NIKE (NKE) 24 Sep 192020 Q1 Earnings call transcript

Good afternoon, everyone. Welcome to NIKE, Inc.'s Fiscal 2020 First Quarter Conference Call.

For those who want to reference today's press release, you'll find it at http://investors.nike.com. Leading today's call is Matt Friend, CFO NIKE Operating Segments and Vice President, Investor Relations.

Before I turn the call over to Mr. and you based on those materially. on subject certain remind make call statements me cause to statements could forward-looking current risks let that to this participants will are actual Friend, results that differ uncertainties expectations and risks in reports the are filed filed on detailed annual including the report uncertainties Form and with These the SEC, XX-K.

expectations or gross Some growth forward-looking margin. revenue statements of future may concern

intended to to measures, financial context In to addition, also statistical constant-dollar references non-GAAP measures. and constant-dollar performance revenue revenue. discuss make information financial are eliminating fluctuations. financial the participants to including References business foreign provide to as non-GAAP references the Participants non-public and may of other exchange may

comparable at and made GAAP will be To website, NIKE’s reconciliations measures information extent the financial of and quantitative available non-public statistical http://investors.nike.com. presentations is discussed,

like Now turn Relations. Friend, over CFO President, to Segments call Matt the Investor and Vice I Operating would to

thank Inc.'s results. today Hello, us you Thank joining everyone, XXXX you, fiscal and operator. for NIKE, first discuss to quarter

the As on discuss may call financial today's measures. non-GAAP indicated, operator participants

will in release, about was issued at our hour site reconciliations find ago, the which an our press Web You appropriate investors.nike.com.

on today's and Mark Officer, be and NIKE, call Inc. CEO, Financial Chairman, Andy our President Chief will Parker; Campion. us Joining

time. we allotted questions. of to allow you Following will as take their our We prepared many possible as to remarks, your would in like ask questions

you. you limiting have appreciate Thanks to we on would free covered you best do and initial to event feel your that additional others, cooperation your questions come will questions In are that re-queue we this. to So please two. for by to the back our not

President over Mark to now CEO, I’ll and Parker. the NIKE, Inc. call Chairman, turn

responsibility the several Matt. to to whole afternoon, behalf Investor partnership I’d his over of of for of on thank you him years. I'd the the Relations. last he as Matt, and to everyone. takes then And Nitesh course Many on his Thanks, of like good first call team, welcome know like

Turning in revenue very of good about and on the quarter basis. to performance of 'XX, on feel growing on the proved the offense, of business XX% currency our a our balance complete quarter neutral first portfolio. drivers foundational that strengths year our capitalizing the and was depth the a results, of untapped our dimensions we building fiscal It

innovation athletic feed For quarter, in which of broad-based style demand showing reflected the in business, by and strong of for XX% celebrating geographies, both grew international growth with an is of summer the relationships power in XX%; in of to double-digit grew the in this business digital a in consumer. consumer women's apparel growth the lineup female our which continues our very our the with the growing athletes; personal and comfortable strong all product; more back and incredible which footwear off led

lead Mobile we’re retail mobile, experiences trend the in are And within true time, growth. to digital continues way some and our partners. while this with app has channels for to experiences own our most our fueling leverage beginning the held

scaling our by As and experiences our NIKE we’re with learnings marketplace partners. out we do, in a to differentiated best creating set for class

expanding to be to to consumer-direct the competitive our key The consumer the edge our through total commitment offense. continues

focused. We’re

we dimensions brand of high macroeconomic accelerating key the and see in and in that’s in in volatile especially our markets geopolitical the today. We’re investing business. we're growth important our that And environment

continue that power that under fair in grassroots of and through digital-first relation by programs. to and serve of participation Beijing we China, a grow sport navigated our strongly free In we the to helping lead. been NIKE’s current of to we effectively the Historically, specifically, confident of generation love trade. we’ll believe support excessive extend In we’re clear we dynamic. so and do through we've In tariffs, to duties and we've cities consumers continue their Shanghai, key

As I’ve years. out. than growth continue it driven China for to said in the double-digit results China before, a prove more of quarter We’ve five for and brand Greater is NIKE China every

continued on environment, NIKE’s momentum revenue product. a with we XX% has In been an any basis. growth This outstanding currency-neutral success always that foundation quarter, great for

We another see huge that continue quarter innovation. today for to with NIKE

categories delivering footwear We're of existing commitment of apparel fresh more and our growing wider and range serving lead a strong options new on and athletes. deeper of continues some products to both to and and a choice expansion in all both hottest double-digits. Sportswear platforms

greatest hit We’ve how XXX example. is mix we blending and React bold a the Max Max NIKE’s React is with of strengths Air colorways. One multiple runway by created Air perfect a style innovation, and and

In led revenue for the to the in largest fact, footwear XXX the gains Air quarter. Max React

this Another layered Air is our build in the energy the visible lineup unit to Max we’re strong addition a with new continues Air the silhouettes. upper driving quarter on XXX, Sole running to

