Nike, Inc.

Good afternoon, everyone. Welcome to Nike Incorporated 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. Now, I would like to turn the call over to Paul Trussell.

Thank you, Operator. Hello, everyone, and thank you for joining us today to discuss Nike, Inc.' 's fiscal 2024 second quarter results. Joining us on today's call will be Nike, Inc. President and CEO John Donahoe and our CFO, Matt Friend. Before we begin, let me remind you that participants on this call will make forward-looking statements based on current expectations, and those statements are subject to certain risks on uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in Nike's reports filed with the SEC. In addition, participants may discuss non-GAAP financial measures and non-public financial and statistical information. Please refer to Nike's earnings press release or Nike's website, investors.nike.com, for comparable GAAP measures and quantitative reconciliation. All growth comparisons on the call today are presented on a year-over-year basis and are currency neutral unless otherwise noted. We will start with prepared remarks and then open up for questions. We would like to allow as many of you to ask questions as possible in our allotted time, so we would appreciate you limiting your initial question to one. Thanks for your cooperation on this. I'll now turn the call over to Nike Inc. President and CEO, John Donahoe.

Thank you, Paul, and hello to everyone on today's call. Nike is the market leader in sport. It's a role we take seriously. We create innovation that pushes human potential. We expand the world of sport, inviting new generations all around the globe into the community of athletes. And we fuel the energy and excitement of sport itself, both on a global stage and on the ground in community and cities everywhere. One thing that distinguishes Nike more than any other brand in the world is that we get our inspiration from athletes and sport. And it was a great quarter for Nike and the athletes who inspire us. Here's just a few examples. Calvin Kipton broke the marathon world record wearing the Alpha Fly 3, which builds on our proprietary system of speed that continues to set the standard. Asia Wilson earned WNBA Finals MVP after leading the Las Vegas Aces to their second straight title. LeBron James and Anthony Davis led the Lakers to the first-ever NBA in-season tournament championship. Aitana Banmati won the Women's Ballon d'Or. And Sha'Carri Richardson was named USA Track and Field's Female Athlete of the Year. Being inspired by world-class athletes like these, keeps us focused on what's redefining what's possible. That's what sets us apart. No one changes the game like Nike, from our breakthrough innovation for toddlers with the Swoosh One shoe, to being able to elevate beloved products like Kobe's into an entire franchise, to NBA players increasingly choosing to play in the Sabrina One, a shoe deeply resonating across genders. Again and again, it's Nike that pushes what's possible to break the status quo. Now, in addition to creating best-in-class innovation, great companies must also focus on strong execution. And that's what we did in Q2, delivering our second $13 billion quarter. This went on top of last year's extraordinary 27% growth. And we drove more than 20% growth in earnings per share this quarter. Simply put, this is the result of relentless execution by our team in an uneven macro backdrop. Looking at holiday, we outpaced the industry, driving growth of close to 10%. Nike Digital had its strongest Black Friday week ever, and a record number of consumers shopped in our stores over the long Thanksgiving weekend. And in Greater China, brick and mortar grew double digits during National Day holiday and Nike once again outperformed the industry during Double 11, is the number one sport brand on Tmall. These holiday results, when combined with Q2's earnings growth and our continued healthy inventory, showcase how we're executing against our priorities, even in the face of a highly promotional environment and increasing macro volatility. Last quarter, I talked about how we're getting back on our front foot. accelerating the flow of our innovation, and executing with excellence across our winning formula of innovative product times distinctive storytelling times differentiated marketplace experiences. Let me give you a few examples of where we've demonstrated progress. Within our running business, we're driving deeper connections with the running community. We recently launched our most innovative trail shoe yet, the UltraFly, at the world's pinnacle trail race. We hosted over a thousand runners for a uniquely Nike experience, which drove energy and positive feedback from both elite runners and the broader trail running community. And we partnered with Top RSG Doors for a series of community activations centered on the Ultra Fly and other key products like Peg Trail and Wild Horse. All this led to growth of over 20% in our trail running portfolio for the quarter. In global football, we're fueling growth through strategic only Nike athlete storytelling. As you know, we have a three silo construct in men's football, having paired Erling Haaland with the Phantom Boot, Jamal Musiala with the Tiempo, and Kylian Mbappe and Marcus Rashford leading the Mercurial. With the game's greatest showcasing our product superiority in our seamless execution to pull this innovation through the marketplace, All three franchises are up strong double digits, even lapping last year's strong performance with the Men's World Cup. And in lifestyle, we're driving a women's-led geo-by-geo marketing acceleration behind V2K, a standout shoe in our fast-growing retro running line. It's being fueled by a tongue-in-cheek campaign that's resonated with this consumer. and a creator partnership strategy that's delivered head to toe style inspiration into her preferred media channels. All this catalyzed the V2K to very strong sell through in the quarter with exciting potential for this style still to come. All three of these examples offer an early indication of the growth we aspire to. We have real opportunity to drive progress across many dimensions of our business And that's our priority moving forward. At Nike, we like to say we're on the offense always. When we see something that needs solving, we don't wait around, we solve it. And so, as we look to the future, we know where we must focus. Three areas will always drive our distinction and competitive separation. Product innovation, storytelling that connects, and marketplace execution. When Nike's at its best, we create impact on a scale that can't be matched. Grounded in sport, centered in youth culture, inviting consumers around the world into our brands. The second half of fiscal 24 represents the start of a multi-year product innovation cycle that will introduce new franchises, concepts, and platforms, elevating our full portfolio. And while there'll be some key moments in the second half, This new innovation