVENUES

DISAGGREGATION OF REVENUES

The following tables present the Company's Revenues disaggregated by reportable operating segment, major product line and distribution channel:


	THREE MONTHS ENDED AUGUST 31, 2024
(Dollars in millions)	NORTH AMERICA		EUROPE, MIDDLE EAST & AFRICA		GREATER CHINA		ASIA PACIFIC & LATIN AMERICA		GLOBAL BRAND DIVISIONS		TOTAL NIKE BRAND		CONVERSE		CORPORATE		TOTAL NIKE, INC.
Revenues by:
Footwear	$	3,212	$	1,952	$	1,246	$	1,052	$	—	$	7,462	$	436	$	—	$	7,898
Apparel	1,331		993		360		348		—		3,032		17		—		3,049
Equipment	283		198		60		62		—		603		12		—		615
Other	—		—		—		—		14		14		36		(23)		27
TOTAL REVENUES	$	4,826	$	3,143	$	1,666	$	1,462	$	14	$	11,111	$	501	$	(23)	$	11,589
Revenues by:
Sales to Wholesale Customers	$	2,475	$	2,074	$	971	$	890	$	—	$	6,410	$	275	$	—	$	6,685
Sales through Direct to Consumer	2,351		1,069		695		572		—		4,687		190		—		4,877
Other	—		—		—		—		14		14		36		(23)		27
TOTAL REVENUES	$	4,826	$	3,143	$	1,666	$	1,462	$	14	$	11,111	$	501	$	(23)	$	11,589


	THREE MONTHS ENDED AUGUST 31, 2023
(Dollars in millions)	NORTH AMERICA		EUROPE, MIDDLE EAST & AFRICA		GREATER CHINA		ASIA PACIFIC & LATIN AMERICA		GLOBAL BRAND DIVISIONS		TOTAL NIKE BRAND		CONVERSE		CORPORATE		TOTAL NIKE, INC.
Revenues by:
Footwear	$	3,733	$	2,260	$	1,287	$	1,141	$	—	$	8,421	$	522	$	—	$	8,943
Apparel	1,479		1,137		401		371		—		3,388		20		—		3,408
Equipment	211		213		47		60		—		531		11		—		542
Other	—		—		—		—		13		13		35		(2)		46
TOTAL REVENUES	$	5,423	$	3,610	$	1,735	$	1,572	$	13	$	12,353	$	588	$	(2)	$	12,939
Revenues by:
Sales to Wholesale Customers	$	2,772	$	2,379	$	895	$	937	$	—	$	6,983	$	329	$	—	$	7,312
Sales through Direct to Consumer	2,651		1,231		840		635		—		5,357		224		—		5,581
Other	—		—		—		—		13		13		35		(2)		46
TOTAL REVENUES	$	5,423	$	3,610	$	1,735	$	1,572	$	13	$	12,353	$	588	$	(2)	$	12,939

Global Brand Divisions revenues included NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. Converse Other revenues were primarily attributable to licensing businesses. Corporate revenues primarily consisted of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through the Company's central foreign exchange risk management program.

As of August 31, 2024 and May 31, 2024, the Company did not have any contract assets and had an immaterial amount of contract liabilities recorded in Accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets.

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NOTE 10 — OPERATING SEGMENTS

The Company's operating segments are evidence of the structure of the Company's internal organization. The NIKE Brand segments are defined by geographic regions for operations participating in NIKE Brand sales activity.

Each NIKE Brand geographic segment operates predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel and equipment. The Company's reportable operating segments for the NIKE Brand are: North America; Europe, Middle East & Africa ("EMEA"); Greater China; and Asia Pacific & Latin America ("APLA"), and include results for the NIKE and Jordan brands.

The Company's NIKE Direct operations are managed within each NIKE Brand geographic operating segment. Converse is also a reportable segment for the Company and operates in one industry: the design, marketing, licensing and selling of athletic lifestyle sneakers, apparel and accessories.

Global Brand Divisions is included within the NIKE Brand for presentation purposes to align with the way management views the Company. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. Global Brand Divisions costs represent demand creation and operating overhead expense that include product creation and design expenses centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology.

Corporate consists primarily of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to the Company's headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses, including certain hedge gains and losses.

The primary financial measure used by the Company to evaluate performance of individual operating segments is earnings before interest and taxes ("EBIT"), which represents Net income before Interest expense (income), net, and Income taxes in the Unaudited Condensed Consolidated Statements of Income.