Force faster Air By We’re Tech the the Fleece It’s X models new this clearly reimagining Fleece. with the too Air our also Force sportswear Air the we with collection businesses we’re and X franchises an men’s adding like N.XXX women's silhouettes shapes top and approach and and Force our adapting Sage, using than X like into and lines. kids the throughout quarter. Tech grew segmenting our

apparel continues as in consecutive sportswear apparel connect Our we collections with XXnd through to consumer, themes the and drove for designing quarter. double-digit strategy growth the of

our that Overall, just its part biggest apparel one is growth business critical but a doesn't and in season get is kids kids’ back-to-school a of our the fact double-digit ever, lot experienced quarter. of Our calls it footwear business. driving attention for on

and core buy kids product. we platforms for in the and which through imagery more drove to dynamic new Max new digital we’re at the parents it parents power buying XXX Air that through our and our make present easier for earning apparel continue their to product basketball kids’ membership kids’ triple-digit testing new in We we’re business growth franchises. How so invest distributed for girls apps, on provides on we and pace and more footwear see kids, both models and In gains to need also boys significant opportunities.

Zoom To this especially this about the with did line become as only momentum line. quarter the on the In potential saw we’re item signature sold out signature Not of in largest basketball Freak long-term its becoming product, in launch initial performance history, selling with the AlphaDunk. basketball quickly top apparel NIKE be the we very apparel honest, well internationally X T-shirt excited the Freak Nike.com. strong

athletes World This and was by tremendous also at were the for Women's the all stage Cup. quarter, incredible we performances NIKE innovation. It a inspired

debuted innovation, boot our During football the Mercurial XXXX. also final, the top all-NIKE we

Cup revenue athlete; it event. than In stayed we matter wider addition, Women's was Across most was the apparel XXXX tights. the intensely for apparel focused bigger and from to the the Xx bras female that World the the classifications XXXX business, on

The the to strategic NIKE a profitable Bra For doors. channels. distribution the price approach retail our partner way other edit direct and incredible great One of the points and light-support amplify collection quarter, especially led focus in is categories is more putting and NIKE across example items that One will Indy Tight stretch demand, NIKE creating most on to our our

the to customer categories Joyride strong scale now multiple delivers the was conform across The to excited about this athletes was and and we’re launched Joyride We're get with we incredible system designed everyday response to running, the silhouette very comfort kids. to beginning running the foot. encourage moving. just women’s, more through beads this In platform which responsive to sportswear that quarter

As to athletes. we to of for opportunity through Joyride, of range continue one began wider is biggest serve communicate even to the NIKE an

our to the will add As our it our product the leader of through and definition around we’re brand, wellness and growing more been we broadening industry, We’ve but innovation. in more of through health sport movement doing world.

on is opportunity to more for opening up inclusive light play, view to competition growth. design of new to From fitness our activity lanes

example, our to of studying fit For with types size body our successful more we’re line. plus the serve products

and for has designing modesty FLYEASE system people. people’s match and to entry more appeal are teams to even preferences easier more for updated exit to been Our our

and high Tokyo can athletes into the a X. be we’ll all confident more champion most comfortable a an Olympics. of time, new into as coveted people the sneakers more and we continue the performance to Making to expanding be bringing catalyst sport that’s basketball Jordan and shoe into one lead will incredible Air We theme of

that On and was brand in record Jordan year that growth quarter’s over healthy apparel mid-teens like and billion $X create call in North all including Air the and America. breaking incredible in geographies, over growth told international with the Jordan women's, followed revenue of areas finished all basketball, growing the up accelerated quarter continues an accelerating in last we world. 'XX. Jordan performance demand the to at franchise X We're you with new fiscal for double-digit pace

This the to announce quarter, we joined family. excited that Jordan Zion incredibly were

the with XX Jordan Air developing the wear rookies. season most NBA's will we’re anticipated innovation start Zion that of already new and proud We’re to this one

over few fuel seasons, carving out in our Looking future new next opportunities. for the businesses growth to pipeline set our biggest while is space also

and LeBron Kyrie make voice innovation in to to phone. to much season adaptive Running evolve from of innovation fitness more our a will spinning activation new proven for and types. performance Training And station-based new the new your NIKE will we arrive features faster will Women's franchise help started. gets year introduce models range as will from materials signature more New into platform activities, designed training 'XX. like classes. NBA will athletes Tokyo. that’s with lead as workouts, with continue fiscal introduce apparel There’s of headed including a high-intensity come

usually our in grab the investing those digital. the are products relationships deepened we of and demand. areas. final is the up We're We're to experiences. with through first channels to consumers, that, of While the building own critical power capture of industry personal do we’re more our leading our To scale three attention create that backend partners. to piece our quickly ramping capabilities And through

products relationship advantages Air services. the as giving Joyride to that inventory React. critical did Connected means access access to to XXX them cases, capturing full-price that that as simple like Membership Fundamentally, product with innovation want giving member. the also latest demand. launch and with capability. is have the heart it better they so some easier Max sits consumers product, to more early can more there our It more be the we you’re to multiple this in NIKE. access being they moment, are In quarter tailored personal at of With and a logged gives a strategy of in the

to With members’ services, we’re bringing lives value consistently. our real

people and have assessing coming for with Our teams to different ways completely engage back more. are more them

more users than Over the more and for we our active create we of apps. NIKE. members value more number engagement last our of active for years, both doubled three the all With across

