Nike Inc.

10/01/2025 | Press release | Distributed by Public on 10/01/2025 14:51

Quarterly Report for Quarter Ending AUGUST 31, 2025 (Form 10-Q)

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.
Our strategy is to achieve sustainable, profitable long-term revenue growth by leading with sport, creating innovative, "must-have" products, building deep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms and at retail.
QUARTERLY FINANCIAL HIGHLIGHTS
•NIKE, Inc. Revenues for the first quarter of fiscal 2026 were $11.7 billion compared to $11.6 billion for the first quarter of fiscal 2025.
•NIKE Direct revenues were $4.5 billion for the first quarter of fiscal 2026 compared to $4.7 billion for the first quarter of fiscal 2025, primarily driven by a decrease in traffic in NIKE Brand Digital. NIKE Direct revenues represented approximately 40% of total NIKE Brand revenues.
•NIKE Brand wholesale revenues were $6.8 billion for the first quarter of fiscal 2026 compared to $6.4 billion for the first quarter of fiscal 2025, primarily driven by an increase in units, partially offset by an increase in discounts.
•Gross margin for the first quarter of fiscal 2026 decreased 320 basis points to 42.2% due to higher discounts with our wholesale partners, higher discounts in our NIKE Brand factory stores, an increase in product costs including new tariffs and changes in channel mix.
•Inventories as of August 31, 2025, were $8.1 billion, an increase of 8% compared to May 31, 2025, primarily driven by product mix and an increase in units.
•We returned approximately $0.7 billion to our shareholders in the first quarter of fiscal 2026 through dividends and share repurchases.
FACTORS IMPACTING OUR BUSINESS
We are navigating through several external factors that create uncertainty and volatility in the operating environment, including, but not limited to, geopolitical dynamics, tax regulation, fluctuating foreign currency exchange rates and evolving tariff policies. As a result of new tariffs, we expect a gross incremental cost of approximately $1.5 billion on an annualized basis. We are taking actions to mitigate the impact of new tariffs; however for fiscal 2026, we expect a negative impact on gross margin. We will continue to monitor changes to the import and export policies of the U.S. and other countries that could require us to change the way in which we do business. These factors, and any changes to these factors, among others, could have a material adverse impact on consumer behavior and on our future Revenues and overall profitability. For a discussion of these factors and other risks, refer to Risk Factors in Item 1A of Part 1 within our Annual Report on Form 10-K for the fiscal year ended May 31, 2025 (the "Annual Report").
Despite these factors, we are focused on driving distinction within key sports, building a complete product portfolio, creating stories to inspire and emotionally connect with consumers, and elevating and growing the entire marketplace as we continue to take actions across the following areas:
•Product Management: Reducing the supply of certain footwear products in the marketplace as we shift to new and innovative products and rebalance the mix of our footwear portfolio.
•Marketplace Management: Repositioning NIKE Brand Digital as a full-price platform and reinvesting in wholesale distribution. This includes liquidating inventory through increased markdowns across NIKE Direct, and higher sales returns and discounts with our wholesale partners to reduce inventory and create capacity for new product. We are also making investments to elevate the presentation of our brands in physical retail.
•Brand Management:Increasing investment in demand creation, including brand marketing and sports marketing, to support key product launches and sports moments.
Our reportable operating segments are at different stages of progress against these actions and therefore, the timing of financial impacts have varied and we expect will continue to vary by segment. These actions have had, and in the future will have, a negative impact on our Revenues and overall profitability. However, we believe these actions will reignite brand momentum and reposition our business to drive long-term shareholder value.
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 generally accepted accounting principles in the United States of America ("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, 2025 and August 31, 2024 are as follows:
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions) 2025 2024
Net income $ 727 $ 1,051
Add: Interest expense (income), net (18) (43)
Add: Income tax expense 195 256
EARNINGS BEFORE INTEREST AND TAXES
$ 904 $ 1,264
EBIT margin:Calculated as total NIKE, Inc. EBIT divided by total NIKE, Inc. Revenues. Our EBIT margin calculations for the three months ended August 31, 2025 and August 31, 2024 are as follows:
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions) 2025 2024
Numerator
Earnings before interest and taxes $ 904 $ 1,264
Denominator
Total NIKE, Inc. Revenues $ 11,720 $ 11,589
EBIT MARGIN
7.7 % 10.9 %
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.
