NIKE Inc
For the period ended Aug 31, 2024. Filed Oct 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 31, 2024 · Filed Oct 7, 2024
NKE$38.59-2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-02-29; filed 2024-04-04.
0000320187-24-000019
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-08-31; filed 2024-10-07.
0000320187-24-000065
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 219 previous paragraphs and 151 current paragraphs.
71 unchanged; 55 reworded; 24 added; 91 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 17 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
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.
Current report
•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
Current report
•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
Current report
CURRENT ECONOMIC CONDITIONS AND OTHER FACTORS IMPACTING OUR BUSINESS
Current report
•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.
Current report
•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.
Current report
•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.
Current report
•NIKE Brand footwear revenues decreased 10% on a currency-neutral basis. Unit sales of footwear decreased 10%, while average selling price ("ASP") per pair was flat as strategic pricing actions were offset by changes in channel mix and higher discounts.
Current report
•Lower warehousing and logistics costs (increasing gross margin approximately 50 basis points); and
Current report
•Higher NIKE Brand ASP (increasing gross margin approximately 40 basis points), primarily due to benefits from strategic pricing actions from the prior year, partially offset by changes in channel mix.
Current report
•Higher other costs (decreasing gross margin approximately 60 basis points), in part due to higher inventory obsolescence reserves.
Current report
(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.
Current report
•Footwear revenues decreased 14% on a currency-neutral basis. Unit sales of footwear decreased 15%, while higher ASP per pair contributed approximately 1 percentage point of footwear revenue growth. Higher ASP per pair was primarily due to strategic pricing actions, partially offset by higher discounts.
Current report
•Apparel revenues decreased 10% on a currency-neutral basis. Unit sales of apparel decreased 12%, while higher ASP per unit contributed approximately 2 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to lower discounts and strategic pricing actions.
Current report
Reported EBIT decreased 15% reflecting lower revenues and the following:
Current report
•Gross margin expansion of 180 basis points primarily due to lower product costs, as well as lower warehousing and logistics costs.
Current report
•EMEA revenues decreased 12% on a currency-neutral basis due to lower revenues in Men's, Women's, the Jordan Brand and Kids'. Wholesale revenues decreased 11%. NIKE Direct revenues decreased 12%, due to digital sales declines of 24%, partially offset by comparable store sales growth of 2% and the addition of new stores.
Current report
•Footwear revenues decreased 12% on a currency-neutral basis. Unit sales of footwear decreased 13%, while higher ASP per pair contributed approximately 1 percentage point of footwear revenue growth. Higher ASP per pair was primarily due to strategic pricing actions, partially offset by changes in channel mix and higher discounts.
Current report
•Apparel revenues decreased 11% on a currency-neutral basis. Unit sales of apparel decreased 12%, while higher ASP per unit contributed approximately 1 percentage point of apparel revenue growth. Higher ASP per unit was primarily due to lower discounts.
Current report
Reported EBIT decreased 15% reflecting lower revenues and the following:
Current report
•Apparel revenues decreased 9% on a currency-neutral basis. Unit sales of apparel decreased 15%, while higher ASP per unit contributed approximately 6 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to strategic pricing actions.
Current report
•APLA revenues decreased 2% on a currency-neutral basis due to lower revenues in Korea, Pacific, Central and South America ("CASA") and Japan, partially offset by higher revenues in Mexico. APLA revenues decreased due to lower revenues in Men's, the Jordan Brand and Women's, partially offset by higher revenues in Kids'. Wholesale revenues decreased 1%. NIKE Direct revenues decreased 4% due to digital sales declines of 15%, partially offset by comparable store sales growth of 8% and the addition of new stores.
Current report
•Selling and administrative expense decrease of 11% due to lower demand creation expense and lower operating overhead expense. Demand creation expense decreased primarily due to lower brand marketing expense, lower sports marketing expense and favorable changes in foreign currency exchange rates. Operating overhead expense decreased primarily due to favorable changes in foreign currency exchange rates and lower wage-related expenses.