cycle will take some time to fully ramp up, given our size and scale. Now, we know we have an outsized opportunity to drive long-term profitable growth. And we have areas of significant growth potential, like women's, Jordan brand, and running, each of which requires focused investment to reach full potential. We also must get deeper traction on our key speed initiatives, Today, we know we must be faster, increasing the pace of innovation, increasing the pace of market to consumer, and increasing our agility and responsiveness. To drive this, we'll embrace a significant savings plan to create investment capacity to fuel profitable growth at speed and scale. Areas of potential savings include simplifying our product portfolio, increasing automation and the use of technology, streamlining our organization, and leveraging our scale to drive greater efficiency. Let me just acknowledge that this work will be led with respect and thoughtfulness as we move to improve the ways in which we work and build a leaner and stronger company for the future. Matt will provide more detail on this later in the call. Now, we've made some progress as we look to accelerate growth in our business. And I want to walk through two key areas today where we're investing for future and further growth, our women's business and Jordan brand. Both women's and Jordan are opportunities that are grounded in performance and the ability to drive culture and lifestyle, with the latter providing even greater scale and growth opportunities. First, let's discuss women's, which is already a roughly $9 billion business, and that's just a Nike brand, excluding Jordan and Converse. Our women's business has grown high single digits on average over the past three years. And while we're encouraged by this progress, we now have line of sight into what we believe is the best plan we've ever had to accelerate growth in women's. Our plan makes us even more confident in serving her through sport and style. Today, about 40% of our members are women consumers. They make up a bigger proportion of new members, and their demand per member is growing faster. We see great opportunity to better serve this consumer by responding to her needs across the spectrum of performance and lifestyle. Let me first touch on performance. where we're focused on innovating for her to create new opportunities we did not previously serve. We've now built a collection of bras and leggings across different price points. This includes our statement leggings, Zenvigo and Universal, all of which are above $100, a price point we were not previously in. These leggings serve her with a whole new approach to fit and comfort, thanks to new material innovations. And we're holistically elevating our retail presentation and storytelling to help her find the right product for her exact needs. More and more women are joining our brand by purchasing these leggings. In fact, all told, statement leggings fueled our fitness apparel growth in women's for the quarter. And in footwear, we're seeing very strong sell-through for the Motiva. a shoe with a comfortable and distinctive design that shows how we've dimensionalized performance into walking. And Free MedCon is also performing very well, serving her need for versatility by expanding a fitness shoe into comfortable everyday wear. And at the same time, when we look at women's lifestyle, we've established our leadership position in women's sportswear through a focus on style and comfort. with iconic franchises like Air Force One, Dunk, Cort, and Fleece, all of which drive continued momentum with new energy and design. And we're also fueling the rapidly growing retro running trend with our portfolio styles like the Vimera 5, V2K, and P6000. In fact, even with us sequentially increasing the supply Demand for this entire line is so strong there remains tremendous opportunity to grow further. We're excited to scale these styles over the next few seasons. And so today we're taking the right steps to serve our women consumer with energy and sharpness. And we're fully aligned in accelerating our offense to raise our game with an eye to the immense opportunity we see going forward. Now let's discuss Jordan Brand, which is on a clear path to become the number two footwear brand in North America, the biggest brand not named Nike. We're fueling the strong momentum in Jordan by growing a Monday to Friday business with a more diverse product portfolio on top of our very successful launch business. Over the past few years, we've driven strong growth in the Jordan business, by bringing more dimensions into the brand. We're proving that Jordan can be more than retro, more than footwear, more than men's, and more than North America. An approach to growth will continue to bring life and growth over the coming years. And this is just the beginning for Jordan brand as we see even greater growth potential through our plan for deeper investment. which for Jordan will come in areas like merchandising, marketing, and marketplace. For instance, today, Jordan brand performance product is outpacing overall growth, with Jordan reigniting its on-court presence in basketball with the strongest signature portfolio ever, as Tatum, Luka, and Zion push the brand to new heights, both on and off the court. Jordan's also expanding beyond basketball into For example, golf, global football, and American football. At Jordan, Women's and Kids continues to lead the brand's overall growth. Women's and Kids' business share within Jordan have increased seven points over the past three years. And Jordan Apparel is now a roughly billion dollar business, averaging almost 20% growth over the past three years. We're also building new dimensions in the iconic AJ1 franchise across high, mid, and low, as well as through women's-led dimensions such as the Elevate and the Brooklyn Boot. And I'd also like to spotlight Jordan's strategic approach and success with our Remix footwear line, which, again, has already surpassed the billion-dollar annual revenue mark with high double-digit growth. Led by styles like the Max Aura and the Stadium 90, Remix has increased Jordan's accessibility through more affordable price points and an expanded distribution with key partners. And last but not least, Jordan's share from international markets continues to expand as we bring the brand to global cities in an authentic way. This has shown up as we pilot the Jordan destination tab in the Nike Commerce app in EMEA with strong early results. And the Jordan World of Flight doors in Milan, Tokyo, and Seoul have emerged as the company's most productive retail concepts. The sky is the limit for Jordan as we continue to invest and explore what's possible for one of the world's leading brands. In the end, We are moving with confidence against the opportunities we see. And looking ahead to the next calendar year, we remain single-minded in our focus to compete and win. I wouldn't trade our position with anyone. And with that, I'll turn the call over to Matt.