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions, except per share data) 2025 2024 % CHANGE
Revenues $ 11,720 $ 11,589 1 %
Cost of sales 6,777 6,332 7 %
Gross profit 4,943 5,257 -6 %
Gross margin 42.2 % 45.4 %
Demand creation expense 1,188 1,226 -3 %
Operating overhead expense 2,828 2,822 0 %
Total selling and administrative expense 4,016 4,048 -1 %
% of revenues 34.3 % 34.9 %
Interest expense (income), net (18) (43) -
Other (income) expense, net 23 (55) -
Income before income taxes 922 1,307 -29 %
Income tax expense 195 256 -24 %
Effective tax rate 21.1 % 19.6 %
NET INCOME $ 727 $ 1,051 -31 %
Diluted earnings per common share $ 0.49 $ 0.70 -30 %
CONSOLIDATED OPERATING RESULTS
REVENUES
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
2025 2024 % CHANGE
% CHANGE EXCLUDING CURRENCY CHANGES(1)
NIKE, Inc. Revenues:
NIKE Brand Revenues by:
Footwear $ 7,410 $ 7,462 -1 % -2 %
Apparel 3,313 3,032 9 % 7 %
Equipment 630 603 4 % 3 %
Global Brand Divisions(2)
9 14 -36 % -39 %
TOTAL NIKE BRAND REVENUES
11,362 11,111 2 % 0 %
Converse 366 501 -27 % -28 %
Corporate(3)
(8) (23) - -
TOTAL NIKE, INC. REVENUES $ 11,720 $ 11,589 1 % -1 %
Supplemental NIKE Brand Revenues Details:
NIKE Brand Revenues by:
Sales to Wholesale Customers $ 6,839 $ 6,410 7 % 5 %
Sales through NIKE Direct 4,514 4,687 -4 % -5 %
Global Brand Divisions(2)
9 14 -36 % -39 %
TOTAL NIKE BRAND REVENUES $ 11,362 $ 11,111 2 % 0 %
(1)The percent change excluding currency changes represents a non-GAAP financial measure. For additional information, see "Use of Non-GAAP Financial Measures".
(2)Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
(3)Corporate revenues primarily consist 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 our central foreign exchange risk management program.
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
•NIKE, Inc. Revenues for the first quarter of fiscal 2026 were $11.7 billion compared to $11.6 billion for the first quarter of fiscal 2025. On a currency-neutral basis, NIKE, Inc. Revenues decreased 1%, primarily due to lower revenues in Greater China and Converse, which reduced NIKE, Inc. Revenues by approximately 2 and 1 percentage points, respectively. Higher revenues in North America increased NIKE, Inc. Revenues by approximately 2 percentage points.
•NIKE Brand revenues increased 2% on a reported basis and were flat on a currency-neutral basis.
•NIKE Brand footwear revenues decreased 2% on a currency-neutral basis. Unit sales of footwear increased 2%, while lower average selling price ("ASP") per pair reduced footwear revenues by approximately 4 percentage points. Lower ASP per pair was primarily due to channel mix and higher discounts.
•NIKE Brand apparel revenues increased 7% on a currency-neutral basis. Unit sales of apparel increased 10%, while lower ASP per unit reduced apparel revenues by approximately 3 percentage points. Lower ASP per unit was primarily due to higher discounts and channel mix, partially offset by product mix.
•NIKE Brand wholesale revenues increased 7% on a reported basis and 5% on a currency-neutral basis. The increase on a currency-neutral basis was driven by higher revenues in North America, Europe, Middle East & Africa ("EMEA") and Asia Pacific & Latin America ("APLA"), partially offset by a decrease in Greater China.
•NIKE Direct revenues were $4.5 billion in the first quarter of fiscal 2026, compared to $4.7 billion for the first quarter of fiscal 2025. On a currency-neutral basis, NIKE Direct revenues decreased 5% due to declines in NIKE Brand Digital sales of 12% from $2.3 billion in first quarter of fiscal 2025 to $2.0 billion in the first quarter of fiscal 2026 and declines in NIKE stores sales of 1%. Comparable store sales decreased 1%. For additional information regarding comparable store sales, including the definition, see "Comparable Store Sales".
GROSS MARGIN
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
2025 2024 % CHANGE
Gross profit $ 4,943 $ 5,257 -6 %
Gross margin 42.2 % 45.4 % -320 bps
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
Consolidated gross margin was 320 basis points lower than the prior year primarily due to:
•Lower NIKE Brand ASP (decreasing gross margin approximately 250 basis points), primarily due to higher discounts and channel mix;
•Higher NIKE Brand product costs (decreasing gross margin approximately 100 basis points), primarily due to higher tariffs in North America; and
•Lower gross margin from Converse (decreasing gross margin approximately 30 basis points).