As part of the Company's centrally managed foreign exchange risk management program, standard foreign currency rates are assigned twice per year to each NIKE Brand entity in the Company's geographic operating segments and to Converse. These rates are set approximately nine and twelve months in advance of the future selling seasons to which they relate (specifically, for each currency, one standard rate applies to the fall and holiday selling seasons, and one standard rate applies to the spring and summer selling seasons) based on average market spot rates in the calendar month preceding the date they are established. Inventories and Cost of sales for geographic operating segments and Converse reflect the use of these standard rates to record non-functional currency product purchases in the entity's functional currency. Differences between assigned standard foreign currency rates and actual market rates are included in Corporate, together with foreign currency hedge gains and losses generated from the Company's centrally managed foreign exchange risk management program and other conversion gains and losses.

Accounts receivable, net, Inventories and Property, plant and equipment, net for operating segments are regularly reviewed by management and are therefore provided below.

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	THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)	2024		2023
REVENUES
North America	$	4,826	$	5,423
Europe, Middle East & Africa	3,143		3,610
Greater China	1,666		1,735
Asia Pacific & Latin America	1,462		1,572
Global Brand Divisions	14		13
Total NIKE Brand	11,111		12,353
Converse	501		588
Corporate	(23)		(2)
TOTAL NIKE, INC. REVENUES	$	11,589	$	12,939
EARNINGS BEFORE INTEREST AND TAXES
North America	$	1,216	$	1,434
Europe, Middle East & Africa	792		930
Greater China	502		525
Asia Pacific & Latin America	402		414
Global Brand Divisions	(1,227)		(1,205)
Converse	121		167
Corporate	(542)		(651)
Interest expense (income), net	(43)		(34)
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES	$	1,307	$	1,648


	AUGUST 31,		MAY 31,
(Dollars in millions)	2024		2024
ACCOUNTS RECEIVABLE, NET
North America	$	1,730	$	1,723
Europe, Middle East & Africa	1,466		1,239
Greater China	426		327
Asia Pacific & Latin America	793		792
Global Brand Divisions	103		103
Total NIKE Brand	4,518		4,184
Converse	226		201
Corporate	20		42
TOTAL ACCOUNTS RECEIVABLE, NET	$	4,764	$	4,427
INVENTORIES
North America	$	3,519	$	3,134
Europe, Middle East & Africa	2,064		2,028
Greater China	1,234		1,070
Asia Pacific & Latin America	977		810
Global Brand Divisions	158		166
Total NIKE Brand	7,952		7,208
Converse	313		296
Corporate	(12)		15
TOTAL INVENTORIES(1)	$	8,253	$	7,519

(1)Inventories as of August 31, 2024 and May 31, 2024, were substantially all finished goods.

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	AUGUST 31,		MAY 31,
(Dollars in millions)	2024		2024
PROPERTY, PLANT AND EQUIPMENT, NET
North America	$	716	$	744
Europe, Middle East & Africa	1,121		1,089
Greater China	252		258
Asia Pacific & Latin America	292		282
Global Brand Divisions	807		842
Total NIKE Brand	3,188		3,215
Converse	23		27
Corporate	1,737		1,758
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET	$	4,948	$	5,000

NOTE 11 — COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the Company is subject to various legal proceedings, claims and government investigations relating to its business, products and actions of its employees and representatives, including contractual and employment relationships, product liability, antitrust, customs, tax, intellectual property and other matters. The outcome of these legal matters is inherently uncertain, and the Company cannot predict the eventual outcome of currently pending matters, the timing of their ultimate resolution or the eventual losses, fines, penalties or consequences relating to those matters. When a loss related to a legal proceeding or claim is probable and reasonably estimable, the Company accrues its best estimate for the ultimate resolution of the matter. If one or more legal matters were to be resolved against the Company in a reporting period for amounts above management's expectations, the Company's financial position, operating results and cash flows for that reporting period could be materially adversely affected. In the opinion of management, based on its current knowledge and after consultation with counsel, the Company does not believe any currently pending legal matters will have a material adverse impact on the Company's results of operations, financial position or cash flows, except as described below.

BELGIAN CUSTOMS CLAIM

The Company has received claims for certain years from Belgian Customs and other government authorities for alleged underpaid duties related to products imported beginning in fiscal 2018. The Company disputes these claims and has engaged in the appellate process. The Company has issued bank guarantees in order to appeal the claims. At this time, the Company is unable to estimate the range of loss and cannot predict the final outcome as it could take several years to reach a resolution on this matter. If this matter is ultimately resolved against the Company, the amounts owed, including fines, penalties and other consequences relating to the matter, could have a material adverse effect on the Company's results of operations, financial position and cash flows.