experiences those example, ultimate at scale our NIKE connection partnerships. start personal sneakers from Becoming truly our with channels for this It’s community. positive. and then quarter. the XX% to of amplify more apparel. direct new in In APLA is a now roughly numbers. We from the has in our quarter, through over came EMEA redefined on growth digital objective. The The has begun to sneaker high app countries grew grow very We've members been also pilots in this with test room heat our read within XX on opportunity own early sneakers and our XX% and

said quarter. XX NIKE As in already It’s countries our The the live growing holiday. go largest triple will NIKE. in for China digits in before, platform app is portfolio, in fastest-growing app the become this shop almost I’ve and is most the and one-stop NIKE comprehensive

can interactions in on North alone million added North the scaling most stores in exciting store in in as experience. and every owned location, America now the NIKE including America is be factory X new having shopping NIKE we nearly app NIKE factory stores most is impact the our from Just features It’s quarter that doors. and members physical this activated

experience point foot, read NIKE in significant accurate year. that and is We’ll fiscal available shoe moving at-home all quickly America in this scans consumer app Fit a an also experience is our users is The locations later technology size. in-store Japan. Europe launching and of by North friction be into providing the currently eliminating a an

When stronger in better online marketplace. an across we the in a channels product our impressive distinctive We to the while at in partnerships. them and we consumer. they find moving experience the offline the to or coming objective want continue platform and of retailer, from be to want, want together easily We’re when the that another move with more they create invest seamlessly pace able to is it path to control

with engage touch Ultimately and channels across it by often points. serving recognizing, rewarding multiple will members, NIKE more and

Retail partners. Our teams showing ability App very to this active space. continue be in NIKE to is at already scale the with

with at Retail and membership doors to wholesaler with time, in top Locker and a were Retail This Foot this store. quarter, for experiences at We activated to North later Washington App China NIKE sports year. features plan App NIKE Europe in Zalando more and first integrate Locker’s NIKE through the bring new Foot a in fiscal pilot Heights America in

Our continued and with also a Zalando, Instagram inventory women's training use allows commerce instantly. with we're partnership direct Pro-Direct in WeChat availability product including top and in the check world's to that in leveraging with stores And media and JD to messaging can users program platforms new for where channels scale, our consumers feature Europe. nearby social

better better our science With members, A and we’re all to And to value art the our and Zodiac, we've our ability experiences the lifetime accelerating critical is to brand. to to through become them bringing our supply like component proprietary acquired teams NIKE their give of smarter to before. never chain. technology that know of expand opportunities do retail

capabilities Fit predictive of This using closer sizes inform acquisition accelerate our to Celect. about decisions us in which acquired to and platform more we and NIKE accurate and actionable into new turn accurate demand insights product. month scientists more talked already us we inventory our we we’re allows addition Invertex a raw data insights, of visioning greatly to brought just gain to will ability this make And computer better the market. through to for analytics last design data team fitting game

great lifestyles for in start the serving we’re is year demand It and accelerate partnering, for shift active completely. investing more a global consumer to towards capabilities and all our product the of was continues We’re more The teams to gaining in new name NIKE. the high. own athletic

drive that we growth. a greatest will areas have As company, focus a these sharper on the

through the sport more of our to valuable consumer people of digital. bringing the with We’re even the relationships power to and more continue build joy we

most the are for opportunity strong, but industry significant fundamentals me the Our what ahead our and is NIKE. excites for

here’s Andy. Thanks. And now

the and call. to hello on everyone Mark, you, Thank

First, I transitions Relations now into leadership valuable call welcome of to incredibly also want responsibilities. And Investor set first new Nitesh Investor partnership expanded over expands want thank Matt his his to as personally include for to he over to take and his leadership Relations. responsibilities I a he a moment as and to

XXX set In neutral revenue XX%, out dimension. XX of our delivered QX, results ago or strong our on and extraordinary every we excited high expectations margin but expansion, the days notably, XX% quality about on is invested of meeting with Most Those returns of block basis EPS of gross point capital. came the we expanding growth of currency exceeding we growth numbers, are performance. most what we're the

performance the exceptional reflects our QX teams around strategic in execution financial Our world. by

One, to we three broad-based to transformation are NIKE QX. our transform accelerating on for stand continue drive NIKE our global reflect on key how consumers. that growth the themes portfolio. We fuel relentless There out when serves the across really continues strategic of be

not growth this accident. Two, is by transformational happening

macro sentiment And three, the competitive the our extending and and for are volatile consumer while incredibly environment brand advantage. respects the in increasingly strong some around remains world. consistent investments unpredictable, targeted is Our NIKE geopolitical and

bit a go three on Let’s deeper these themes.

to broad-based is new When it with market transformation our comes creating all as is grow, growth. it it unrivaled to strategic product. innovative Mark shareholders scale. growth. to an has product with First, value starts and NIKE said, bringing at for it comes NIKE when pace driving all And starts global at

to two XXX. XXX% platforms Joyride from over of compelling years our successful over the the XXX, strong of includes new platforms demand XXX consumer QX. Air to the recently equated VaporMax, Max launched platforms sustained launched past as innovation and New such for range in launch growth and incremental That of React

expansion time the at our year same with we grew digital do live the sneakers amplifying NIKE. 'XX. fiscal countries services XX QX, and the neutral transforming NIKE and more internationally. of XX% on is In The a and now app of currency digital digital over enhanced everything basis NIKE over by At ecosystem app both in expansion are balance coming driven

and As theme, deliberate making to are NIKE’s investments the second key advantage. both competitive through for extend we acquisitions organically

test cloud-based scale a digital architectural. faster our ability our For example, and of new enhanced in experiences over consumer services migration by investing we've to XX% of nimble the to more