This was partially offset by:
•Lower warehousing and logistics costs (increasing gross margin approximately 50 basis points), primarily due to channel mix; and
•Favorable changes in net foreign currency exchange rates, including hedges (increasing gross margin approximately 30 basis points).
TOTAL SELLING AND ADMINISTRATIVE EXPENSE
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
2025 2024 % CHANGE
Demand creation expense(1)
$ 1,188 $ 1,226 -3 %
Operating overhead expense(2)
2,828 2,822 0 %
Total selling and administrative expense $ 4,016 $ 4,048 -1 %
% of revenues 34.3 % 34.9 % -60 bps
(1)Demand creation expense consists of brand marketing expense and sports marketing expense. Brand marketing expense includes advertising and promotion costs such as production and media costs, digital marketing expense, brand events and retail brand presentation costs. Sports marketing expense includes expenses related to endorsement contracts, complimentary product and sports marketing events.
(2)Operating overhead expense consists primarily of wage and benefit-related expenses and other administrative expenses, such as research and development costs, bad debt expense, rent, depreciation and amortization and costs related to professional services, certain technology investments, meetings and travel.
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
Demand creation expense decreased 3% due to lower brand marketing expense, primarily due to higher investment in key sports events in the prior year, partially offset by higher sports marketing expense and unfavorable changes in foreign currency exchange rates. Changes in foreign currency exchange rates increased Demand creation expense by approximately 2 percentage points.
Operating overhead expense was flat due to higher wage-related expense and unfavorable changes in foreign currency exchange rates, offset by lower other administrative costs. Changes in foreign currency exchange rates increased Operating overhead expense by approximately 1 percentage point.
OTHER (INCOME) EXPENSE, NET
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
2025 2024
Other (income) expense, net $ 23 $ (55)
Other (income) expense, net comprises foreign currency conversion gains and losses from the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, as well as unusual or non-operating transactions outside the normal course of business.
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
Other (income) expense, net decreased from $55 million of other income, net, to $23 million of other expense, net, in part due to a net unfavorable change in foreign currency conversion gains and losses, including hedges.
INCOME TAXES
THREE MONTHS ENDED AUGUST 31,
2025 2024 % CHANGE
Effective tax rate 21.1 % 19.6 % 150 bps
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
Our effective tax rate was 21.1% for the first quarter of fiscal 2026, compared to 19.6% for the first quarter of fiscal 2025, primarily due to decreased benefits from stock-based compensation.
For additional information, refer to Note 4 - Income Taxes within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
SEGMENT INFORMATION
See Note 10 - Segment Information in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for a description of our segments and related information.
The breakdown of Revenues is as follows:
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
2025 2024 % CHANGE
% CHANGE EXCLUDING CURRENCY CHANGES(1)
North America $ 5,020 $ 4,826 4 % 4 %
Europe, Middle East & Africa 3,331 3,143 6 % 1 %
Greater China 1,512 1,666 -9 % -10 %
Asia Pacific & Latin America 1,490 1,462 2 % 1 %
Global Brand Divisions(2)
9 14 -36 % -39 %
TOTAL NIKE BRAND 11,362 11,111 2 % 0 %
Converse 366 501 -27 % -28 %
Corporate(3)
(8) (23) - -
TOTAL NIKE, INC. REVENUES $ 11,720 $ 11,589 1 % -1 %
(1)The percent change excluding currency changes represents a non-GAAP financial measure. For additional information, see "Use of Non-GAAP Financial Measures".
(2)Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
(3)Corporate revenues primarily consist 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 our central foreign exchange risk management program.
The primary financial measure used to evaluate performance of our individual reportable operating segments is EBIT. For additional information on our segments, refer to Note 10 - Segment Information in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
The breakdown of EBIT is as follows:
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
2025 2024 % CHANGE
North America $ 1,134 $ 1,216 -7 %
Europe, Middle East & Africa 735 792 -7 %
Greater China 377 502 -25 %
Asia Pacific & Latin America 350 402 -13 %
Global Brand Divisions (1,192) (1,227) 3 %
TOTAL NIKE BRAND(1)
1,404 1,685 -17 %
Converse 39 121 -68 %
Corporate
(539) (542) 1 %
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES(1)
904 1,264 -28 %
EBIT margin(1)
7.7 % 10.9 %
Interest expense (income), net (18) (43) -
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES $ 922 $ 1,307 -29 %
(1)Total NIKE Brand EBIT, Total NIKE, Inc. EBIT and EBIT margin represent non-GAAP financial measures. For additional information, see "Use of Non-GAAP Financial Measures".
