The paragraph announces NIKE, Inc.'s Fiscal 2025 First Quarter Conference Call, led by Paul Trussell, Vice President of Corporate Finance and Treasurer. He introduces Matt Friend, Executive Vice President and CFO, who will discuss the first quarter results. The call includes forward-looking statements and non-GAAP financial measures, with references available at Nike's investor website. The call is abbreviated to allow more questions, and it occurs during a transition period with Elliott Hill set to become the new President and CEO on October 14th, succeeding John.

The paragraph discusses a leadership transition at NIKE, expressing gratitude for John's contributions and excitement for Elliott's return as a leader. Elliott is praised for his strong connection to NIKE's culture and his extensive experience in driving growth. The company's decision to withdraw full-year guidance and postpone Investor Day allows Elliott the flexibility to reconnect with teams and strategize for future business positioning. NIKE's first-quarter results met expectations from the previous quarter.

The paragraph discusses the company's efforts to shift its product portfolio and balance its business to boost brand momentum through sports. Despite seeing some early successes, overall progress is slow, and the company hasn't fully recovered. In the first quarter, revenue met expectations, but unit sales were lower, partially offset by higher average selling prices. Traffic declines were noted in NIKE Direct and NIKE Digital, especially in Greater China, and retail sales didn't meet plans, leading to increased promotional activity. Although there was improvement in store traffic in August, overall results, including back-to-school sales, fell short. The company is deliberately reducing reliance on classic footwear lines like Air Force 1, Air Jordan 1, and Dunk, leading to anticipated revenue declines as it adjusts marketplace supply. This trend is expected to continue affecting revenue in the near future.

The paragraph discusses how NIKE is adjusting its strategies across different franchises, geographies, and channels, especially focusing on NIKE Direct and digital platforms, which saw significant declines. The company is reallocating products to channels with higher traffic to improve sales, with men's and women's lifestyle and the Jordan brand planned to decline in Q1 and fiscal '25. Overall, these declines contributed to a reduction in Q1 revenue. However, NIKE is optimistic about the future, as feedback from partners on upcoming products has been positive, shown during a Partner Summit. Although the environment is competitive, the company is focused on innovation and balanced growth to expand market share over time, despite spring '25 order books being flat compared to the previous year.

The paragraph discusses the company's recent successes and strategies in the sports footwear market. They have seen growth in men's fitness, global football, and running footwear, with significant advancements in their Mercurial and Global Football and G.T. basketball series. The running segment, previously a challenge, has shown positive growth in Q1. Strong future orders indicate continued momentum, particularly in North America. They have launched a major Running brand campaign and new product offerings, including the successful Pegasus 41 and upcoming releases like Peg Trail, Peg Plus, and Peg Premium, which features advanced NIKE Air technology.

The article discusses optimism about upcoming product releases in Nike's running footwear and apparel lines, highlighting innovations like enhanced cushioning, new designs in women's apparel, updated trail models, and affordable options. It reports strong growth in Q1 revenue from new footwear, with significant increases in performance and lifestyle shoe lines. Although this growth hasn't yet offset declines elsewhere, it's a positive trend. The company anticipates continued growth in new and innovative products in the coming seasons while focusing on cost management and resource allocation to maximize impact and growth.

The paragraph discusses NIKE's strategic initiatives and recent performance. Over the summer, NIKE launched a successful Paris Olympics campaign, highlighting athlete achievements and boosting brand presence, especially among Gen Z. The brand is investing in retail partnerships, such as collaborations with DICK'S Sporting Goods and Foot Locker, to enhance brand differentiation and drive growth. Despite these efforts, the company's financial results for the first quarter showed a revenue decline of 10% on a reported basis, with decreases in both NIKE Direct and NIKE Digital sales, while NIKE stores saw slight growth and wholesale was down 7%. The company emphasizes its commitment to long-term growth, driven by strategic investments and leadership under Elliott.

