NIKE (NKE) 27 Jun 242024 Q4 Earnings call transcript

Good afternoon, everyone. Welcome to NIKE, Inc.'s Fiscal 2024 Fourth 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, VP of Corporate Finance and Treasurer. I would now like to turn the call over to Paul Trussell.

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

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

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

call non-GAAP participants may earnings year-over-year a measures addition, website, and comparisons noted. measures In are today financial and or reconciliations. basis the statistical release Please discuss investors.nike.com, neutral are NIKE's financial to presented quantitative unless and GAAP otherwise comparable growth and refer on nonpublic currency for NIKE's information. All press on

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to QX it transition, we're in technologies. all as our over our running impacted our manage recent was proactive releases double portfolio actions business running best-in-class easier styles new in the grew by Structure We're quarter. and for consumers Pegasus overall retail making high our simplifying Infinity by pleased that discover digits the we highlight Invincible, Vomero, While at construct cushioning to these

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call. Thanks, John, to everyone on and the hello

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some Let we see deeper and me and the financial we our forward reviewing results implications the provide look fourth insights our as outlook. before into quarter

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the declined Digital NIKE Second, XX% quarter. in

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versus shifts particularly as Third, year. Greater brick-and-mortar in much traffic prior where in consumer markets, digits we declined experienced the in traffic China, as key meaningful double

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of share 'XX, Brand franchises, Let our dimension Jordan few more and launch a recent recalibrated Back to fiscal in supply me we our select the bringing examples. business resetting portfolio.

and heading supply reacted extended energy we our to and around subsequent the of in our years with position Korea, to the of the in consumer Over page most models regained 'XX. women's vault. this in start and fiscal portfolio our footwear reshape Japan franchises momentum read our our teams new And quarters, the double-digit #X lifestyle moved lifestyle strong where we In while from our growth. in lead and new signals. We the into fourth Korea we brand markets, reduced turned multiple classic some footwear Japan trend-forward declines to X in consecutive double-digit other earlier quickly of of creating year, scaling quarter, in

Now from newness of and NIKE's forward. innovation, are response partners our consumers early optimism path accelerate we in our and reinforcing the pace as

focus First, impact. sport sharper the on is creating

on This momentum, across quarter, performance fiscal leading and in men's, with women's, to we 'XX. build across that all and geographies, channels Jordan, kids' and expect performance grew

American are focus We holiday fresh including books resonating both and consumers. order indicators releases double-digit lifestyle, with North strong in 'XX. In in spring positively growth areas, in are specialty seeing key 'XX partners with favorable running

to Cortez, For strong executions General fiscal such we in franchises instance, Field and retro and scale field driving these 'XX. sales new the growth around as running franchises as prepare retail are Killshot

technology costs $X streamline layers functions. In from and billion activities up accelerate parcel across chain restructuring our by consolidating growth. are suppliers, fiscal up, in opportunities down the spend, organization our P&L and transition we initiatives At tightly 'XX, our small attacking 'XX, to a the and in our 'XX. Last, support to next business fulfillment below footwear more up turn, impact. Olympics. value starting from have in is 'XX quarter's brand including elevating our nearly to ramping this in bolder for initiative, double-digit includes campaigns product game also Building This we in products this and consumer-facing strong where growth, to lineup fuel ground points, resources design, year which through from scale lifestyle optimizing expenses reducing capacity we Our the to in fiscal investment savings reallocating reinvesting and 'XX. merchandising enabled and fiscal managing to we expect models in our contribution This of increasing we deepening end refreshed sport price Added offense growth. on teams new retail, of consumer plan we distinction our our marketing key creation bigger to the end save-to-invest are dimensions, product which from we new creating than and is double of maximize across unlocked the fiscal of are performance $XXX. the brand while and start cities, our portfolio, expect products new cycle sports spring of with driving to key phase our ECXX to running Paris physical in return resources

margins Digital our X%. me primarily neutral In were was let Now X%, charges. as investment down partially reductions on revenue margins Direct to points X% than down channel Wholesale a more Inc. a pricing on reported impact. SG&A basis. from NIKE, operational unfavorable foreign reported Gross NIKE, and supply XX%. and $XX quarter NIKE basis down expanded to increased to ocean and basis, approximately QX, fourth X%. turn reported basis NIKE creation currency was demand Inc. NIKE and in offset This on basis was lower down exchange chain strategic in improved grew lower was net a flat in million X% mix offset rates by includes a XX.X% stores NIKE results. down on by restructuring was overhead. due efficiency, actions, freight XXX Direct, impact in

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flat full a was the operations neutral basis. $X.X Diluted a capital. currency in was year days continued from improvements on X% versus basis flow in versus significant prior on improvement share with per the and inventory. on year, XX% year For reported Cash Inventory revenue grew XX% up declined billion, working up earnings prior the XX%. in