NORTH AMERICA
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions) 2025 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 3,219 $ 3,212 0 % 0 %
Apparel 1,474 1,331 11 % 11 %
Equipment 327 283 16 % 16 %
TOTAL REVENUES $ 5,020 $ 4,826 4 % 4 %
Revenues by:
Sales to Wholesale Customers $ 2,736 $ 2,475 11 % 11 %
Sales through NIKE Direct 2,284 2,351 -3 % -3 %
TOTAL REVENUES $ 5,020 $ 4,826 4 % 4 %
Cost of Sales 2,897 2,627 10 %
Gross profit 2,123 2,199 -3 %
Gross margin 42.3 % 45.6 % -330 bps
Demand creation expense 442 452 -2 %
Operating overhead expense 547 529 3 %
Total selling and administrative expense 989 981 1 %
Other segment items - 2 -
EARNINGS BEFORE INTEREST AND TAXES $ 1,134 $ 1,216 -7 %
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
•North America revenues increased 4% on a currency-neutral basis. Wholesale revenues increased 11%, in part due to shipment timing in the prior year as well as expanded distribution in the current year. NIKE Direct revenues decreased 3% due to declines in digital sales of 10% while store sales were flat. Comparable store sales were flat.
•Footwear revenues were flat on a currency-neutral basis. Unit sales of footwear increased 5%, while lower ASP per pair reduced footwear revenues by approximately 5 percentage points. Lower ASP per pair was primarily due to channel mix and higher discounts.
•Apparel revenues increased 11% on a currency-neutral basis. Unit sales of apparel increased 16%, while lower ASP per unit reduced apparel revenues by approximately 5 percentage points. Lower ASP per unit was primarily due to channel mix and higher discounts.
Reported EBIT decreased 7% reflecting higher revenues and the following:
•Gross margin contraction of 330 basis points, primarily due to new tariffs and lower ASP, partially offset by lower warehousing and logistics costs. Lower ASP primarily reflects channel mix, higher discounts and product mix. Overall product costs were flat as higher tariffs were offset primarily by product mix.
•Demand creation expense decreased 2% due to lower brand marketing expense, primarily due to higher investment in key sports events in the prior year, partially offset by higher sports marketing expense in the current year.
•Operating overhead expense increased 3% due to higher wage-related expense, partially offset by lower other administrative costs.
EUROPE, MIDDLE EAST & AFRICA
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions) 2025 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 2,021 $ 1,952 4 % -2 %
Apparel 1,106 993 11 % 6 %
Equipment 204 198 3 % -2 %
TOTAL REVENUES $ 3,331 $ 3,143 6 % 1 %
Revenues by:
Sales to Wholesale Customers $ 2,261 $ 2,074 9 % 4 %
Sales through NIKE Direct 1,070 1,069 0 % -6 %
TOTAL REVENUES $ 3,331 $ 3,143 6 % 1 %
Cost of Sales 1,900 1,695 12 %
Gross profit 1,431 1,448 -1 %
Gross margin 43.0 % 46.1 % -310 bps
Demand creation expense 313 290 8 %
Operating overhead expense 382 366 4 %
Total selling and administrative expense 695 656 6 %
Other segment items 1 - -
EARNINGS BEFORE INTEREST AND TAXES $ 735 $ 792 -7 %
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
•EMEA revenues increased 1% on a currency-neutral basis. Wholesale revenues increased 4%. NIKE Direct revenues decreased 6% due to declines in digital sales of 13%, partially offset by an increase in store sales of 1%. Comparable store sales increased 4%.
•Footwear revenues decreased 2% on a currency-neutral basis. Unit sales of footwear increased 4%, while lower ASP per pair reduced footwear revenues by approximately 6 percentage points. Lower ASP per pair was primarily due to higher discounts and channel mix.
•Apparel revenues increased 6% on a currency-neutral basis. Unit sales of apparel increased 8%, while lower ASP per unit reduced apparel revenues by approximately 2 percentage points. Lower ASP per unit was primarily due to higher discounts, partially offset by product mix.
Reported EBIT decreased 7% reflecting higher revenues and the following:
•Gross margin contraction of 310 basis points, primarily due to higher product costs and lower ASP, partially offset by lower warehousing and logistics costs. Lower ASP primarily reflects higher discounts.
•Demand creation expense increased 8% due to higher sports marketing expense and unfavorable changes in foreign currency exchange rates, partially offset by lower brand marketing expense, primarily due to higher investment in key sports events in the prior year.
