NIKE (NKE) 21 Dec 232024 Q2 Earnings call transcript

Good afternoon, everyone. Welcome to NIKE, Inc. Fiscal 2024 Second Quarter Conference Call.

For those who want to reference today's press release, you'll find it at investors.nike.com. Leading today's call is Paul Trussell, Vice President of Corporate Finance and Treasurer.

to call like Trussell. to would I turn over the Paul Now

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

will be us John and CFO, our today's Joining Friend. NIKE, Donahoe; on Matt President and Inc. CEO, call

results this certain could current Before those expectations, let on statements you differ risks forward-looking that make to are that remind begin, will risks actual reports statements are to and These and cause uncertainties in we detailed participants SEC. filed subject and me call materially. based on the with uncertainties NIKE's

GAAP may participants and NIKE's addition, and press quantitative statistical measures Please discuss In comparable and earnings nonpublic website, financial measures non-GAAP financial NIKE's release reconciliations. to refer or information. for investors.nike.com,

on call year-over-year presented on comparisons are unless growth are the otherwise a currency-neutral today noted. and basis All

then John with Instructions] and to start CEO, remarks I'll prepared turn will NIKE the now [Operator We up over Donahoe. call and for questions. President Inc. open

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will sharing updates continue quarters. the We over coming

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we continue environment. monitor the operating to ahead, closely Looking

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are year becoming And the impact is risks Looking full we result, of clearer. as outlook. forward, financial adjusting a our these

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and basis gross to XXX XXX in QX increased expect margin QX expanding XXX XXX margins We our expansion expanding points with half, second points. margins basis to

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to low improve efficiency. We digits, to productivity as expect and full improve charges to year SG&A continue manage we single excluding growth and expenses tightly restructuring

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the open with for questions. so let's that, call And up

JPMorgan. Matthew from of Your Instructions] comes Boss question first [Operator the line from

to innovation, to break year. And supporting maybe John, and wholesale? means could your what just structural the that And relative as press that that pipeline the to portion cited retail that in next X-part changes revenue your for in we on revenue think commentary maybe see release the that of foot on the question. putting product a the change maybe this? second half, -- just the you or elaborate second best outlook structural that Matt, quarter the could foot down the So around you pivot changes to how second then you half and you between front the help

You want go to first, Matt?

Yes.

Let gave this ago. that, Monday periods performance and a saw go you with the changed and sales and the XX XX delivered bifurcation a bookend we're digits that back-to-school start. management performance. bit prior and ourselves the moments seeing. the strong our over XX% mean from environment marketplace. if me disciplined the guidance days ahead strong that Black we in down ago the as delivered operating the and result partner quarter a of largest are specifically, what the the expectations in days below in was But consumer in quarter. the performance what of now that softer we And and brand down NIKE in set inventory of for we what quarter is versus saw total prior what's Friday marketplace, plus year. But were with I retail inventory we Matt, including execution And quarter a Cyber in quarter talking incredibly for We between, saw through incredibly the we pleased right being in and obviously and about we're the being revenue in the NIKE line double

activity considering of for we the based promotional of the China see in anniversaried to given and softness QX of bit really of in QX we of increased this that the year, the year, sharpness in some taken and the on downward way comparisons and traffic of the like marketplace provided QX headwinds planning year for our we've we've higher reflective digital, specifically balance particular. a that much prudent our the little seen prior and As digital growth is the EMEA the quarter. macro adjusted to this a in and lowered the we've particular balance you promotions. the a we're guidance for we've our the approach and that softness in overall, on and But marketplace more seeing result

talk creates what an promotional innovation, to where on and John connected so seeing in environment. environment will And because activity, of recent like in second, product focus this it's particularly and which last we've of over days. our innovation this we're recent XX newness And is newness cautious the seeing we're the in introductions in about XX it higher context releases and really even distinction is a to consumer levels brand and that had the

to to And our huge NIKE best, distinctive And drive know, and question break with ability co-Presidents. focus focus, team, as does Matt difference it And marketplace unique focus with experiences. And ago, team next storytelling entire have we're Williams will in the know, as is scale just to it doing focused portfolio, innovative is innovation making first a combined on best. regarding under and a a our product execute. real of organization consistency cycle, with our does Heidi, your That's we want to newness the you focus. we're driving part right? single-mindedly on And NIKE Craig what where realigned O'Neill changes, our aligning and through. real as Matt, elevate structural Heidi combined months product Craig you and we which said, X and This what our we entire entire our our as

