In reporting Q3 results in line with its expectations but well below historical highs, Nike senior executives confirmed the streamlined company is ramping up “a multi-year cycle of innovation.” This will initially focus on new iterations of its Air technology, increased investments with its wholesale partners, and sharpened brand storytelling to reach and excite consumers worldwide with both product freshness and innovation. 

Nike, whose net income fell by 5 percent to $1,172 million in the period ended Feb. 29 on flat total revenues of $12,429 million, said it does not like how the brand is showing up in retail stores and “it’s important to elevate our brand in that environment.” 

Nike - Income
  2024 2023 Change
Q3 ($ millions)
Revenues 12,429 12,390 0.3%
Cost of sales 6,867 7,019 -2.2%
Gross profit 5,562 5,371 3.6%
Demand-creation expense 1,011 923 9.5%
Operating-overhead expense 3,215 3,036 5.9%
SG&A expense 4,226 3,959 6.7%
Interest expense -52 -7 -642.9%
Other expense, net -16 -58 72.4%
Pre-tax 1,404 1,477 -4.9%
Tax 232 237 -2.1%
Net income 1,172 1,240 -5.5%
Diluted EPS 0.77 0.79 -2.5%
Nine months ($ millions)
Revenues 38,756 38,392 0.9%
Cost of sales 21,503 21,695 -0.9%
Gross profit 17,253 16,697 3.3%
Demand-creation expense 3,194 2,968 7.6%
Operating-overhead expense 9,294 9,035 2.9%
SG&A expense 12,488 12,003 4.0%
Interest expense -108 22 –
Other expense, net -101 -283 64.3%
Pre-tax 4,974 4,955 0.4%
Tax 774 916 -15.5%
Net income 4,200 4,039 4.0%
Diluted EPS 2.74 2.57 6.6%
Source: Nike Inc.

The company did improve its year-over-year gross margins by 150 basis points to 44.8 percent in Q3 and increase sales in its home North American market by 3 percent to $5.07 billion. But it also realized lower sales in the EMEA (-3% to $3.14 billion). Greater China sales rose by 5 percent to $2.08 billion and APLA revenues increased by 3 percent to $1.65 billion. Converse sales contracted by 19 percent to $495 million. North American Ebit increased by 18 percent to $1.4 billion as year-over-year inventories fell by double digits and sales rose by 5 percent in the wholesale channel, increased by 3 percent in stores and by 1 percent in the digital channel. In Europe, meanwhile, reported Ebit declined by 6 percent to $734 million against a difficult comparison as direct sales fell by 4 percent, by 10 percent in the digital channel, and by 5 percent in the wholesale segment. Ebit in Greater China, where a Jordan World of Flight store is opening in Beijing this week, Q3 reported Ebit was 3 percent higher to $722 million on the 6 percent sales growth as revenues increased by 12 percent at wholesale but declined by 13 percent in the digital channel.

Nike - Revenues
    2024 2023 Change
Q3 ($ millions)
North America      
  Footwear 3,460 3,322 4.2%
  Apparel 1,408 1,419 -0.8%
  Equipment 202 172 17.4%
  Total 5,070 4,913 3.2%
EMEA      
  Footwear 1,960 2,011 -2.5%
  Apparel 994 1,094 -9.1%
  Equipment 184 141 30.5%
  Total 3,138 3,246 -3.3%
Greater China      
  Footwear 1,547 1,496 3.4%
  Apparel 498 461 8.0%
  Equipment 39 37 5.4%
  Total 2,084 1,994 4.5%
Asia-Pacific & Latin America      
  Footwear 1,195 1,141 4.7%
  Apparel 390 407 -4.2%
  Equipment 62 53 17.0%
  Total 1,647 1,601 2.9%
Global Brand Divisions 9 12 -25.0%
Total Nike Brand 11,948 11,766 1.5%
Converse 495 612 -19.1%
Corporate -14 12 –
Total Nike Inc. 12,429 12,390 0.3%
Total Nike Brand      
  Footwear 8,162 7,970 2.4%
  Apparel 3,290 3,381 -2.7%
  Equipment 487 403 20.8%
  Global Brand Divisions 9 12 -25.0%
  Total 11,948 11,766 1.5%
Nine months ($ millions)
North America      
  Footwear 10,950 11,090 -1.3%
  Apparel 4,555 4,598 -0.9%
  Equipment 613 565 8.5%
  Total 16,118 16,253 -0.8%
EMEA      
  Footwear 6,406 6,086 5.3%
  Apparel 3,331 3,528 -5.6%
  Equipment 578 454 27.3%
  Total 10,315 10,068 2.5%
Greater China      
  Footwear 4,195 4,099 2.3%
  Apparel 1,368 1,228 11.4%
  Equipment 119 111 7.2%
  Total 5,682 5,438 4.5%
Asia-Pacific & Latin America      
  Footwear 3,639 3,313 9.8%
  Apparel 1,198 1,255 -4.5%
  Equipment 187 167 12.0%
  Total 5,024 4,735 6.1%
Global Brand Divisions 34 44 -22.7%
Total Nike Brand 37,173 36,538 1.7%
Converse 1,602 1,841 -13.0%
Corporate -19 13 –
Total Nike Inc. 38,576 38,392 0.5%
Total Nike Brand      
  Footwear 25,190 24,588 2.4%
  Apparel 10,452 10,609 -1.5%
  Equipment 1,497 1,297 15.4%
  Global Brand Divisions 34 44 -22.7%
  Total 37,173 36,538 1.7%
Source: Nike Inc.

The start of a Nike metamorphosis, which will be marked by a period of transition for its product portfolio in coming quarters, will commence next week during the 10th annual Air Max Day when the brand will introduce its new Air Max Dn style in 4,000 doors. Subsequently, the company will roll out an “Air for Athletes” advertising campaign ahead of the Paris Games, where it’s likely that a multitude of new Nike products and innovations will be introduced on the world’s best athletes.

The current FY, which ends in May, is expected to have 1 percent overall sales growth, with Q4 sales up slightly. H2 will include $450 million in restructuring charges, including $403 million in Q3. Final period gross margin is forecast to increase by 120 basis points, including a 60-basis point headwind from currency fluctuations. The preliminary FY25 outlook calls for unspecified revenue and operating income growth, but an expected low-single-digit drop in H1 revenues as the brand’s product portfolio is shifted to “newness and innovation.”

Nike to replace Adidas as DFB’s sponsor

Elsewhere, Nike announced that it will take over sponsorship of the German Football Federation (DFB) in 2027 and that it’s making steady progress in the running segment, particularly in North America, that should be accelerated after the Olympics this summer and helped by ongoing investments. For example, the number of Ekin representatives for the run specialty market has been doubled. Also, the order book for the Pegasus 41, Pegasus Premium and Pegasus Trail was described as “looking good,” and more $100+ styles have been booked for fall delivery.

Topics