•Operating overhead expense increased 4% due to unfavorable changes in foreign currency exchange rates and higher wage-related expense, partially offset by lower other administrative costs.
GREATER CHINA
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions) 2025 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 1,109 $ 1,246 -11 % -12 %
Apparel 362 360 1 % 0 %
Equipment 41 60 -32 % -33 %
TOTAL REVENUES $ 1,512 $ 1,666 -9 % -10 %
Revenues by:
Sales to Wholesale Customers $ 893 $ 971 -8 % -9 %
Sales through NIKE Direct 619 695 -11 % -12 %
TOTAL REVENUES $ 1,512 $ 1,666 -9 % -10 %
Cost of Sales
798 855 -7 %
Gross profit
714 811 -12 %
Gross margin
47.2 % 48.7 % -150 bps
Demand creation expense
99 114 -13 %
Operating overhead expense
238 240 -1 %
Total selling and administrative expense
337 354 -5 %
Other segment items
- (45) -
EARNINGS BEFORE INTEREST AND TAXES $ 377 $ 502 -25 %
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
•Greater China revenues decreased 10% on a currency-neutral basis. Wholesale revenues decreased 9%. NIKE Direct revenues decreased 12% due to declines in digital sales of 27% and declines in store sales of 4%. Comparable store sales decreased 5%.
•Footwear revenues decreased 12% on a currency-neutral basis. Unit sales of footwear decreased 11%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point. Lower ASP per pair was primarily due to higher discounts and channel mix.
•Apparel revenues were flat on a currency-neutral basis. Unit sales of apparel decreased 2%, while higher ASP per unit increased apparel revenues by approximately 2 percentage points. Higher ASP per unit was primarily due to product mix, partially offset by higher discounts.
Reported EBIT decreased 25% reflecting lower revenues and the following:
•Gross margin contraction of 150 basis points, primarily due to higher product costs, driven by product mix.
•Demand creation expense decreased 13%, primarily due to lower brand marketing expense, driven by higher investment in key sports events in the prior year.
•Operating overhead expense decreased 1%, primarily due to lower other administrative costs, partially offset by higher wage-related expense.
ASIA PACIFIC & LATIN AMERICA
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions) 2025 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 1,061 $ 1,052 1 % 0 %
Apparel 371 348 7 % 5 %
Equipment 58 62 -6 % -7 %
TOTAL REVENUES $ 1,490 $ 1,462 2 % 1 %
Revenues by:
Sales to Wholesale Customers $ 949 $ 890 7 % 6 %
Sales through NIKE Direct 541 572 -5 % -6 %
TOTAL REVENUES $ 1,490 $ 1,462 2 % 1 %
Cost of Sales 838 782 7 %
Gross profit 652 680 -4 %
Gross margin 43.8 % 46.5 % -270 bps
Demand creation expense 97 90 8 %
Operating overhead expense 208 188 11 %
Total selling and administrative expense 305 278 10 %
Other segment items (3) - -
EARNINGS BEFORE INTEREST AND TAXES $ 350 $ 402 -13 %
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
•APLA revenues increased 1% on a currency-neutral basis primarily due to higher revenues in Central & South America and Pacific, partially offset by lower revenues in Southeast Asia & India and Korea. Wholesale revenues increased 6%. NIKE Direct revenues decreased 6% due to declines in digital sales of 8% and declines in store sales of 5%. Comparable store sales decreased 8%.
•Footwear revenues were flat on a currency-neutral basis. Unit sales of footwear increased 5%, while lower ASP per pair reduced footwear revenues by approximately 5 percentage points. Lower ASP per pair was primarily due to product mix, channel mix and higher discounts.
•Apparel revenues increased 5% on a currency-neutral basis. Unit sales of apparel increased 10%, while lower ASP per unit reduced apparel revenues by approximately 5 percentage points. Lower ASP per unit was primarily due to higher discounts and channel mix.
Reported EBIT decreased 13% reflecting higher revenues and the following:
•Gross margin contraction of approximately 270 basis points, primarily due to lower ASP and unfavorable changes in standard foreign currency exchange rates. Lower ASP primarily reflects product mix, higher discounts and channel mix.
•Demand creation expense increased 8%, primarily due to higher sports marketing expense.
•Operating overhead expense increased 11%, primarily due to higher wage-related expense and higher other administrative costs.