NOTE 12 — RESTRUCTURING

During the third quarter of fiscal 2024, the Company announced a multi-year enterprise initiative designed to accelerate its future growth. As part of this initiative, management streamlined the organization which resulted in a net reduction in the Company's global workforce. During the three months ended August 31, 2024, the Company recognized an immaterial amount of pre-tax restructuring charges and made cash payments, primarily related to employee severance, of $217 million. Cash payments related to the restructuring are expected to be substantially paid by the end of the first half of fiscal 2025. As of August 31, 2024 and May 31, 2024, the amounts within Accrued liabilities on the Unaudited Condensed Consolidated Balance Sheets related to the pre-tax restructuring charges were $56 million and $267 million, respectively.

NOTE 13 — SUPPLIER FINANCE PROGRAMS

Certain financial institutions offer voluntary supplier finance programs facilitated through a third-party platform that provide participating suppliers the option to finance valid payment obligations from the Company. The Company is not a party to agreements negotiated between participating suppliers and third-party financial institutions. The Company's obligations to its suppliers, including amounts due and payment terms, are not affected by a supplier's decision to participate in these programs and the Company does not provide guarantees to third parties in connection with these programs. As of August 31, 2024 and May 31, 2024, the Company had $970 million and $840 million, respectively, of outstanding supplier obligations confirmed as valid under these programs. These amounts are included within Accounts payable on the Unaudited Condensed Consolidated Balance Sheets.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

NIKE designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and services worldwide. We are the largest seller of athletic footwear and apparel in the world. We sell our products through two distribution channels: NIKE Direct operations which are comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital") and to wholesale accounts, which include a mix of independent distributors, licensees and sales representatives in nearly all countries around the world. Our goal is to deliver value to our shareholders by building a profitable global portfolio of branded footwear, apparel, equipment and accessories businesses.

Our strategy is to achieve sustainable, profitable long-term revenue growth by creating innovative, "must-have" products, building deep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms and at retail. We are focused on growing the entire marketplace by increasing investment to elevate and differentiate our brand experience within our wholesale partners while also continuing to invest in our NIKE Direct operations.

We have completed the implementation of a new Enterprise Resource Planning ("ERP") Platform in our Greater China and North America geographies as part of a global rollout integrating wholesale and NIKE Direct operations and enhancing supply chain and finance capabilities. As a result, beginning with the first quarter of fiscal 2025, we have removed the non-GAAP financial measure of wholesale equivalent revenues. There is no change to our reported revenues or gross margin. We will continue to invest in the global rollout of the ERP Platform in our remaining geographies to serve our consumers at speed and scale.

QUARTERLY FINANCIAL HIGHLIGHTS

•NIKE, Inc. Revenues for the first quarter of fiscal 2025 were $11.6 billion compared to $12.9 billion for the first quarter of fiscal 2024

•NIKE Direct revenues were $4.7 billion for the first quarter of fiscal 2025 compared to $5.4 billion for the first quarter of fiscal 2024, and represented approximately 42% of total NIKE Brand revenues

•NIKE Brand wholesale revenues were $6.4 billion for the first quarter of fiscal 2025 compared to $7.0 billion for the first quarter of fiscal 2024

•Gross margin for the first quarter of fiscal 2025 increased 120 basis points to 45.4%, primarily due to lower NIKE Brand product costs, lower warehousing and logistics costs, and benefits from strategic pricing actions from the prior year

•Inventories as of August 31, 2024, were $8.3 billion, an increase of 10% compared to May 31, 2024, primarily driven by an increase in units

•We returned approximately $1.8 billion to our shareholders in the first quarter of fiscal 2025 through share repurchases and dividends

CURRENT ECONOMIC CONDITIONS AND OTHER FACTORS IMPACTING OUR BUSINESS

The operating environment could remain volatile in fiscal 2025 as the risk remains that the factors discussed below, among others, could have a material adverse impact on our future revenue growth as well as overall profitability.

•Consumer Spending: During the first quarter of fiscal 2025, consumers continued to spend more cautiously as macroeconomic and geopolitical conditions remain uncertain. We will continue to closely monitor these conditions and their impacts on consumer spending behavior.

•Product Portfolio Management: We are reducing the supply of certain footwear products as we scale new and innovative products across the marketplace and rebalance our footwear portfolio. This had a negative impact on our revenues in the first quarter of fiscal 2025.

•Marketplace Management: We are creating a more balanced channel mix as we move product from our NIKE Direct operations to our wholesale partners to ensure our products are in the path of the consumer. In the first quarter of fiscal 2025, we experienced a decline in traffic across NIKE Brand Digital and our retail stores which negatively impacted our revenues.