The article discusses NIKE's financial performance and marketing activities for the first quarter. Gross margins increased due to lower costs and strategic pricing, while SG&A fell due to reduced overhead. The effective tax rate rose, and diluted earnings per share reached $0.70. In North America, revenue and EBIT both declined, with notable brand activations around basketball events. In EMEA, revenue and EBIT also decreased, but NIKE stores saw a slight increase. The region featured significant marketing campaigns, particularly in Paris, including a major Olympics and Jordan brand presence, with successful digital engagement through Twitch.

In the APLA region, NIKE's Q1 revenue decreased by 2%, with a decline in NIKE Direct and Digital sales, but an increase in store sales. Despite a slight decline in wholesale and EBIT, the quarter marked the successful launch of a new retail space in Mexico City. In Greater China, Q1 revenue dropped by 3%, heavily impacted by declines in NIKE Direct and Digital, but with a rise in wholesale sales. The market faced challenges with moderated retail sales and high inventory levels. Nonetheless, NIKE remains the top sports brand in China, driven by strong brand stories and events, especially surrounding athletes and new product innovations. Despite a moderated short-term outlook, NIKE is optimistic about long-term opportunities in China.

In the upcoming second quarter, NIKE anticipates a decline in revenues by 8% to 10% and a decrease in gross margins by approximately 150 basis points due to factors like increased promotions and supply chain challenges. SG&A is expected to remain flat, offsetting demand creation investments with tighter overhead controls. Other income and expenses, including net interest, are projected to range between $30 million and $40 million, with a tax rate in the high-teens. Although full-year guidance isn't provided due to a leadership transition, the company notes moderated revenue expectations due to digital and retail trends. Despite projected declines in gross margins, there's optimism for improved revenue trends in the second half, bolstered by new product introductions. NIKE remains committed to disciplined cost management while investing in brand growth, embracing challenges as opportunities for adaptation and enhancement.

The paragraph is from an earnings call discussion involving Nike executives and analysts. It explains Nike's current inventory situation, particularly highlighting elevated inventory levels in China and North America due to retail sales underperforming plans. The company acknowledges that inventory challenges are part of the overall product portfolio and not limited to specific classic products. Nike plans to manage this by adopting a more promotional strategy to clear excess inventory and accommodate a more moderate retail sales outlook for the rest of the year.

In the paragraph, Alex Straton questions Matthew Friend about the unexpected challenges faced during the quarter and the key metrics being monitored for recovery. Matthew responds by highlighting encouraged performance in new products with double-digit growth, noting underperformance in Greater China as a factor in unit decline. He mentions general macroeconomic softness across geographies and slightly elevated inventories, which require proactive action. In Digital sales, there was a 20% decline, mainly due to three classic franchises being down nearly 50%, although their performance in the wholesale channel was significantly better.

The paragraph discusses NIKE's proactive management of inventory amidst declines in three major franchises, focusing on maximizing full-price sales through NIKE Digital. Michael Binetti from Evercore ISI inquires about the discrepancy between lower-than-expected spring order books and a positive second-half revenue outlook. Matthew Friend explains that the spring order books remained flat compared to the previous year but notes optimism due to emerging newness and innovation expected to scale in the second half. Additionally, he acknowledges that while past investments in the direct-to-consumer (DTC) segment aimed to elevate margins, there might still be growth elements needed to fully leverage these investments moving forward.

The paragraph highlights NIKE's focus on innovation and growth in their footwear products, particularly in the running category. New and innovative products, defined as those introduced within the last eight seasons, are experiencing mid to high-single digit growth. The company's strategic focus on running has resulted in positive growth for men's and women's running footwear, with double-digit growth projected for upcoming seasons. NIKE's active presence at running events and their community engagement efforts support this momentum. Additionally, upcoming product releases include new cushioning innovations, premium models combining Foams and Zoom Air, and refreshed performance running apparel, while trail models are also performing well.

The paragraph discusses the company's optimistic outlook on growth in the running segment, particularly trails, and a core market segment defined by products priced below $100. They have been focusing on speeding up product delivery to capture revenue opportunities they previously missed in this segment. Their partners are enthusiastic about the upcoming products. They also address their Direct-to-Consumer (DTC) business, highlighting profitable growth opportunities by offering more full-price products and enhancing supply chain efficiencies. The overall strategy is to drive balanced growth and improved profitability across the marketplace. Lastly, the company aims to expand their core franchises but does not provide specific details on their current size or growth targets.