Current report
•Gross margin contraction of approximately 50 basis points primarily due to lower ASP, higher logistics costs and unfavorable changes in standard foreign currency exchange rates. This was partially offset by lower product costs, lower other costs and growth in licensee revenues.
Removed paragraphs (91)
Previous report
The Consumer Direct Acceleration strategy, which launched in July 2020, has driven revenue growth and millions of new connections with our consumers, and shifted the mix of our business toward our owned stores and digital platforms. To holistically serve all of our consumers across the marketplace, we expect to continue to invest in our NIKE Direct operations while also increasing investment to elevate and differentiate our brand experience within our wholesale partners. In addition, our product creation and marketing organizations are aligned to a consumer construct focused on sports dimensions through Men's, Women's and Kids', which allows us to better serve consumer needs. We also remain focused on accelerating our pace of innovation and maximizing the impact of our storytelling.
Previous report
We continue to invest in a global Enterprise Resource Planning Platform, data and analytics, demand sensing, insight gathering and other areas to create an end-to-end technology foundation. We believe this approach will accelerate growth and unlock more efficiency for our business, while driving speed and responsiveness as we serve consumers globally across the marketplace.
Previous report
•Gross margin for the third quarter of fiscal 2024 increased 150 basis points to 44.8%, primarily driven by strategic pricing actions and lower ocean freight rates and logistics costs, partially offset by higher product input costs and restructuring charges
Previous report
ECONOMIC CONDITIONS AND MARKET DYNAMICS
Previous report
•Consumer Spending: During the third quarter of fiscal 2024, consumers continued to spend more cautiously and promotional activity remained high across our industry. In this environment, we continue to experience lower digital traffic and moderation in our revenue growth. We will continue to monitor macroeconomic conditions, including the potential impacts of inflation and higher interest rates on consumer behavior.
Previous report
•Cost Inflationary Pressures: Inflationary pressures, including higher product input costs, continued to negatively impact our gross margin. These negative impacts on gross margin were more than offset by strategic pricing actions we have taken through the third quarter of fiscal 2024, as well as improvements in ocean freight rates and logistics costs we started to realize at the beginning of the second quarter of fiscal 2024.
Previous report
•Supply Chain Conditions: During the first nine months of fiscal 2024 and as of February 29, 2024, our inventory levels were healthy and reflected our proactive actions taken to manage our inventory supply. In addition, we continued to experience normalized inventory transit times and flow of seasonal product.
Previous report
RECENT DEVELOPMENTS
Previous report
In December 2023, we announced an enterprise initiative designed to accelerate our future growth. As part of this initiative, we are taking steps to streamline the organization. These changes will result in a net reduction of our global workforce. We expect a majority of the future annual wage savings from these actions will be reinvested in consumer facing activities to drive greater impact for our consumers, sports dimensions and the total marketplace.
Previous report
As of February 29, 2024, we expect to recognize pre-tax charges of approximately $450 million, primarily associated with employee severance costs and accelerated stock-based compensation expense, the majority of which will be recognized by the end of fiscal 2024. The related cash payments are expected to take place through the first half of fiscal 2025. The expected pre-tax charges are estimates and subject to a number of assumptions. Actual results may differ from current estimates.
Previous report
During the third quarter of fiscal 2024, we incurred pre-tax charges of $403 million, primarily associated with employee severance costs and accelerated stock-based compensation expense. For more information, refer to Note 14 — Restructuring within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
Previous report
•NIKE Brand footwear revenues increased 3% on a currency-neutral basis due to higher revenues in Men's, Women's, Kids' and the Jordan Brand. Unit sales of footwear increased 2%, while higher average selling price ("ASP") per pair contributed approximately 1 percentage point of footwear revenue growth. Higher ASP per pair was primarily due to higher full-price ASP, net of discounts, on a wholesale equivalent basis, partially offset by lower NIKE Direct ASP.