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to in said, strong quarter, felt number stores, we and and In growth as of traffic strong and This new by increasing footwear pressure our results performance in in we In in well. our by fitness, factory women's Jordan. our environment, working our innovation a refreshed several well, in performance value seeing saw Air a offset Global declined In kids', EMEA, with the stores China, grew start we earlier Pro drove declines cautious drove with In by with Kids' X% X% launch gained line. lifestyle This strong declines being Nike double footwear the grew the basketball, we drive kids'. as led XXX points by macro fitness strong across highlighting That Football geography of X%, lifestyle, lifestyle EBIT energy including bookings Pegasus revenue softer double a women's contribution in sell-through. consumer. XX%. in scale, digits. bright including momentum spots led running, releases saw offset and X%. from full is the digits, fall continue to share men's QX fitness, reported was grew Max running grew Wholesale shopping Greater revenue and footwear. market product franchises NIKE In apparel and are overall Direct X%, down new Dn double takeover. In on marketplace a our are NIKE X%. basis. grew and retro we such women's QX dimensions digits partially grew releases as Tmall's XX. In of men's holiday. Digital NIKE up

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'XX outlook. me Now our let financial turn fiscal to

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starts Above required hard that to and of and hustle around the innovative sport the product Their world. work is reach stories us dreams most we of tell For in that inspiration millions athletes to serve. us win. motivate the the with the they NIKE, all, create people remind

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[Operator with come Instructions] Matthew of from Boss the will JPMorgan. question Our line first

apart just changes macro about outlook would you how think front John, months the execution in relative Matt, the takes similarly rank and Maybe, cadence the X ago? back, on from course then, And and the your and help break on margin just a on perspective? relative to could maybe just you months 'XX to margin, today the of and puts to gross guess, to summarize to model that I consider change XXXX over impacted the best gross how X NIKE

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couple including about talked several innovations last quarters, reignited pulling the pipeline, of As our we've we've forward. innovation

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start look our One, And change. FX. are so with things guidance mid-single when we full at the the digits X really down I'll driving updated there's year, of that for

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also first quarter on an numbers. had that So impact the

Matthew. to thing -- just add I that want one more

it. accelerating. just together which on think important, just about You've the the heard last XX of both has our over it's hustle pulling and the been end-to-end, of also Craig's in so things teamwork consumer, the and is Matt how working focus I the but days, It's speed, intangible the heart team, it's talk last confidence -- I teams. our extraordinary the an which and year just in the thing, there's of forward, Heidi's shift focus palpable a nature and teams, Both increasing and they're but forward-looking

and credit confidence but so So NIKE, give I want day comes teams recognize more just important are, I to at think, each them our also that is to huge feeling along.

America. of line will of Bank from Lorraine question Our Hutchinson come the with next

half numerically helped some in How And get the some sunsetting headwind much improvements? total to half anything franchises? do can that you of is books to provide less improvement? a that help Can us have these that back you you look? to from provide meaningful numbers there confidence second might of How order

Well, it sales I curves year, looking a of we've some the time scenarios we've a of over levels at and Lorraine, high franchises at realization and the that for retail products from as and guidance as what our developing updated of relates to ranges franchises. But different drive mentioned, to different of going slopes as different largest factors different number play and on perspective trends growth think how out full -- and in the those continue are to marketplace. our we price looked

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our we're partners. with wholesale and our And so balance we that also creating feel portfolio momentum better confident across building

will line Our Guggenheim Securities. of come from the next question Drbul with Bob

today Just can to when think, of the how you a higher the the you to us look of in and just me. with the business for framework you when at questions, in can to shifts second you some that visibility and direct business, is, is more the on XX at pieces the your bricks ability months when this the of just you piece And channel mortar, level? impacts terms shift any to give going think looking occurring, visibility last first are look that X versus look your just is the how predict? of I Lorraine's about you I of talk that business, P&L the the digital saw around at questions answers wholesale then at about of feel guess the to you XX over the at guess one I what

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retail the of at for on these in increasing our the having based factors between but our balance Digital. we relative this overall the of made things supply and been some of NIKE we've of guidance, in on in manage what the forward-looking digital relative drove with franchises we've adjustments this, our sales wholesale experience of franchises to at volatility more most supply think trend the -- looking this in the them quarter. overall I And on marketplace those the franchises, plans recently are are the it managing those also of how aggressive looking dynamic context doing and

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in channel have full driving a question, terms in the been fiscal as shift these mentioned going outweighed a revenue, headwind of also in both just mix across just I high forward, franchises. on realization it far the we've price prior levels products margin certainly that As year have these given an but of also as And will answering impact 'XX, on margin.

channel so XX And that mix in despite pleased 'XX, that's And for headwind planning basis exchange the be are to year able basis to a we but another foreign XX about points of we're of to margins XX still I'm expand points year. headwinds. in

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Barclays. Our next question comes from the line of Adrienne Yih with

if coming X over to there amount historically of has another talk first. you kind to you pipeline the the magnitude read read Has wholesale down sort newness about of the wholesale And wondering time the NIKE that when as consumer, was going of at into next the degree that months. the do sort So of how can the pipeline? it of right? end channel it's you this consumer launched I the XX is the been second success do goes of of How newness?