GLOBAL BRAND DIVISIONS
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
2025 2024 % CHANGE
Revenues $ 9 $ 14 -36 %
Cost of Sales 168 153 10 %
Gross profit
(159) (139) -14 %
Demand creation expense 203 242 -16 %
Operating overhead expense 831 846 -2 %
Total selling and administrative expense 1,034 1,088 -5 %
Other segment items
(1) - -
EARNINGS (LOSS) BEFORE INTEREST AND TAXES
$ (1,192) $ (1,227) 3 %
Global Brand Divisions primarily represents costs, including product creation and design expenses, that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
Global Brand Divisions' loss before interest and taxes decreased 3%, primarily due to lower Demand creation expense and lower Operating overhead expense. Demand creation expense decreased 16%, primarily due to lower brand marketing expense, driven by higher investment in key sports events in the prior year. Operating overhead expense decreased 2%, primarily due to lower other administrative costs, partially offset by higher wage-related expense.
CONVERSE
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
2025 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 321 $ 436 -26 % -28 %
Apparel 11 17 -35 % -35 %
Equipment 8 12 -33 % -34 %
Other(1)
26 36 -28 % -28 %
TOTAL REVENUES $ 366 $ 501 -27 % -28 %
Revenues by:
Sales to Wholesale Customers $ 195 $ 275 -29 % -31 %
Sales through Direct to Consumer 145 190 -24 % -25 %
Other(1)
26 36 -28 % -28 %
TOTAL REVENUES $ 366 $ 501 -27 % -28 %
Cost of Sales
193 233 -17 %
Gross profit
173 268 -35 %
Gross margin 47.3 % 53.5 % -620 bps
Demand creation expense
33 35 -6 %
Operating overhead expense
102 113 -10 %
Total selling and administrative expense
135 148 -9 %
Other segment items
(1) (1) -
EARNINGS BEFORE INTEREST AND TAXES $ 39 $ 121 -68 %
(1)Other revenues consist of territories serviced by third-party licensees who pay royalties to Converse for the use of its registered trademarks and other intellectual property rights.
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
•Converse revenues decreased 28% on a currency-neutral basis driven by declines in all territories. Unit sales decreased 22%, while lower ASP reduced revenues by approximately 6 percentage points. Lower ASP per unit was primarily due to higher discounts and product mix.
•Wholesale revenues decreased 31% on a currency-neutral basis, driven by declines in all territories.
•Direct to consumer revenues decreased 25% on a currency-neutral basis, reflecting reduced traffic in Western Europe and North America.
Reported EBIT decreased 68% reflecting lower revenues and the following:
•Gross margin contraction of approximately 620 basis points, primarily due to lower ASP and higher warehousing and logistics costs. Lower ASP primarily reflects higher discounts and product mix.
•Demand creation expense decreased 6%, primarily due to lower brand marketing expense.
•Operating overhead expense decreased 10%, primarily due to lower wage-related expense and lower other administrative costs.
CORPORATE
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
2025 2024 % CHANGE
Revenues $ (8) $ (23) -
Cost of Sales (17) (13) -
Gross profit
9 (10) -
Demand creation expense 1 3 -67 %
Operating overhead expense 520 540 -4 %
Total selling and administrative expense 521 543 -4 %
Other segment items
27 (11) -
EARNINGS (LOSS) BEFORE INTEREST AND TAXES
$ (539) $ (542) 1 %
Corporate primarily consists of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to our corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses.
Corporate revenues primarily consist 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 our central foreign exchange risk management program.
In addition to the foreign currency gains and losses recognized within Corporate revenues, foreign currency results in Corporate include gains and losses resulting from the difference between actual foreign currency exchange rates and standard rates used to record non-functional currency denominated product purchases within the NIKE Brand geographic operating segments and Converse; related foreign currency hedge results; conversion gains and losses arising from remeasurement of monetary assets and liabilities in non-functional currencies; and certain other foreign currency derivative instruments.
FIRST QUARTER OF FISCAL 2026 COMPARED TO FIRST QUARTER OF FISCAL 2025
Corporate's loss before interest and taxes decreased $3 million, primarily due to the following:
•a favorable change of $20 million in Operating overhead expense primarily related to lower other administrative costs, partially offset by higher wage-related expense;
•a favorable change in net foreign currency gains and losses of $17 million related to the difference between actual foreign currency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of hedge gains and losses; these results are reported as a component of consolidated Gross profit; and
•an unfavorable change of $37 million related to the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, reported as a component of consolidated Other (income) expense, net.
FOREIGN CURRENCY EXPOSURES AND HEDGING PRACTICES
OVERVIEW
As a global company with significant operations outside the United States, in the normal course of business we are exposed to risk arising from changes in currency exchange rates. Our primary foreign currency exposures arise from the recording of transactions denominated in non-functional currencies and the translation of foreign currency denominated results of operations, financial position and cash flows into U.S. Dollars.
