- Full Year Revenue Growth: Approximately 1% on a currency-neutral basis.
- Full Year Earnings Per Share Growth: 15%.
- Q4 Revenue: Flat.
- Q4 Nike Digital Decline: 10%.
- Q4 Gross Margin: Expanded 110 basis points to 44.7%.
- Q4 SG&A: Down 7%.
- Q4 Effective Tax Rate: 13.1%.
- Q4 Diluted Earnings Per Share: $0.99, up 50% versus the prior year.
- Full Year Cash Flow from Operations: $7.4 billion, up 27% versus the prior year.
- Full Year Inventory Decline: 11% versus the prior year.
- North America Q4 Revenue Decline: 1%.
- North America Q4 Nike Digital Decline: 11%.
- North America Q4 Wholesale Growth: 6%.
- EMEA Q4 Revenue Growth: 1%.
- EMEA Q4 Nike Digital Decline: 14%.
- Greater China Q4 Revenue Growth: 7%.
- Greater China Q4 Nike Digital Growth: 8%.
- APLA Q4 Revenue Growth: 4%.
- APLA Q4 Nike Digital Decline: 12%.
- Fiscal '25 Revenue Outlook: Expected to be down mid-single digits.
- Fiscal '25 Gross Margin Outlook: Expected expansion of approximately 10 to 30 basis points.
- Fiscal '25 SG&A Growth Outlook: Expected to be up slightly versus the prior year.
- Fiscal '25 Effective Tax Rate Outlook: Expected to be in the high-teens range.
- Q1 Fiscal '25 Revenue Outlook: Expected to be down approximately 10%.
Release Date: June 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue grew approximately 1% on a currency-neutral basis for the full fiscal year.
- Earnings per share increased by 15% year-over-year.
- Performance products saw double-digit growth in Q4, particularly in basketball, fitness, and running.
- Gross margins expanded by 110 basis points to 44.7%, driven by strategic pricing actions and improved supply chain efficiency.
- The company is accelerating its innovation pipeline, with new products like the Pegasus 41 and Air Max Dn showing strong early results.
Negative Points
- Q4 revenue was flat, with declines in lifestyle products offsetting gains in performance products.
- Nike Digital declined by 10% in Q4, impacted by softer traffic and higher promotions.
- Foreign exchange headwinds worsened, creating additional revenue challenges.
- Greater China saw a significant decline in brick-and-mortar traffic, impacting overall performance.
- The company has reduced its guidance for fiscal '25, expecting reported revenue to be down mid-single digits.
Q & A Highlights
Q: How would you rank changes on the macro front and NIKE execution that impacted the change in your 2025 outlook today relative to three months ago?
A: John Donahoe, President and CEO: Our execution continues to stay on pace. We are moving aggressively on putting sport back at the center, reigniting our innovation pipeline, strengthening our brand, and leaning in with our wholesale partners. The fundamentals are strong, but macro factors like foreign exchange and franchise management have impacted the numbers.
A: Matthew Friend, CFO: The changes in our outlook are driven by worsened foreign exchange, a softer outlook for Greater China, and more aggressive actions on key franchises, particularly impacting NIKE Digital. We expect meaningful sequential improvement in the second half of the year.
Q: Can you provide some numbers that might help us to confidence in the meaningful second half improvement?
A: Matthew Friend, CFO: We are planning for meaningful sequential improvement in the second half, driven by new products like Peg 41, Peg Premium, Vomero 18, and Air Max Dn. Our initial read of our spring order book is in line with our guidance, and we are confident in the scaling of newness.
Q: Can you talk about the visibility of the business today with the shifts that are occurring?
A: Matthew Friend, CFO: We were surprised by the performance of larger franchises in Q4, which led to our revised guidance. However, excluding the impact of these franchises, the rest of our digital business was healthy. We are confident in our adjustments and the aggressive actions we are taking.
Q: Can you talk about the amount of newness coming down the pipeline over the next 6 to 12 months?
A: John Donahoe, President and CEO: We are very excited about our multi-year innovation pipeline. We aim to double the growth of our new innovations by the end of '25. Wholesale partner feedback has been strong, and their order books reflect that. We are on track to achieve our goals.
Q: Can you contextualize the importance of these larger classic franchises in relation to NIKE's current sales?
A: Matthew Friend, CFO: These franchises are the largest in industry history. We are managing them to ensure newness drives consumer demand. The actions we are taking will create better balance across our portfolio and drive sustainable growth.
Q: Can you help us think about the longer-term opportunity for NIKE as channels, geos, and franchises come back into alignment?
A: John Donahoe, President and CEO: We see significant tailwinds in the industry, including the growing definition of sport and healthy lifestyle trends. We aim to be sport-based in our lifestyle innovation and leverage our vault of assets to drive growth.
Q: Are you expecting the product life cycle reset to be done by the end of the fiscal year?
A: Matthew Friend, CFO: The aggressive actions on NIKE Digital will be largely taken into consideration in the first half of the year. We expect to exit the year with momentum, with new products outweighing the impact of franchise management.
Q: Where are you on the organizational reset and shifting of the cost base?
A: John Donahoe, President and CEO: The organizational reset is behind us. Our teams are now focused on driving growth and innovation. We will continue to look for non-labor areas to provide savings while reallocating resources to maximize consumer impact.
Q: How do you use innovation in performance to create a halo for lifestyle products?
A: Matthew Friend, CFO: The lines between performance and lifestyle are blurring. Consumers want more comfort, and we are focused on fit and comfort in our new products. We also leverage our vault to bring classics back and create energy around new stories and partnerships.
Q: Can you provide additional color on how you're thinking about the gross margin bridge for FY25?
A: Matthew Friend, CFO: We expect full-year gross margin expansion of 10 to 30 basis points, driven by strategic pricing actions and lower product input costs, partially offset by supply chain deleverage and channel mix shifts. We are managing expenses tightly while reallocating resources to fuel growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