•Foreign Currency Impacts: As a global company with significant operations outside the United States, we are exposed to risk arising from changes in foreign currency exchange rates. For additional information, refer to "Foreign Currency Exposures and Hedging Practices".

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USE OF NON-GAAP FINANCIAL MEASURES

Throughout this Quarterly Report on Form 10-Q, we discuss non-GAAP financial measures, which should be considered in addition to, and not in lieu of, the financial measures calculated and presented in accordance with U.S. GAAP. References to these measures should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Management uses these non-GAAP measures when evaluating the Company's performance, including when making financial and operating decisions. Additionally, management believes these non-GAAP financial measures provide investors with additional financial information that should be considered when assessing our underlying business performance and trends.

Earnings Before Interest and Taxes ("EBIT"): Calculated as Net income before Interest expense (income), net and Income tax expense in the Unaudited Condensed Consolidated Statements of Income. Total NIKE, Inc. EBIT for the three months ended August 31, 2024 and August 31, 2023 are as follows:


	THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)	2024		2023
Net income	$	1,051	$	1,450
Add: Interest expense (income), net	(43)		(34)
Add: Income tax expense	256		198
Earnings before interest and taxes	$	1,264	$	1,614

EBIT margin: Calculated as total NIKE, Inc. EBIT divided by total NIKE, Inc. Revenues. Our EBIT margin calculation for the three months ended August 31, 2024 and August 31, 2023 are as follows:


	THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)	2024			2023
Numerator
Earnings before interest and taxes	$	1,264		$	1,614
Denominator
Total NIKE, Inc. Revenues	$	11,589		$	12,939
EBIT margin	10.9		%	12.5		%

Currency-neutral revenues: Currency-neutral revenues enhance visibility to underlying business trends, excluding the impact of translation arising from foreign currency exchange rate fluctuations. Currency-neutral revenues are calculated using actual exchange rates in use during the comparative prior year period in place of the exchange rates in use during the current period.

COMPARABLE STORE SALES

Comparable store sales: This key metric, which excludes NIKE Brand Digital sales, comprises revenues from NIKE-owned in-line and factory stores for which all three of the following requirements have been met: (1) the store has been open at least one year, (2) square footage has not changed by more than 15% within the past year and (3) the store has not been permanently repositioned within the past year. Comparable store sales represents a performance metric that we believe is useful information for management and investors in understanding the performance of our established NIKE-owned in-line and factory stores. Management considers this metric when making financial and operating decisions. The method of calculating comparable store sales varies across the retail industry. As a result, our calculation of this metric may not be comparable to similarly titled metrics used by other companies.

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RESULTS OF OPERATIONS


	THREE MONTHS ENDED AUGUST 31,
(Dollars in millions, except per share data)	2024			2023			% CHANGE
Revenues	$	11,589		$	12,939		-10	%
Cost of sales	6,332			7,219			-12	%
Gross profit	5,257			5,720			-8	%
Gross margin	45.4		%	44.2		%
Demand creation expense	1,226			1,069			15	%
Operating overhead expense	2,822			3,047			-7	%
Total selling and administrative expense	4,048			4,116			-2	%
% of revenues	34.9		%	31.8		%
Interest expense (income), net	(43)			(34)			—
Other (income) expense, net	(55)			(10)			—
Income before income taxes	1,307			1,648			-21	%
Income tax expense	256			198			29	%
Effective tax rate	19.6		%	12.0		%
NET INCOME	$	1,051		$	1,450		-28	%
Diluted earnings per common share	$	0.70		$	0.94		-26	%

CONSOLIDATED OPERATING RESULTS

REVENUES


	THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)	2024		2023		% CHANGE		% CHANGE EXCLUDING CURRENCY CHANGES(1)
NIKE, Inc. Revenues:
NIKE Brand Revenues by:
Footwear	$	7,462	$	8,421	-11	%	-10	%
Apparel	3,032		3,388		-11	%	-9	%
Equipment	603		531		14	%	15	%
Global Brand Divisions(2)	14		13		8	%	20	%
Total NIKE Brand Revenues	11,111		12,353		-10	%	-9	%
Converse	501		588		-15	%	-14	%
Corporate(3)	(23)		(2)		—		—
TOTAL NIKE, INC. REVENUES	$	11,589	$	12,939	-10	%	-9	%
Supplemental NIKE Brand Revenues Details:
NIKE Brand Revenues by:
Sales to Wholesale Customers	$	6,410	$	6,983	-8	%	-7	%
Sales through NIKE Direct	4,687		5,357		-13	%	-12	%
Global Brand Divisions(2)	14		13		8	%	20	%
TOTAL NIKE BRAND REVENUES	$	11,111	$	12,353	-10