The paragraph discusses Nike's strategy to rebalance its product portfolio by reducing its focus on classic footwear, referred to internally as "icons," which had become overly concentrated in their offerings. Despite a double-digit decline in revenue, Nike's gross margins improved this quarter. The company plans to continue adjusting its portfolio to manage these classic products more effectively, aiming for a more balanced offering. While these products are culturally significant and profitable, especially through digital sales, the deliberate reduction is expected to result in a mid-single digit revenue decline for the rest of the year.

The paragraph discusses the challenges and strategies NIKE faces in managing margins and inventory, particularly through its Direct and Digital channels. Despite current margin pressures, the company is focused on innovation and new product offerings to boost consumer engagement. In response to a question from Lorraine Hutchinson of Bank of America, Matthew Friend emphasizes the positive momentum in NIKE's wholesale partnerships. He acknowledges past issues with overemphasis on Direct channels and highlights efforts to rebuild partner relationships. This includes a focus on broad distribution across various product lines, leveraging events like the Paris Summer Olympics to strengthen ties, and investing with partners to enhance brand presence in retail.

The paragraph discusses NIKE's strategic approach to growth by leveraging partnerships and focusing on creating deeper connections with consumers through sport. NIKE highlights successful collaborations, such as with DICK'S Sporting Goods and Foot Locker, to pilot new concepts in women's fitness and basketball. By reflecting on past strategies, like the market re-profiling in North America in 2010 under the leadership of Elliott, NIKE underscores its commitment to fostering growth through sport-driven relationships, which then extend to sportswear and lifestyle. The company also emphasizes the importance of digital and direct consumer connections in its marketplace strategy.

The paragraph focuses on Nike's efforts to regain market share in the Running specialty channel in North America, where it previously pulled back and subsequently lost ground. Nike acknowledges the significance of engaging with the running community beyond just boosting revenue, emphasizing connections with everyday runners. Although they've succeeded in areas like marathons and track innovation, they've lagged with regular runners. Recently, they've been concentrating on this aspect and observing positive momentum, which is crucial for Nike as a running-focused brand.

The paragraph discusses the company's strategy for business growth, highlighting its commitment to reinvesting in channels and partnerships to change its trajectory. It notes positive momentum and upcoming product innovations that span from running and sporting goods to lifestyle products. The paragraph also addresses factors affecting second-quarter margins, such as higher promotions, channel mix headwinds, supply chain issues, and decreased benefits from prior strategic pricing and product costs. It mentions monitoring potential risks, like an East Coast port strike, that haven't been accounted for yet. The operator then introduces Brooke Roach from Goldman Sachs for a question about the China business and its specifics related to NIKE.

In the paragraph, Matthew Friend discusses the challenges Nike is facing in the Chinese market, noting that consumer traffic was low across all channels in a recent quarter. Despite improving full-price realization in previous seasons by managing inventory carefully, this quarter required more aggressive promotional activity due to industry-wide trends. Wholesale revenue increased by 10% partly due to shipping timing, while retail sales saw less growth. Nike is focusing on managing inventory and forward-looking order books with partners, while also providing margin assistance to clear excess inventory and prepare for new innovations in the second half of the year. Performance innovations like Pegasus 41 and Alphafly 3 have resonated well with Chinese consumers, as well as the return of Kobe Bryant-related products, which are generating significant excitement.

The paragraph highlights Nike's strategy and outlook in the Chinese market. The company emphasizes creating distinction in the marketplace through its strong classic franchises, like Jordan, and focuses on performance and innovation, particularly in China. Despite moderating short-term expectations, Nike is optimistic about long-term growth opportunities in China, emphasizing sport as a growing industry. They aim to leverage their retail investments, innovation, and digital platforms to serve local consumers effectively, highlighting a "China for China" approach. Overall, Nike remains positive about the future prospects in the Chinese market.

This summary was generated with AI and may contain some inaccuracies.