Most of Celect effectively in in proprietary industry. industries team digital us our demand, the demand are and of after plan supply, Our sensing help transformation. QX products another other same of Celect’s the sharpen predict their tools will acquisition gains. season. and was accelerator to sell product and our more stores allocate capabilities first our season pricing right Celect’s kind markdown

data season. and bring three Celect least unique by developed product at science we our every demand to the digital new our has innovative acquisition accelerates where Celect and learning industry sensing machine of of in building leverage models years. The capabilities market

such With NIKE's these time, resources, advantage. our leadership continue increasingly unrivaled within will to invest incremental the resources our on we’re also scale opportunities and same through legacy models. competitive our editing we to capitalize and of investment extend as offsetting operating the and At

key on the somewhat theme global increasingly brand environment our for NIKE remained to and and as we’re favorite consistent. and the continues GDP brand factors, in macro dynamic third the strong be continues cities. we one growth unpredictable our relates to geopolitical consumer sentiment broader Despite reflect and The around and in NIKE’s retail world, to QX the growth major operating. number in which NIKE affinity and markets growth XX outpace key

financial on that growth, launching and has the over in currency neutral offense fiscal balance see ago, return consumer capital of profitability long-term exceeded of we performance year direct our continuing model our invested momentum Since our terms two years 'XX. and

were long all has of we XX they even remaining agile days macro levers a While the the record of are managing than control. track ago, volatile and dynamics more NIKE

levers of outside constituents are all with also direct increasingly the We engaging our on our that of are control.

to-date dollar net result, a remained have reported and As strong our results real consistent.

billion despite We reported financial our impact four revenue on having over $X.X deliver FX negative strong impact continue and had our roughly $X over past on to the performance years. negative EBIT a of billion

strong performance detail. outlook year our implemented we touch the associated in going sharing tariffs to more results a fiscal on delivering FX financial and the I’ll 'XX, QX first But of Despite bit continue positive headwinds, recently balance for expect reported forward. before our

NIKE, Inc. and neutral basis QX on increased a on a reported currency revenue basis. XX% X%

geographies, margin across our gross points all healthy outpaced China. than projected as higher prices growth growth. basis in by XXX expanded led NIKE wholesale overall Gross in balanced stronger QX growth Our Greater of direct globally digital growth by and four NIKE expanded selling reflects average margin

stronger from We QX. gross and margin lower chain factory impact QX level on shift in than at mix though direct. the significantly than into significantly the QX timing favorable of in rates markdown this course our in more I’ll the driven even planned the balance than guidance. expect exceeded other primarily margin touch high-margin of we NIKE in our the fact typical in nonetheless as stores; in expect not growth of international of quarter year, guidance, a investments fiscal the out the planned supply and of geographies same year, by a saw NIKE we’d gross and and in over our our balance lower expansion specifically

Joyride World launch. in SG&A the grew and to Cup X% invest as our in part continue driven digital Women's associated innovation by the transformation with marketing brand in and QX we

with the favorable for was been effective Our non-recurring rate would quarter guidance line items. which largely XX.X% in but for tax have

also into forward-looking Day globally support Greater such XX.XX quarter in key earnings reflecting which in diluted this XXst, moments strong to ahead were on Singles’ $X.XX. up of demand as looking consumer China. extended year XX% September August to increased as has per First and inventories back-to-school of XX% share consumer and And

segments. performance to the X%. for our In North operating let’s America, Now grew turn reported QX revenue financial

growth digital Our QX by from was right categorically. led channel and in a on perspective in plan, Jordan sportswear

basis on in marketplace across with NIKE our currency digital partners. growth high with growing the single-digit over reshaping are and and neutral We North America a key differentiated strategic XX%

intentional an drove decline undifferentiated also we in wholesale. QX, multi-brand In

testing and app direct to new dollars includes, product Foot our best partner in such to leveraging partner Heights NIKE Washington retail continue with as NIKE doors our experiences. investment differentiated the We That reallocate Locker. services, in for and example,

Now neutral new app grew XX% launched let’s where momentum double-digit in growth with QX. a currency the in amplified geography. broad categories in Europe was strong strong We turn in basis just to Growth NIKE and digital. based digital Nike see countries our XX on across by having across this revenue continued EMEA

rated of extended lead QX double-digit and all at We favorite rates one the Milan. strong and in growing our London, Berlin in in our brand Europe with key brand NIKE cities the our in business number

driver, While to key contributing Zalando NIKE direct growth our also a sustained our strategic and Europe. is in with partnerships JD strong are

the which consecutive China. growth let’s to QX Greater sportswear by China, XX% Greater Greater categories set Jordan. turn QX, growth grew double-digit in key nearly neutral of Now fueled NIKE's led pace In on XXst continues by the revenue China basis and to a quarter for marks currency globally. all