Previous report
•NIKE Brand apparel revenues decreased 3% on a currency-neutral basis due to lower revenues in Men's and Women's, partially offset by higher revenues in Kids'. Unit sales of apparel decreased 8%, while higher ASP per unit contributed approximately 5 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to higher full-price, off-price and NIKE Direct ASPs.
Previous report
•NIKE, Inc. Revenues were $38.8 billion for the first nine months of fiscal 2024, which increased 1% compared to the first nine months of fiscal 2023 on a reported and currency-neutral basis. The increase, on a currency-neutral basis, was driven by higher revenues in Greater China and APLA, which each contributed approximately 1 percentage point to NIKE, Inc. Revenues. Lower revenues for Converse reduced NIKE, Inc. Revenues by approximately 1 percentage point.
Previous report
•NIKE Brand revenues, which represented over 90% of NIKE, Inc. Revenues, increased 2% on a reported and currency-neutral basis. The increase, on a currency-neutral basis, was primarily due to higher revenues in the Jordan Brand, partially offset by lower revenues in Men's and Kids'.
Previous report
•NIKE Brand footwear revenues increased 2% on a currency-neutral basis, primarily due to higher revenues in the Jordan Brand and Women's, partially offset by lower revenues in Kids'. Unit sales of footwear decreased 2%, while higher ASP per pair contributed approximately 4 percentage points of footwear revenue growth. Higher ASP per pair was primarily due to higher full-price ASP and a higher mix of NIKE Direct sales, partially offset by lower NIKE Direct ASP.
Previous report
•NIKE Brand wholesale revenues were flat compared to the first nine months of fiscal 2023, on a reported and currency-neutral basis, as higher revenues in Greater China and APLA were offset by lower revenues in North America and EMEA.
Previous report
•NIKE Direct revenues increased 4%, on a reported basis, from $15.8 billion for the first nine months of fiscal 2023 to $16.5 billion for the first nine months of fiscal 2024. On a currency-neutral basis, NIKE Direct revenues increased 4%, primarily driven by comparable store sales growth of 6% and the addition of new stores. NIKE Brand Digital sales were $9.4 billion for the first nine months of fiscal 2024 compared to $9.3 billion for the first nine months of fiscal 2023. Within NIKE Direct revenues, there were certain reclassifications made between NIKE-owned retail stores and NIKE Brand Digital in the prior period to conform to current period presentation. The reclassifications did not have a material impact on our Unaudited Condensed Consolidated Financial Statements.
Previous report
•Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis (increasing gross margin approximately 180 basis points), primarily due to strategic pricing actions;
Previous report
•Lower other costs, including warehousing costs (increasing gross margin approximately 50 basis points); and
Previous report
•Favorable changes in net foreign currency exchange rates, including hedges (increasing gross margin approximately 10 basis points).
Previous report
•Lower margin in our NIKE Direct business (decreasing gross margin approximately 50 basis points);
Previous report
•Lower off-price margin, on a wholesale equivalent basis (decreasing gross margin approximately 40 basis points); and
Previous report
•Restructuring charges (decreasing gross margin approximately 50 basis points).
Previous report
•Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis (increasing gross margin approximately 270 basis points), primarily due to strategic pricing actions; and
Previous report
•Lower other costs (increasing gross margin approximately 10 basis points).
Previous report
This was partially offset by:
Previous report
•Higher NIKE Brand product costs, on a wholesale equivalent basis (decreasing gross margin approximately 60 basis points), primarily due to higher product input costs largely offset by lower ocean freight rates and logistics costs; and
Previous report
•Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 50 basis points); and
Previous report
•Lower off-price margin, on a wholesale equivalent basis (decreasing gross margin approximately 30 basis points);
Previous report
•Lower margin in our NIKE Direct business (decreasing gross margin approximately 20 basis points).
Previous report
Demand creation expense increased 8% reflecting an increase in marketing expense, primarily due to higher advertising and marketing expense, higher sports marketing expense and higher digital marketing. Changes in foreign currency exchange rates did not have a material impact on Demand creation expense.