Our foreign exchange risk management program is intended to lessen both the positive and negative effects of currency fluctuations on our consolidated results of operations, financial position and cash flows. We manage global foreign exchange risk centrally on a portfolio basis to address those risks material to NIKE, Inc. Our hedging policy is designed to partially or entirely offset the impact of exchange rate changes on the underlying net exposures being hedged. Where exposures are hedged, our program has the effect of delaying the impact of exchange rate movements on our Unaudited Condensed Consolidated Financial Statements; the length of the delay is dependent upon hedge horizons. We do not hold or issue derivative instruments for trading or speculative purposes. As of and for the three months ended August 31, 2025, there have been no material changes to our hedging program or strategy from what was disclosed within our Annual Report.
Refer to Note 3 - Fair Value Measurements and Note 7 - Risk Management and Derivatives in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for additional description of outstanding derivatives at each reported period end. For additional information about our Foreign Currency Exposures and Hedging Practices, refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report.
TRANSACTIONAL EXPOSURES
We conduct business in various currencies and have transactions which subject us to foreign currency risk. Our most significant transactional foreign currency exposures are:
•Product Costs - Product purchases denominated in currencies other than the functional currency of the transacting entity and factory input costs from the foreign currency adjustments program with certain factories.
•Non-Functional Currency Denominated External Sales - A portion of our NIKE Brand and Converse revenues associated with European operations are earned in currencies other than the Euro (e.g., the British Pound) but are recognized at a subsidiary that uses the Euro as its functional currency. These sales generate a foreign currency exposure.
•Other Costs - Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency risk, though to a lesser extent.
•Non-Functional Currency Denominated Monetary Assets and Liabilities - Our global subsidiaries have various monetary assets and liabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies other than their functional currencies. These balance sheet items are subject to remeasurement which may create fluctuations in Other (income) expense, net within our Unaudited Condensed Consolidated Statements of Income.
MANAGING TRANSACTIONAL EXPOSURES
Transactional exposures are managed on a portfolio basis within our foreign currency risk management program. We manage these exposures by taking advantage of natural offsets and currency correlations that exist within the portfolio and may also elect to use currency forward and option contracts to hedge the remaining effect of exchange rate fluctuations on probable forecasted future cash flows, including certain product cost exposures, non-functional currency denominated external sales and other costs described above. Generally, these are accounted for as cash flow hedges.
Certain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated monetary assets and liabilities subject to remeasurement are not formally designated as hedging instruments. Accordingly, changes in fair value of these instruments are recognized within Other (income) expense, net within our Unaudited Condensed Consolidated Statements of Income and are intended to offset the foreign currency impact of the remeasurement of the related non-functional currency denominated asset or liability being hedged.
TRANSLATIONAL EXPOSURES
Many of our foreign subsidiaries operate in functional currencies other than the U.S. Dollar. Fluctuations in currency exchange rates create volatility in our reported results as we are required to translate the balance sheets, operational results and cash flows of these subsidiaries into U.S. Dollars for consolidated reporting. The translation of foreign subsidiaries' non-U.S. Dollar denominated balance sheets into U.S. Dollars for consolidated reporting results in a cumulative translation adjustment to Accumulated other comprehensive income (loss) within Shareholders' equity. The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a benefit of approximately $213 million for the three months ended August 31, 2025. The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a benefit of approximately $54 million for the three months ended August 31, 2025.
MANAGING TRANSLATIONAL EXPOSURES
To minimize the impact of translating foreign currency denominated revenues and expenses into U.S. Dollars for consolidated reporting, certain foreign subsidiaries use excess cash to purchase U.S. Dollar denominated available-for-sale investments. The variable future cash flows associated with the purchase and subsequent sale of these U.S. Dollar denominated investments at non-U.S. Dollar functional currency subsidiaries creates a foreign currency exposure that qualifies for hedge accounting under U.S. GAAP. We utilize forward contracts and/or options to mitigate the variability of the forecasted future purchases and sales of these U.S. Dollar investments and to mitigate exposure to forecasted future cash flows of certain intercompany transactions. The combination of these foreign currency exposures and the related hedging instruments has the effect of partially offsetting the year-over-year foreign currency translation impact on net earnings. These hedges are generally accounted for as cash flow hedges.
