Revenue Performance: Revenue was up slightly on a reported and currency-neutral basis, with low single-digit growth in the NIKE brand, partially offset by declines at Converse.
Gross Margins: Expanded 150 basis points to 44.8%, driven by strategic pricing, lower ocean freight rates, and improvements in supply chain efficiency, despite being partially offset by higher product input costs.
Earnings Per Share (EPS): Diluted EPS was $0.77. Excluding restructuring charges, EPS would have been $0.98, marking a 24% increase versus the prior year.
Segment Growth:
North America revenue grew by 3%.
EMEA revenue declined by 4%.
Greater China revenue grew by 6%.
APLA (Asia Pacific & Latin America) revenue grew by 4%.
Future Guidance
FY Revenue Expectation: Revenue growth anticipated to be approximately 1% for the full year.
Q4 Revenue Projections: Q4 revenue expected to be up slightly, with adjustments for shipment timing benefits in Q3 and lower digital growth.
Full-Year Gross Margin Outlook: Full year gross margins expected to expand approximately 120 basis points, factoring in various adjustments including foreign exchange headwinds.
Q4 Gross Margin Projections: Q4 gross margins expected to expand approximately 160 to 180 basis points.
SG&A Expense: Q4 SG&A is expected to be down slightly versus the prior year, including restructuring charges. Full year SG&A growth forecasted to be low single digits, including restructuring charges.
Early FY24 Expectations: Revenue and earnings growth is expected versus the prior year, with operating margins expanding, excluding restructuring charges. However, revenue in the first half of the fiscal year anticipated to be down low single digits.
Trends, Market Conditions, Sentiment
Innovation and Product Portfolio: Emphasis on accelerating a multiyear innovation cycle and shifting the product portfolio towards newness and innovation, including a focus on Nike Air technologies.
Consumer Demand Trends: Continued consumer attraction towards new and innovative products, with particular notice on performance footwear and fashion-conscious products.
Inventory Management: Maintaining healthy and productive inventory levels across the marketplace, with inventory units down double digits versus the prior year.
Macro Volatility and Market Challenges: Navigating increased macro volatility, with specific mention of softer consumer demand in EMEA, balanced against strategic pricing actions and supply chain efficiencies.
Strategic Restructuring: Implementing organizational restructuring to focus more on consumer-facing activities and innovation, impacting SG&A expenses and operational focus.
Notable Quotes
John Donahoe: “Our Consumer Direct Acceleration Strategy has driven growth and direct connections with consumers… and we’re increasing our investment in wholesale to help us elevate and grow the entire marketplace.”
Matthew Friend: “Newness and innovation are what drives brand distinction… NIKE needs to be faster.”
Regarding Fiscal Strategy: “We are driving earnings growth and offsetting softer second half revenue with strong gross margin execution.”
On Future Growth: “We expect revenue and earnings to grow versus the prior year, with operating margins expanding…however, expecting revenue in the first half of the fiscal year to be down low single digits.”