Previous report
Operating overhead expense increased 3% primarily due to restructuring charges, partially offset by lower technology spend and wage-related expenses. Changes in foreign currency exchange rates did not have a material impact on Operating overhead expense.
Previous report
For more information related to our organizational realignment and related costs, refer to Note 14 — Restructuring within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.
Previous report
For the first nine months of fiscal 2024, Other (income) expense, net decreased from $283 million of other income, net, to $101 million of other income, net, primarily due to a net unfavorable change in foreign currency conversion gains and losses, including hedges, as well as net favorable settlements of legal matters in the prior year and goodwill impairment in the current year. These items were partially offset by the loss recognized in the prior year upon completion of the sale of our entities in Argentina and Uruguay to a third-party distributor.
Previous report
Our effective tax rate was 16.5% for the third quarter of fiscal 2024, substantially consistent with 16.0% for the third quarter of fiscal 2023.
Previous report
Wholesale equivalent revenues: References to wholesale equivalent revenues are intended to provide context as to the total size of our NIKE Brand market footprint if we had no NIKE Direct operations. NIKE Brand wholesale equivalent revenues consist of (1) sales to external wholesale customers and (2) internal sales from our wholesale operations to our NIKE Direct operations, which are charged at prices comparable to those charged to external wholesale customers.
Previous report
•Footwear revenues increased 4% on a currency-neutral basis, primarily due to higher revenues in Kids', Women's and Men's. Unit sales of footwear increased 7%, while lower ASP per pair reduced footwear revenues by approximately 3 percentage points. Lower ASP per pair was primarily due to a lower mix of NIKE Direct sales and lower NIKE Direct ASP.
Previous report
•Apparel revenues decreased 1% on a currency-neutral basis due to lower revenues in the Jordan Brand and Men's, largely offset by higher revenues in Kids' and Women's. Unit sales of apparel decreased 5%, while higher ASP per unit contributed approximately 4 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to higher full-price and NIKE Direct ASPs, partially offset by a lower mix of NIKE Direct sales.
Previous report
Reported EBIT increased 18% reflecting higher revenues and the following:
Showing the first 40 of 91 passages. Open the source sections for the rest.
Reworded paragraphs (55)
Previous wording
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 NIKE Direct operations, which is comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital"), to wholesale accounts and to 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 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.
Current wording
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.
Previous wording
•NIKE, Inc. Revenues for the third quarter of fiscal 2024 were $12.43 billion compared to $12.39 billion for the third quarter of fiscal 2023
Current wording
•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
Previous wording
•NIKE Direct revenues were $5.4 billion for the third quarter of fiscal 2024 compared to $5.3 billion for the third quarter of fiscal 2023, and represented approximately 45% of total NIKE Brand revenues
Current wording
•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
Previous wording
•Inventories as of February 29, 2024, were $7.7 billion, a decrease of 9% compared to May 31, 2023, primarily driven by a decrease in units
Current wording
•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
Previous wording
•We returned approximately $1.4 billion to our shareholders in the third quarter of fiscal 2024 through share repurchases and dividends
Current wording
•We returned approximately $1.8 billion to our shareholders in the first quarter of fiscal 2025 through share repurchases and dividends
Previous wording
The operating environment could remain volatile in the fourth quarter of fiscal 2024, and the risk exists that the worsening of macroeconomic conditions could have a material adverse impact on our revenue growth as well as overall profitability. We continue to be confident in our brand strength and deep consumer connections. We will also continue to focus on driving gross margin expansion and disciplined cost control while managing the health of our most iconic franchises.
Current wording
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.
Previous wording
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 and nine months ended February 29, 2024 and February 28, 2023 are as follows:
Current wording
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:
Previous wording
EBIT margin: Calculated as total NIKE, Inc. EBIT divided by total NIKE, Inc. Revenues. Our EBIT margin calculation for the three and nine months ended February 29, 2024 and February 28, 2023 are as follows:
Current wording
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:
Previous wording
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 includes revenues from stores that were temporarily closed during the period as a result of COVID-19. 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.