category ahead Coming Cup China the FIBA the NIKE in and launch of QX. app as the The strategic globally season. in in digital XX% impact new of NBA extraordinary. forward we WeChat. pulling the short World of into grew are And our basketball looking late digital off QX, part geography enter Tmall in energy nothing in the are Greater partnerships of about also this has with amplified around we excited we been China, by in NIKE and the China over

the of to our serving very lifestyle. active a and on strong. all their retail consumer in believe constituents closely Based by sentiment. a trade sport at sell-through China China passion build authentically monitoring deeply we're same in leadership and for focused broader movement brand affinity engaged and We remaining with the fueling the we Chinese continues toward while NIKE NIKE the extending remains on brand’s more our for and also continue At to consumer dynamics we’re time, be other

a basis App QX, to of the the APLA in QX, now at XX% a globally driven So [indiscernible] Retail In from launched store, NIKE to let's by digital. turn we direct XX% growth APLA. in Tokyo. key NIKE China life revenue of on city geography, our the neutral nearly grew consumer bringing offense great currency fast-growing example In another through

The an concepts APLA culture as double we local strong the extremely our leveraging such India and Korea force also partners in diverse Flipkart Jordan saw APLA commerce members. ramping was entrepreneurial of and of new digits basketball APLA continue year-over-year. the we brand with In growing driving momentum behind geography. is in on launch with with the digital platform relationship testing in Kakao to the media on Joyride social new

Finally, the delivering Chuck great with at the a All neutral across an the Lift. which We're growth in also globally, basketball, launch in and Taylor start to with the increasingly of Star Chuck into XX reentry including successful Growth Converse, off revenue BB. digital got performance excited brand portfolio, on by Converse’s Pro about increased a Taylor to franchise, Chuck double-digit growth strong the X% and currency while and basis is stronger China diversified fueled the product across Converse Europe. being returning

tariffs forward. Now Accordingly, to the business. projected consistent to dollar outlook improved improving. implemented however, neutral continued all outlook. real expected associated our of recently One expectations; profitability have growth FX in our turning to currency going might the We our in our headwinds real are result slightly dollar see remains and lower dynamics net momentum and of

associated our incorporates late the FX continue of intense to we full range, improved being 'XX headwinds offset exceeding currency the year within by reported revenue neutral growth with more outlook trade reported slightly growth. the largely expect This single-digit fiscal high dynamics. For revenue year

effect fiscal year. hedges expansion Recall And basis accounted gross within of deliver year to XX That of our line XX that for by remember impact other is of and items. range. now remains negative margin balance recently We shifts the within implemented item. the amplified our exchange QX discrete in for the impact that again full to margin tariffs revenue point gross expect our assumes foreign that the was not timing expansion

the have expect grow our on revenue acquisition line year. SG&A, Celect impact to with While in roughly recent for SG&A we of will some still

$XXX rate mid-teens. tax expense, effective OIE, our year. the in to net million for expect $XX for to million income of We be we And the of to expect continue interest

neutral Our of but on provide year a longer QX. on sustaining and focus over full on first context strong the volatile dynamics is I'll of and the currency foremost term, bit operating momentum late based

will We expect line growth with FX roughly in reported be dampened QX of growth headwinds. reported strong revenue assumes to neutral our X revenue our currency points QX That in by be growth. revenue

we expansion high to roughly For the year. than points the expect half QX. range. impact with greater of tariffs gross be growth the XX margin, pronounced SG&A In expect second be QX that in slightly in basis of we QX, expansion most in will The single-digit

We expect mid-teens income our million. expect to be in we million And effective be tax $XX rate OIE, range. for $XX to in to the QX roughly

in the years strategic stages brand neutral our said, are ago. with since early we pleased and strong two offense extremely of NIKE are the still momentum We currency growth transformation. delivered we new That implementing our

direct against and across opportunities to Our as see in growth continue execution our of cities in women's, consumer key the our apparel, long-term key will growth of accelerate international. the as countries portfolio key well fuel digital outside categories, that we offense

the open up questions. now call we’ll that, With for

[Operator Instructions].

comes first with Bob Guggenheim. question Drbul from Our

is line Your open.

Good guys. afternoon. Hi,

Bob. Hi,

Bob. Hi,

the guess questions I is have question really. two I –

growth it part terms is in in we North of think second success in any about can little the approach of anything bit that? pockets from On a around of and America, the level just some more the women’s of but you first sort apparel generally talk about is of inventory that the question you’re concerned or that just should concerns there, areas how perspective? about geographically should we And levels, any performance the

America I’ll apparel. Sure. on start North

great a in particular, to same about It’s with continue even business At on the we pleased Overall, opportunity we QX asked the does continue fact we’ve in North in some capitalized in America. of women’s to We grow the strong unfavorably women’s to in really you see greater very compare – apparel rate. growing than growth. year time prior growth, date. number we’re The ahead, comps. apparel at terms

impacted part X% QX, last recall relative may to you NBA. the America in the grew in North was by apparel As in and year jersey business that

