Nike Inc's Fiscal 2024 Fourth Quarter Conference Call

Introduction

• Host: Paul Trussell, VP of Corporate Finance and Treasurer
• Speakers: John Donaho (President and CEO), Matt Friend (CFO)
• Purpose: Discuss fiscal 2024 Q4 results
• Documentation: Press release available at investors.nike.com

Forward-Looking Statements and Measures

• Forward-looking statements subject to risks and uncertainties (detailed in SEC filings)
• Discussion may include non-GAAP financial measures and non-public financial info
• All growth comparisons are year-over-year and currency neutral unless noted

Financial Results Overview by John Donaho

Full Year Fiscal 2024

• Revenue Growth: Approximately 1% (currency neutral)
• Earnings Per Share: Grew 15%

Q4 Specifics

• Revenue: Flat
• Performance Product: Strong gains
• Lifestyle Segment: Declines impacting digital results
• Revised guidance for fiscal 2025 due to macro uncertainties and foreign exchange variability

Strategic Shifts and Future Plans

• Leadership and organizational changes
• Multi-year Innovation cycle
• Capacity creation for consumer-facing activities
• Four main focus areas:
  • Sharpen focus on sport
  • Accelerate innovation
  • Drive bold storytelling
  • Elevate marketplace for brand distinction
• Emphasis on performance side

Innovation and Consumer Engagement

• Accelerated Innovation pipeline with early results showing promise
• Performance categories showing double-digit growth
• Introduction of “Speed Lane” to enhance product creation and market agility

Key Sport Areas

• Basketball: Double-digit growth driven by new signatures (e.g., Kobe, Sabrina 1)
• Fitness: Significant market opportunity, broad-based growth, especially in apparel and footwear (e.g., Metcon)
• Running: Competitive field with strong recent releases (Pegasus 41, Vomero)

Lifestyle Segment Focus

• Building a diversified product portfolio around industry’s largest franchises
• Introduction of Dynamic Air platform with new iterations planned
• Retro running: Growing segment with plans to triple by end of fiscal 2025

Paris Olympics 2024

• Opportunity for brand exposure with breakthrough innovations and global campaigns
• Upcoming innovations to be showcased during the events

Financial Performance Breakdown by Matt Friend

Key Points Impacting Q4

• Declines in lifestyle segment outweighing gains in performance
• Digital declines (10%) impacted by lower traffic, higher promotions
• Greater China: Notable drops in brick-and-mortar traffic, diverse international trends
• Foreign exchange headwinds worsened

Quarter and Full-Year Financials

• Revenue: Down 2% reported, flat currency neutral
• Gross Margin: 44.7%, up 110 basis points
• SG&A: Down 7%
• Tax Rate: 13.1%
• Earnings Per Share (Q4): $0.99, up 50%

Segment Insights

• North America: Variety in results with declines in direct sales, gains in wholesale
• EMEA: Continued performance gains, offset by lifestyle declines
• Greater China: Revenue growth but challenges persist
• APAC & Latin America: Regional variances with strong performance in sports

Fiscal 2025 Outlook

• Revenue: Expected to be down mid-single digits
• Gross Margin: Expected expansion of 10-30 basis points
• SG&A: Up slightly as investments in demand creation continue
• Q1 Focus: Down approximately 10% due to strategic adjustments and economic factors
• Continued foreign exchange impacts forecasted

Q&A Highlights

Key Concerns and Strategic Adjustments

• Addressing concerns on execution pace, macro impacts, franchise management
• Focused on aggressive innovation, tighter supply management on key franchises, especially digital
• Q4 and expected slow first half pivoting to stronger second half with new product scaling
• Reinvestment in consumer-facing activities expected to fuel long-term growth

Conclusion

• Positive signs in wholesale order books and product pipeline
• Confidence in long-term potential and strategic focus moving forward
• Recognition of team’s efforts and ongoing initiatives for sustainable growth

Final Remarks

• Gratitude for the team’s dedication and hard work during challenging times
• Anticipation for further engagements and detailed plans at upcoming investor day in November