Current wording
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.
Previous wording
•NIKE, Inc. Revenues for the third quarter of fiscal 2024 were $12.43 billion compared to $12.39 billion for the third quarter of fiscal 2023. On a currency-neutral basis, NIKE, Inc. revenues were flat, as higher revenues in North America and Greater China, which each increased NIKE, Inc. Revenues by approximately 1 percentage point, were offset by lower revenues in Europe, Middle East & Africa ("EMEA") and Converse, which each reduced NIKE, Inc. Revenues by approximately 1 percentage point.
Current wording
•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. On a currency-neutral basis, NIKE, Inc. revenues decreased 9%, as lower revenues in North America, Europe, Middle East & Africa ("EMEA") and Converse reduced NIKE, Inc. Revenues by approximately 5, 3 and 1 percentage points, respectively.
Previous wording
•NIKE Brand revenues, which represented over 90% of NIKE, Inc. Revenues, increased 2% on a reported and currency-neutral basis. The increase, on a currency-neutral basis, was due to higher revenues in Men's, Kids', Women's and the Jordan Brand.
Current wording
•NIKE Brand revenues, which represented over 90% of NIKE, Inc. Revenues, decreased 10% on a reported basis and 9% on a currency-neutral basis. The decrease on a currency-neutral basis, was due to lower revenues in Men's, Women's, the Jordan Brand and Kids'.
Previous wording
•NIKE Brand apparel revenues decreased 2% on a currency-neutral basis, primarily due to lower revenues in Men's and Women's. Unit sales of apparel decreased 12%, while higher ASP per unit contributed approximately 10 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to higher full-price and NIKE Direct ASPs.
Current wording
•NIKE Brand apparel revenues decreased 9% on a currency-neutral basis. Unit sales of apparel decreased 12%, while higher ASP per unit contributed approximately 3 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to lower discounts and strategic pricing actions.
Previous wording
•NIKE Brand wholesale revenues increased 3% compared to the third quarter of fiscal 2023, on a reported and currency-neutral basis. The increase, on a currency-neutral basis, was driven by higher revenues in Greater China, North America and Asia Pacific & Latin America ("APLA"), partially offset by lower revenues in EMEA.
Current wording
•NIKE Brand wholesale revenues decreased 8% and 7% compared to the first quarter of fiscal 2024, on a reported and currency-neutral basis, respectively. The decrease on a currency-neutral basis was driven by lower revenues in EMEA, North America and Asia Pacific & Latin America ("APLA"), partially offset by higher revenues in Greater China.
Previous wording
•NIKE Direct revenues were $5.4 billion in the third quarter of fiscal 2024, compared to $5.3 billion for the third quarter of fiscal 2023. On a currency-neutral basis, NIKE Direct revenues were flat, driven by comparable store sales growth of 3% and the addition of new stores, offset by NIKE Brand Digital sales declines of 4%. For additional information regarding comparable store sales, including the definition, see "Comparable Store Sales". NIKE Brand Digital sales were $3.0 billion for the third quarter of fiscal 2024 compared to $3.1 billion for the third quarter of fiscal 2023. Within NIKE Direct revenues, there were certain reclassifications made between NIKE-owned retail stores and NIKE Brand Digital in the prior period to conform to current period presentation. The reclassifications did not have a material impact on our Unaudited Condensed Consolidated Financial Statements.
Current wording
•NIKE Direct revenues were $4.7 billion in the first quarter of fiscal 2025, compared to $5.4 billion for the first quarter of fiscal 2024. NIKE Brand Digital sales were $2.3 billion for the first quarter of fiscal 2025 compared to $2.9 billion for the first quarter of fiscal 2024. On a currency-neutral basis, NIKE Direct revenues decreased 12%, primarily due to NIKE Brand Digital sales declines of 20%. Comparable store sales were flat compared to the first quarter of fiscal 2024. For additional information regarding comparable store sales, including the definition, see "Comparable Store Sales".