LeBron recall, teams had that may and you impact. last year As some changed

back-to-school were extend and seeing QX year out We a QX. of also bit our this into

had really the So bit see see America. short We’ve going demand balance North accelerate on over in growth apparel America little in supply in the a of we for to rates strong of the North apparel year. but our of you’re pressure

of the asked Inventory demand. transit seasonal of consumer you marketplace also guess inventory. a foreign over then strong product, in from marketplace versus and to that and was quarter our exchange spoke number. I majority which of too. primarily we in I’ll driven was and up prior to into was that take There about little bit one year. we’ll new about is the XX% some A That impact And through in inventories the as by an QX. sell sell inventory in

seeing very numbers mix if see our look well and at with aligned in you with and, would basis, you’re low unit a that one, growth. inventory themes, and those hope fact low. is combining closeout the two it And So overall inventory that largely is unit that you is and unit the are seasonal our unit on kind forward-looking growth of fact is expect really it’s aligned to two, what our it

that very healthy again, season. dynamics is is inventory a back-to-school worth One, calling other are There our our couple are of extended geographies. probably in So this out.

then through our in we on which Day is extended So Singles’ also have see China. back-to-school September, And some as anticipation been QX. now inventory inventory of in XX.XX of building into that selling in you

the inventory line of that have So feel we brand. is strong the the on about we it’s hand punch and the demand reflective for great

Great.

Thank you. Operator, next question.

from with is Jamie next question Merriman Bernstein. Our

Your line is open.

all for on the much very call. color Thanks the

and specifically Thank you think to respect is partners how of first partners, partners give partnerships an e-commerce some those and can about Jet, whether on then And like of about that? with you’re thinking how – with balance update ramp decision have Amazon, talked an just not with we you’ve on you. about plans us strategic in seen so Can play the and strategic America to talk about that far? what those you purposely you The on update North the down XXXX the some how question out market. those of should for you

first I’ll question to America. Hi, the relative Jamie. take North

highlighted call some comparison our in ago, North from recall going were America. that may dynamics XX have to days we you As we year-over-year

saying we’re in on I’d America. plan by start North So right

We We’re really geography. see healthy that digit we’re sustaining mid-single geography growth as in pleased growth. that seeing the that strong with still

over A higher significant see You’ll remember North America of growth in course growth two in created pretty rates equal. North and we what in is of year point percents are or America the slightly a not delivered of the all QX balance impact. than

which bit Bob’s some to little think on comparisons then And slightly was growth The again respect with just in with a by business impacted into QX, kind of footwear our question. and also again begins extended this I of again timing QX in back-to-school the innovation year-over-year and then QX I jersey touched that launches spanning in but September. season in not over the

tremendous North again, momentum America. see we So in

of That two really also is the distinction undifferentiated a about consumer experiences tale experiences. asked You cities. direct NIKE consumer and between differentiated

in We accelerating growth are strong NIKE seeing digital. in fact

deliberate We’re differentiated strategic seeing we how product with And investment dollars. undifferentiated are in an and partners. in and that the we our growth retail in digit where fact retail decline seeing put we’re allocate somewhat and intentional expected drivers retail high-single of our

short we to continue expect that So trend term. in would the

which term much and wholesale this to Of NIKE connecting more NIKE goal course, our have in we members consumers with directly long we’re direct partners. our strategic through reshaped marketplace is one in

ahead we in those is and in which again, digital, The North women’s, opportunities touched consistently $XXX below brand’s So on; footwear apparel. really including on core extremely the areas we’re plan on strong about America. in excited touched

you both on Obviously, and obviously but digital question touch driving also partners through don’t that’s me for as importantly direct who had of partnerships. the of our with growth you the on channel We platforms. business have much overall wholesalers Let are well update growth digital NIKE’s is as Amazon. digital base in new terms their expanding the digital on growth to anything digital second the

gone has nothing business well that the well. performing to report far relationship So is Amazon, with The is, new so there. work the

and our from that platform standpoint. are where of serve frictionless actually we the know authentic have serving serving that We means just our experiences highest that buying It’s know so other and an in seamless at continue consumers a members our commerce, the really that they platform interaction, analyze looking terms to at of or and to our of environment sort better relationship consumers. partnership ultimately products level possible opportunities partners they’re sort NIKE critical

So those are things partners. that platform we expect from our digital

media, feel States Instagram opportunity good like Jet through the China ahead really digital through then social just lots and We also Europe getting so with channels here about partners on United growing our of the there’s partners in in in there. and

Tmall. most I will is be to forward. and – biggest mention of in So of should China one growth And partners that’s failed mention an our this I part our going important successful here

to So energy our help to well in as to as add there, China. tremendous drive relationship brand continues business the

question. Operator, Okay. next

Your with next Bank. Deutsche Paul question from Trussell is

Your line is open.

you supply on chain how the to walk impact Thanks little Thank taking the gross in Congrats would great think base for of wanted I expected well behind quarters in the more spread will and on and performance. tariffs, could estimates, touch margin the versus on we what as as a lower XQ impact how the a color about quarter. that question. just through the detail be drivers on Perhaps our the is XQ helpful? original bit should you. the balance than what markdowns were of that your affect

as the Sure. Thanks, terms versus the spread you of through said impacts Paul. guidance. or some first you in I of our will drivers walk