We estimate the combination of translation of foreign currency-denominated profits from our international businesses and the year-over-year change in foreign currency related gains and losses included in Other (income) expense, net had a favorable impact of approximately $17 million on our Income before income taxes for the three months ended August 31, 2025.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW ACTIVITY
THREE MONTHS ENDED AUGUST 31,
(Dollars in millions)
2025 2024
$ CHANGE
Cash provided (used by):
Operations
$ 222 $ 394 $ (172)
Investing activities
(59) (166) 107
Financing activities
(598) (1,622) 1,024
Effect of exchange rate changes on cash and equivalents
(5) 19 (24)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS
$ (440) $ (1,375) $ 935
Cash provided by operations decreased $172 million. This was driven by a decrease of $239 million in Net income, adjusted for non-cash items, and changes in certain working capital components and other assets and liabilities, which increased $67 million. The change in working capital was primarily impacted by favorable changes to Accounts receivable and Inventories. This was in part due to the timing of wholesale shipments as well as a larger increase in inventory units in the prior period. These changes were partially offset by changes to Accounts payable, due to the timing of payments.
Cash used by investing activities decreased $107 million, primarily driven by the net change in short-term investments (including sales, maturities and purchases).
Cash used by financing activities decreased $1,024 million, primarily driven by lower share repurchases.
During the first three months of fiscal 2026, we purchased a total of 1.8 million shares of NIKE's Class B Common Stock for $123 million (an average price of $68.20 per share) under the four-year, $18 billion share repurchase plan authorized by the Board of Directors in June 2022. As of August 31, 2025, we have repurchased 124.4 million shares at a cost of approximately $12.1 billion (an average price of $97.57 per share) under this $18 billion share repurchase program. During the first quarter of fiscal 2026, we continued to moderate and ultimately stopped repurchases under our existing share repurchase program due to lower operating cash flows in the current year. The existing program remains authorized by the Board of Directors and we may resume share repurchases in the future at any time, depending upon market conditions, our liquidity and capital needs and other factors. We continue to expect funding of share repurchases will come from operating cash flows and excess cash.
CAPITAL RESOURCES
On July 17, 2025, we filed a shelf registration statement (the "Shelf") with the U.S. Securities and Exchange Commission (the "SEC") which permits us to issue an unlimited amount of securities from time to time. The Shelf expires on July 17, 2028.
As of August 31, 2025, our committed credit facilities were unchanged from the information previously reported within our Annual Report. We currently have long-term debt ratings of A+ and A1 from Standard and Poor's Corporation and Moody's Investor Services, respectively. Any changes to these ratings could result in interest rate and facility fee changes. As of August 31, 2025, we were in full compliance with the covenants under our facilities and believe it is unlikely we will fail to meet any of the covenants in the foreseeable future. As of August 31, 2025 and May 31, 2025, no amounts were outstanding under our committed credit facilities.
Liquidity is also provided by our $3 billion commercial paper program. As of and for the three months ended August 31, 2025, we did not have any borrowings outstanding under our $3 billion program. We may issue commercial paper or other debt securities depending on general corporate needs.
To date, in fiscal 2026, we have not experienced difficulty accessing the capital or credit markets; however, future volatility may increase costs associated with issuing commercial paper or other debt instruments or affect our ability to access those markets.
As of August 31, 2025, we had Cash and equivalents and Short-term investments totaling $8.6 billion, primarily consisting of commercial paper, corporate notes, deposits held at major banks, money market funds, U.S. Treasury obligations and other investment grade fixed-income securities. Our fixed-income investments are exposed to both credit and interest rate risk. All of our investments are investment grade to minimize our credit risk. While individual securities have varying durations, as of August 31, 2025, the weighted average days to maturity of our cash equivalents and short-term investments portfolio was 106 days.
We believe that existing Cash and equivalents, Short-term investments and cash generated by operations, together with access to external sources of funds as described above, will be sufficient to meet our domestic and foreign capital needs for the next twelve months and beyond.
There have been no significant changes to the material cash requirements previously reported.
OFF-BALANCE SHEET ARRANGEMENTS
As of August 31, 2025, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current or future financial condition, results of operations, liquidity, capital expenditures or capital resources.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 1 - Summary of Significant Accounting Policies within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for recently adopted and issued accounting standards.
CRITICAL ACCOUNTING ESTIMATES
The preparation of our Unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.
We believe the assumptions and judgments involved in the accounting estimates described in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section within the Annual Report have the greatest potential impact on our Unaudited Condensed Consolidated Financial Statements, so we consider these to be our critical accounting estimates. Because of the uncertainty inherent in these matters, actual results could differ from these estimates. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
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