Previous wording
For the third quarter of fiscal 2024, our consolidated gross margin was 150 basis points higher than the prior year due to:
Current wording
For the first quarter of fiscal 2025, our consolidated gross margin was 120 basis points higher than the prior year due to:
Previous wording
•Lower NIKE Brand product costs, on a wholesale equivalent basis (increasing gross margin approximately 50 basis points), primarily due to lower ocean freight rates and logistics costs, partially offset by higher product input costs;
Current wording
•Lower NIKE Brand product costs (increasing gross margin approximately 120 basis points), primarily due to lower ocean freight rates and lower product input costs;
Previous wording
(1)Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complimentary products, television, digital and print advertising and media costs, brand events and retail brand presentation.
Current wording
(1)Demand creation expense consists of brand marketing expense, including advertising and promotion costs such as production and media costs, digital marketing expense, brand events and retail brand presentation costs, and sports marketing expense, including expenses related to endorsement contracts, complimentary product and sports marketing events.
Previous wording
Demand creation expense increased 10% reflecting an increase in marketing expense, primarily due to higher advertising and marketing expense and higher sports marketing expense. Changes in foreign currency exchange rates did not have a material impact on Demand creation expense.
Current wording
Demand creation expense increased 15% primarily due to an increase in brand marketing expense, reflecting investment in key sports events. Changes in foreign currency exchange rates did not have a material impact on Demand creation expense.
Previous wording
Operating overhead expense increased 6% primarily due to restructuring charges, partially offset by lower wage-related expenses and technology spend. Changes in foreign currency exchange rates did not have a material impact on Operating overhead expense.
Current wording
Operating overhead expense decreased 7% primarily due to lower wage-related expenses and lower other administrative costs. Changes in foreign currency exchange rates did not have a material impact on Operating overhead expense.
Previous wording
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 that are outside the normal course of business.
Current wording
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.
Previous wording
For the third quarter of fiscal 2024, Other (income) expense, net decreased from $58 million of other income, net, to $16 million of other income, net, primarily due to goodwill impairment in the current year and a net unfavorable change in foreign currency conversion gains and losses, including hedges.
Current wording
For the first quarter of fiscal 2025, Other (income) expense, net increased from $10 million to $55 million of other income, net, primarily due to a net favorable change in foreign currency conversion gains and losses, including hedges.
Previous wording
We estimate the combination of the 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 $16 million and an unfavorable impact of $86 million on our Income before income taxes for the third quarter and first nine months of fiscal 2024.
Current wording
We estimate the combination of the 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 an unfavorable impact of $12 million on our Income before income taxes for the first quarter of fiscal 2025.
Previous wording
Our effective tax rate was 15.6% for the first nine months of fiscal 2024, compared to 18.5% for the first nine months of fiscal 2023, primarily due to one-time benefits provided by the delay of the effective date of certain U.S. foreign tax credit regulations and a reduction in accrued withholding taxes on undistributed foreign earnings.
Current wording
Our effective tax rate was 19.6% for the first quarter of fiscal 2025, compared to 12.0% for the first quarter of fiscal 2024, primarily due to a one-time benefit in the first quarter of fiscal 2024 provided by the delay of the effective date of certain U.S. foreign tax credit regulations.
Previous wording
•North America revenues increased 3% on a currency-neutral basis due to higher revenues in Kids', Men's, Women's and the Jordan Brand. Wholesale revenues increased 5%. NIKE Direct revenues increased 2%, driven by comparable store sales growth of 1% and the addition of new stores, as well as digital sales growth of 1%.
Current wording
•North America revenues decreased 11% on a currency-neutral basis due to lower revenues in Men's, Women's, the Jordan Brand and Kids'. Wholesale revenues decreased 11%. NIKE Direct revenues decreased 11%, primarily due to digital sales declines of 15%, partially offset by comparable store sales growth of 1%.