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side element in business. just one the lifestyle would of add that of newness I is Adrienne, also the

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next Goldman Roach with Sachs. Your the question comes from of line Brooke

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to the look lot do work we I work of guess going all look for 'XX. Thanks you've a a details as given here, we as where us beyond out 'XX, to you're you've got here.

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structural I tailwind And derivatives the of a so for I environment. there's also one industry. think the think happens, the sport post-COVID where it's of

the don't go to or the to You have gym field.

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shifts with for over fiscal will the the out and the the Day marketplace we're so at strategic of provide last we into that also And Investor outlook into 'XX. November, where the dynamics going to that the that in the profitability, taking put we've couple next of our product dealing here an And quarters, consideration in transition we've plan and we're over laid updated growth year. execute on portfolio, the across place are we some of course

Bernstein. Aneesha with question will come line from next Sherman Your of the

of the management. follow-up. to normalized I of expecting with the year? have are exit of organizational of billion by going are I'm years? a second, to line this run FY life for reallocation on at where of then by with talked Matt, reset product fiscal So of be to rate it the be you 'XX just it clarify, curious is spread start the $X Can How end shifting you about couple loaded? expect reset a top the the you you front that headwind? And without going of next the be quick on next you couple Or cost challenges fiscal done do quarters down be the expecting a you to much year? the and cost kind -- about on cycle Is base. are the out to the end to

problem. no Yes,

we're on the first NIKE aggressive. that and are Direct on So taking your question, Digital more actions

we're first half making that to our be plan, adjustments the relates in to so to it specifically our the own into as this consideration going channels, largely year. And are of taken

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the question, one Aneesha, way then, -- second And that, to want I the asked thing. on just your distinguish you

the And it. feel earlier, completely hustle just of tremendous throughout aligned You That's now I amount the organization, excited. They're organization behind around teams There's can play. we across and mentioned organizational reset. as you are mentioned And focused. us. field are a sport, to our

And so to that's continue. going

count head some the consumer dimension save execution. We'll provide innovation to can those So behind to look And focused and is you areas. of the driving other non-labor teams Matt, of to ways the savings, invest us. on for now describe are areas the reassure of we've -- our it's is been about you that -- And driving the I excitement energy, on about and just talking and growth focused innovation the call. through these. But now everyone's organization that's can future. XXX% got again hustle

greater -- been building we've it, and as grow. about Yes. as that model speed we I cost mean operating we've productivity focused, talking an been with about

overhead point, this we demand execute offense. And in year year we're that billion more we've we've taken out have creation invested teammates the function. $X tightly. managing in make John's To did That swings in some global order investment to new and reallocated product geographies the able to past consumer-facing into the our now merchandising in fiscal 'XX. includes enabled have that And design, operating so teams the that sport-focused while at year dollars opportunity fiscal the we're and over in activities. to 'XX. We've actions in us putting be building We bold of

some some reignite return, the will do saw right so brand resources absolutely that while investments overhead reallocate I've could on momentum You with time drive thing a effort to take to as these back consumers. to manage referenced. And get they're with to and to operating we us for even restructuring significant the charge the us offense

And to push capacity done, be will and manage continue this -- us invest, SG&A and to to with we the to what this us so consumer. the that's program leveraging initiative to forward we've create tightly, for

on it. up, just this is world. And gone through so We through and and Matt everybody and and Craig to around clear and just I challenging It's and on team just much has Paul, the intended want how a and into -- how me, maybe one -- As NIKE's you've This to team. team NIKE's comment. so energy this. I'm we operated is last led thank our for wrap whole work globally for what final you've has this one -- of this saying this -- behalf been Heidi and year, hard leadership

culture. advantage competitive is at the of people real the NIKE's NIKE's day and end NIKE's

kind people talking those and well so of to been and drive growth calls. that we've to execution the compete And hungry is and and culture and alive ready all about

just I global to want team. thanks NIKE's up wrap with everyone on to So

We many for forward for details Thank headquarters fourth you come. Investor fiscal quarter our Good hosting November. joining here at XXXX This our to More Day in look call. concludes the of to evening. late you our call.

joining you all for today's Thank call.

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