I’d ago, direct second, our I So would our the than versus days and growth our is had dimensions again, momentum wholesale so direct those versus plan NIKE strong business XX the than our And over-indexing those. growth in higher America XXX to days our geographies in first, higher favorable international say, both North would business said growth a of plan. mix we as are touch say the and points on business geographies; basis in those NIKE ago, margin margin and business. I significantly of are expectations compared exceeded we international higher business again XX higher geographies

than You say separation. most Europe. business, asked factory had expected Europe, in store In that our markdowns extraordinary really lower was about we’ve just I’d in pronounced

some double-digit time. You’ve quite neutral Europe in currency seen strong for growth

taking strong Europe. cities key brand’s in share incredibly our just in our of and We’re all

quarter markdowns other Not the some a and only lower much we than in we in were business. our had but there typical planned frankly our expect for So you’d quarter. then areas planned of

You also asked about the impact QX. of tariffs. Tariffs through will impact QX

account Now overall to pronounced into again, in slightly improved the gross QX. even impact guided margin is more but those tariffs, we taking

time any September doesn’t That the in us our As on manage of announced and August levers within you give much X. were portfolio. know they to implemented overall

time. look As year, of a managed lot over the the our we of within out to We’ve balance them levers there are portfolio.

and fair levers. We’re so we with a bit we trade other a been tariffs work have free of time of lot proponent NIKE, in big have can part the equation because of with always that’s and a sourcing levers of from to little financial

So the And impact we significant likely our guidance, QX is compared inferred slightly expansion of QX. margin then as tariffs and from in in you greater QX as QX. most expect to gross

pipeline. just color. My up product is that appreciate follow regarding quick the really I

that spoke are you delivering a the about You exciting lot already. for of platforms results

over XXX, Joyride color Air new you innovation of or platforms be will women’s, in Max Thank way and a about on for excitement what moving about how the doing areas helpful? strong there’s that maybe would to digit could revenue now rank the balance that you us drive of you’re think as gains and the year any you. these if we high-single just curious think that Just your

sportswear, the certainly is standpoint. our look of high we and case sport innovation best that We from complete of into talk – absolutely. is this always the line is but or this how when in performance-based Olympics Summer The actually time complete excitement we our a very pipeline like term work standpoint up innovation brand of leverages over at as the I more against we’re so complete. we so the feel next only is offense product sort style Yes, papers not that’s this portfolio offense. the innovation about both from year. bring meter due or a And innovation and

good that the both multiple core the Tokyo across Olympics particularly and performance include That learned here of some incredible and leverage we great categories the that again incredible in sportswear. would more We’ve manage up a the of includes at how some priced I in building we cadence the We’ve we’ve and got platforms of that, in innovations leverage in most women’s. more of coming how completely. sportswear. lifecycle coming to spring/summer mentioned the accessibly how long in performance on innovations, You innovation NIKE for performance for the breakthroughs time seasons. again

excitement. would talked early stages. It��s I level we’ve about So incredibly adapt. the of high in add still

more people. will the systems incredibly include powered NIKE will as both high more free as continue well – to accessible priority. exciting non-powered make Fit to innovation innovation as hands a systems course and more we that’s Women’s adaptive of bring to be

more footwear for source really completely resources well. apparel. Kids a is for that innovation we there, incredible mentioned shifting and us across the I innovation major up category growth our so an agenda amp have the leverage as feel good We’re that’s to to both portfolio,

ahead bright so I’ve opportunities them, are ever very bullish. the as think as I So seen

like Sounds --

Operator? Okay.

Omar Our next with question from Saad is ISI. Evercore

open. is line Your

I follow North of intentional the another of piece on to question, about of by And we or Hi. the questions when We market my up my taking happy with of material get follow on quarter. American mover huge to Mark for another growth you’re – the kind to undifferentiated DTC you have a XX% the and The think obviously wanted a offset Thanks great about smaller where America. and out If a the overall the North for kind just as well. I wholesale. wholesale DTC time for when then footprint. the looking that Thanks. point kind of horizon become DTC first that’s being another business. talked congrats reduction number, still ask up a

That’s Yes, business being Investor in ago Omar, digital, next partnered global about talked America North owned greater same Day I would is success, of measure the [indiscernible]. terms our range years of we but our over five at in that say XX% a of or the couple years. a and

towards alone digital as direct, the that necessarily we’ve alone being that we but that date discussed momentum that to not of in see incredible and potentially range. digital NIKE on build see we’ve beyond based we all And had. accelerating So continuing that

QX. digital in noted, NIKE of was As that I accelerated in level growth an

North So profitable years, much the mid-single about next the we long five the our and is and excited is is that for sustainable we really would North in where is underway. America is next we’re America Investor marketplace But is required in term frankly years North platform America our the equate a five at future. ago, growth years growth. the think of reshaping like building the discussed most to what transformation Day range over two view digit

of I don’t Got company across then us the back, perform quarter-after-quarter, groups, seen regions, performing genders. kind consistently of Maybe – the points, NIKE performance components categories, broader I’ve different us think more understand if so price the help stepping in some performed it. into or past, maybe but consistent historically? watching and or platform obviously to channels, give you understand that why And positive has than year-after-year be never it exceptionally such Thanks. much help can us insight seems age

talked we doing – areas and underpenetrated well it’s matter apparel. have no you we examples. women’s, areas price smarter only lot complete We’ve the then not we outsized point one Again, in more said go we about new we where as was are genders. offense innovation across product leverage that international about all I about – opportunities. where I how how invest we on down where categories dimensions, as of innovation we’re of but talked where multiple fixated we up We’ve think those have terms see I those call opportunity digital, across spectrum better we’re we a and actually across what and

we upside it or is never as ending Striking that even way. in ahead challenge the right tremendous it foundational put terms balance me us complete in portfolio we’ve our got of complete core. But offense call think the let that for across I opportunity, business or