Previous wording
•Selling and administrative expense increase of 1% driven by higher demand creation expense, partially offset by lower operating overhead expense. The increase in demand creation expense was primarily due to higher advertising and marketing expense. The decrease in operating overhead expense was primarily due to lower other administrative costs and wage-related expenses, largely offset by unfavorable changes in foreign currency exchange rates.
Current wording
•Selling and administrative expense increase of 4% driven by higher demand creation expense, partially offset by lower operating overhead expense. The increase in demand creation expense was primarily due to higher brand marketing expense, reflecting investment in key sports events. The decrease in operating overhead expense was primarily due to lower wage-related expenses and other administrative costs.
Previous wording
•Gross margin was flat, as lower product costs, reflecting lower ocean freight rates and logistics costs, and higher full-price ASP, net of discounts, primarily due to strategic pricing actions, were offset by unfavorable changes in standard foreign currency exchange rates, lower margin in NIKE Direct and lower off-price margins.
Current wording
•Gross margin expansion of 190 basis points primarily due to lower product costs, reflecting lower ocean freight rates, and lower warehousing and logistics costs, partially offset by unfavorable changes in standard foreign currency exchange rates.
Previous wording
•Selling and administrative expense was flat as higher demand creation expense was offset by lower operating overhead expense. The increase in demand creation expense was primarily due to higher advertising and marketing expense and higher sports marketing expense. The decrease in operating overhead expense was primarily due to lower wage-related expenses.
Current wording
•Selling and administrative expense decrease of 2% driven by lower operating overhead expense, partially offset by higher demand creation expense. The decrease in operating overhead expense was primarily due to lower wage-related expense, lower other administrative costs and favorable changes in foreign currency exchange rates. The increase in demand creation expense was primarily due to higher brand marketing expense, reflecting investment in key sports events, partially offset by lower sports marketing expense and favorable changes in foreign currency exchange rates.
Previous wording
•Greater China revenues increased 6% on a currency-neutral basis due to higher revenues in Men's, Women's, Kids' and the Jordan Brand. Wholesale revenues increased 12%. NIKE Direct revenues decreased 1% due to digital sales declines of 13%, reflecting reduced digital traffic, partially offset by comparable store sales growth of 1% and growth in non-comparable store sales.
Current wording
•Greater China revenues decreased 3% on a currency-neutral basis, primarily due to lower revenues in the Jordan Brand. Wholesale revenues increased 10%. NIKE Direct revenues decreased 16% due to digital sales declines of 34% and comparable store sales declines of 8%, partially offset by growth in non-comparable store sales.
Previous wording
•Footwear revenues increased 6% on a currency-neutral basis due to higher revenues in Men's, the Jordan Brand, Women's and Kids'. Unit sales of footwear increased 7%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point. Lower ASP per pair was primarily due to lower NIKE Direct ASP, partially offset by higher full-price ASP.
Current wording
•Footwear revenues decreased 2% on a currency-neutral basis. Unit sales of footwear decreased 1%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point. Lower ASP per pair was primarily due to changes in channel mix and higher discounts, partially offset by strategic pricing actions.
Previous wording
Reported EBIT decreased 4% reflecting higher revenues and the following:
Current wording
Reported EBIT decreased 4% reflecting lower revenues and the following:
Previous wording
•Gross margin contraction of approximately 180 basis points, largely due to unfavorable changes in standard foreign currency exchange rates, lower off-price margins and higher product costs. This was partially offset by higher full-price ASP, net of discounts, primarily due to strategic pricing actions.
Current wording
•Gross margin contraction of approximately 170 basis points, largely due to unfavorable changes in standard foreign currency exchange rates, higher product costs and higher other costs, in part due to higher inventory obsolescence reserves. This was partially offset by higher ASP, primarily due to strategic pricing actions, partially offset by changes in channel mix.
Previous wording
•Selling and administrative expense decrease of 4% primarily due to lower operating overhead expense. Operating overhead expense decreased due to lower other administrative costs, favorable changes in foreign currency exchange rates and lower wage-related expenses.