basketball now, at so results. Look where in fresh product We what's seeing And bringing example innovative maybe seeing one happening I'll right early -- right? at you're scale. are you're pick some some

the past X. Ja So months, the Luka X XX, we've X, launched Tatum LeBron Sabrina X, X,

nights come X Christmas Ja back X Day. You the ago, Ja saw on

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off and NIKE on driving is translates this into so court. performance, performance lifestyle. like both through and the the And court does, momentum And that innovation

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we so seeing guns one we through when like and you're cut what lifestyle, no consistency can can. scale focus on is else our drive innovation, translating and And driving that performance into

March. look Day So Air Max that's Air of in Max as we're anniversary coming is our Max years. product Air about we ahead, in excited tenth best DN up The

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as in really performance and in using us see You'll Air lifestyle. both source a of innovation,

And it. an you distinct and -- of we and it's so acceleration, the and an is an pivot. focus feel our think called I speed just a -- it alignment acceleration

of Evercore question the from comes line Michael ISI. Binetti from next Your

around Thanks thinking some of longer-term the for particularly all the detail business. today, in the

Do as we said target? these of you few help can the it's the net for considering, margins, helpful. commentary thinking years. help feeling revenues Maybe And your like should macro in commentary lot takes wondering have if think China. we on you the us macro revenue pressures true-up the majority here, we've a of getting see an it billion to business is go will about 'XX longer-term some got efficiencies offset second of longer-term I visibility that long then to I'm be back pretty help would I amount this say, some that the savings, is the the "Hey, we the that half yet high-teens to algorithm Matt, the -- the us reinvested controllables of target the multiyear look of way. Is try the Some sounds and to is 'XX. we $X guess, cost to make the if margin next story to past to year? a just

the Well, start Michael. Sure, let me with margins.

and talking look really of which product expansion strong sustain And been combination recovery about particular margin increases, team's into the this improving it's operating like that strong strong. we of a a execution our think supply efficiencies, with was specifically meaning able of environment, also gross in that drivers margin which now, couple been and margin the proof to this we've at a point When years as headwinds, transitory drivers expansion. price chain for quarter we've I deliver the it, structural we in was but per really the gross and marketplace. unit cost we're of

goals pre-pandemic the and and that there, drivers the our long-term return are The that so greater back for targets point proof is some for on quarters quarter John Invest to a we're Safe about levels, today, now we still for our forward. it. But behind as resources of of resources to couple And some growth to we being opportunity a And I efficiency effectiveness on given as reinvesting at and a revenue the look this largely mentioned. SG&A us margin is growth. like below our more long-term look we've percentage higher connect when be trajectory. I've And think been a To look we we've great as of little profitable talking like that bit of see about underlying were the done way it opportunities lowering to plan to -- drive of cost when marginal opportunities, those for

which this we're it's it's is what P&L, down plan what The remind really $X call, up isn't and Invest To focused on. SG&A. Save the I value chain. is and billion that's the -- I you so across our will on And that said just

drive the about. as in at the is but the that forward look And holistically. And our we been profitable margin years. several confident we SG&A benefits really over see business looking we've focus will to are in so more remain goals next We we long-term talking growth

on And that we but long-term that provide approach goals, we endpoint. know update so 'XX, an remain confident due to as we on we're still those

relates around are China the adjustments it headwinds can the that just Europe. I commentary and this hit Yes, is based revenue, in we The managing control element to made franchises. on we our macro it seeing increased largely in in As quickly.

franchises. incredibly have We strong

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the line comes question Bank. next Gabriella of Your from Carbone Deutsche from

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question next the Kernan Cowen. from line from Your of comes TD John

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Matt, for maybe you.

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comes from Citi. Paul the from Our Lejuez last line question of

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for Our this rates year walked.

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think we're when the teams goals year. we margin so encouraged seeing well executing to be we And long-term with and continue through we this what have, the about that are

participation, for your This call. Thank may conference disconnect. concludes you today's you and now