So innovation where such of source and the brand NIKE portfolio. that leveraging putting I advantage competitive or been for has for seen just during entire offense. at better the the I this at never been think innovation growth I’ve the relevant us and a energy feel period like that’s as there’s out across how we’re robust that consumers always there to but we’re across getting also tremendous And strong we’re a NIKE

as be one here that a first people to we That opportunity. NIKE have said, would say more lot tell I’d the at you

the most. that So is on the matter the challenge things focus to or the opportunity

standpoint We the opportunities. drive is fixation the creates what the that relevant drive The or consumer are have unlimited really needle focus and to growth on going to are success. from that a really things ultimately going be

I’d that is the how is XX how consumer of to those all about growth cities to, from connected be add key for dimension all opportunity Omar strategic our offense positively to market framework key And [indiscernible] just maybe it, cities about a offense of there isn’t might being think countries NIKE. XX that’s to speed you any those the faster cadence Mark and principles. categories and so our isn’t of framing the consumers. of innovation, it terms direct categories, of are applies our impact key The perspective and impacted those in more Xx that in the directly And being doubling or countries where can by all and complete and offense, then our and refers those that’s really

fuel are is create maybe how now in supply in or do it’s plan retail just you’d overarching we digital but we our not assess in this how doors. impacting consumer And NIKE, that to we increasingly digital then and services demand everything course partner transformation app the the offerings product our our all to NIKE and of stores through the from of way say underlying through

a of off dimension in impacting it’s of So the strategy every really sense consumer portfolio. the that, racked the

exclamation really the digital to the going in, invest much our it’s an put we’re more a better leveraging point capabilities consumer, to I so digital advancing company better. making investing the want we are capabilities creating make I us that us understanding innovation forward. innovation and serving see Yes, that in going all from The consumer, that. on opportunity

one for Operator, maybe call. have more time we Okay.

Co. Our with Stifel Jim last question Nicolaus & Duffy is from

line Your open. is

the together. in. for shifts from gross performance, from and seems more me Thanks innovations, margin. gross future? shouldn’t think Is good power then margin some we as squeezing margin context A and go pricing nuance in It marketplace historical the Celect you. leveraging of are gross you’re afforded North on help of that past lot can about so got forth. couple think a Thank things margin Andy, there to outgrowth you’ve in American Fit near questions me direct, reshaping factors the peaks NIKE of structural NIKE by the of reason coming that and like a like

no. The short is answer

touched a think long as significantly you and I of business business are of see higher margin. the we digital as being just long-term and drivers on part also others business mentioned direct margin. wholesale and price opportunity term. margin in than expansion some we drivers NIKE question, increasingly value the larger Omar’s of many direct expand our The part is equation is an to of

had but acquisition that terms our bringing Mark to consumer. your closeout, now and markdowns spot to in been just and touched tangible In through of question significant Investor pipeline impact that own talked to the means touched on thanks capabilities we’ve that. the value never is we you huge start a Celect Day leveraging, just as from drive on, full-price and At we’re we sell more potentially mix having a opportunity. about the able planned And build bringing are excited innovation to market to organically greater the this lower about and on of and

If are us. headwinds I that about tell you impacted have thing we’re one the the FX to pleased was not as that

the over As and the headwind revenue call billion headwind had last billion $X on, touched years $X.X on on more on profitability. we’ve I four about

over if reflective perspective. the doing We this that’s of again, medium would our add gross some we’re margin yes. we back short expansion the margin systemic we term. and more be could long significant in from Of what would. of But That drivers is short, course, pretty a operating operating pretty expansion an answer see

to favorable what first to a fiscal positive relates the to gross in extent hedge margin, margin it gross as contributor quarter and then are And 'XX? FX rates and more

the Yes, a about to so negative our EBIT expecting the is way that the we now performance be to we perspective. I would of slightly continues thrilled it’s into Again from are in guidance, context operational strong be net came fiscal offsetting sort to in slightly think so year an that’s FX neutral that favorable. our It’s improved that. of just FX year 'XX

FX. of the to to impact in year thing Over the predict balance somewhat mind one to model keep – is it’s predict not the difficult but to of

aspect actual volatile in the regard course that very product hedges of which at over year backward rates. have is well timing the list we of as costs. terms looking of is spot the timing of The kind late. top the lock of in Certainly in as the timing Renminbi the You our of when

an in I as for So the say it’s revenue will I of spoke be will is, guidance. negative from EBIT that think my and the negative to on be over fiscal about about It way slightly a slightly FX full impact shifted course the headwind easiest me points to X impact perspective. negative a margin on it year now

as see a certainty those that a go headwind resolution into to get tailwind. that maybe we things more We’re turn from and some respect impacts. transient and And hopeful that more forward we are trade with we

the care. you Okay. and next Jim, forward to Take you Thank today Thank and quarter. for to everybody. call joining speaking thank look you Bye-bye. us we you, on

concludes This conference. today’s

now may disconnect. You