Current wording
•Selling and administrative expense decrease of 5% primarily due to lower operating overhead expense, partially offset by higher demand creation expense. Operating overhead expense decreased due to lower other administrative costs, lower wage-related expenses and favorable changes in foreign currency exchange rates. Demand creation expense increased due to higher brand marketing expense, reflecting investment in key sports events.
Previous wording
•Footwear revenues increased 3% on a currency-neutral basis, primarily due to higher revenues in Men's, partially offset by Kids'. Unit sales of footwear decreased 4%, while higher ASP per pair contributed approximately 7 percentage points of footwear revenue growth. Higher ASP per pair was primarily due to higher full-price ASP and a higher mix of NIKE Direct sales.
Current wording
•Footwear revenues decreased 3% on a currency-neutral basis. Unit sales of footwear decreased 4%, while higher ASP per pair contributed approximately 1 percentage point of footwear revenue growth. Higher ASP per pair was primarily due to strategic pricing actions, partially offset by higher discounts and changes in channel mix.
Previous wording
•Apparel revenues decreased 3% on a currency-neutral basis, primarily due to lower revenues in Men's, partially offset by higher revenues in the Jordan Brand. Unit sales of apparel decreased 6%, while higher ASP per unit contributed approximately 3 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to higher off-price ASP, higher full-price ASP and a higher mix of NIKE Direct sales, partially offset by lower NIKE Direct ASP.
Current wording
•Apparel revenues decreased 2% on a currency-neutral basis. Unit sales of apparel decreased 6%, while higher ASP per unit contributed approximately 4 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to strategic pricing actions.
Previous wording
Reported EBIT decreased 3% reflecting higher revenues and the following:
Current wording
Reported EBIT decreased 3% reflecting lower revenues and the following:
Previous wording
•Restructuring charges (decreasing gross margin approximately 20 basis points); and
Current wording
•Gross margin expansion of approximately 20 basis points primarily due to higher ASP, due to strategic pricing actions, partially offset by higher discounts and changes in channel mix. This was partially offset by higher product costs, primarily due to higher product input costs.
Previous wording
Global Brand Divisions' loss before interest and taxes increased 3% in part due to higher demand creation expense, partially offset by lower operating overhead expense. The increase in demand creation expense was primarily due to increased advertising and marketing expense. Lower operating overhead expense was primarily due to lower technology spend and wage-related costs.
Current wording
Global Brand Divisions' loss before interest and taxes increased 2% in part due to higher demand creation expense, partially offset by lower operating overhead expense. The increase in demand creation expense was primarily due to increased brand marketing expense, reflecting investment in key sports events and sports marketing expense. Lower operating overhead expense was primarily due to lower wage-related expenses.
Previous wording
(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. We do not own the Converse trademarks in Japan and accordingly do not earn revenues in Japan.
Current wording
(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.
Previous wording
•Converse revenues decreased 20% on a currency-neutral basis driven by revenue declines in North America, Western Europe, and Asia. Combined unit sales within the wholesale and direct to consumer channels decreased 17%, driven primarily by a decrease in wholesale, while ASP decreased 3% driven by increased promotional activity in direct to consumer.
Current wording
•Converse revenues decreased 14% on a currency-neutral basis driven by revenue declines in all territories. Unit sales decreased 11%, driven primarily by a decrease in wholesale, while ASP decreased 3% reflecting higher discounts in direct to consumer.
Previous wording
•Wholesale revenues decreased 14% on a currency-neutral basis, as declines in North America and Western Europe were partially offset by growth in Asia.
Current wording
•Wholesale revenues decreased 16% on a currency-neutral basis, as declines in Western Europe and Asia were partially offset by growth in North America.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
For the first nine months of fiscal 2024, our consolidated gross margin was 100 basis points higher than the prior year due to:
Previous report — wording carried elsewhere
•a favorable change of $167 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 margin; and