Nike, Inc.

Good afternoon, everyone, and welcome to Nike Inc.' 's Fiscal 2025 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. Hello, everyone, and thank you for joining us today to discuss Nike Inc.' 's Fiscal 2025 fourth quarter results. Joining us on today's call will be Nike Inc. President and CEO, Elliot Hill, 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 and 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 reconciliations. 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. Thank you for your cooperation on this. I'll now turn the call over to Nike Inc. President and CEO, Elliot Hill. Thank you, Paul.

And hello, everyone. I'll kick it off with a reflection on Faith Kipyagan's attempt to run the mile in under four minutes today, called Breaking Four. While she crossed the line at a personal best of 4.06, today's attempt will always represent more than the pursuit of a specific singular time. We're super proud of Faith, our teams, and everyone who supported her And we were all inspired by her effort. The Breaking Forward journey will live on as a symbol of courage and ambition. You have to dare to try. And I deeply admire the monumental effort. What it showed is that no other brand offers athletes the depth of expertise that we can. No other brand dreams as big as we can. And more than anything, No other brand inspires 8 billion potential athletes to believe. Faith's historic attempt comes at a unique moment for Nike and our consumers as the sportswear industry continues to operate under geopolitical volatility and tariff uncertainty. Specifically to our business, the results we're reporting today in Q4 and in FY25 are not up to the Nike standard. But as we said 90 days ago, the work we're doing to reposition the business through our win now actions is having an impact. From here, we expect our business results to improve. It's time to turn the page. Just look at the pace of change we've embraced and the progress we made over the last eight months. It all started on October 14th, my first day back at Nike with an all-employee meeting and a declaration to our teammates that we are a sport and a growth company and that we will put the athlete at the center of everything that we do and every decision that we make. In December, we aligned our teams against the five win-now actions, culture, product, marketing, marketplace, and our ground game. with a sharp focus on five key sports, three key countries, and five key cities. We also set out to aggressively right-size three very important franchises, the Air Force One, Dunk, and the AJ1, and to return Nike Digital to a premium destination. With our teams executing against our actions, I flattened my leadership structure and made changes to 11 of my 15 direct reports. We pulled the lever. We could pull the fastest, investing heavily in big sport moments and key product launches to win back our brand voice. That energy has ignited Nike Performance products with consumers, which is helping us to better balance our portfolio. Reclaiming our voice in sports has turned out to be the jumpstart we need it for our team culture too. I see the fight in our teams. We believe and we're competing. A sharp sport point of view and a less promotional Nike marketplace is helping us gain the confidence of wholesale partners. I'm personally meeting with our partners to reaffirm that we're prioritizing and investing in their businesses. We're also strategically adding more points of distribution to be in the path of a wider range of consumers. Nike Direct is showing early signs of being a more premium destination, especially when tied to a sport moment, a key product launch, or a Nike-created on-the-ground activation. To accelerate our Win Now actions, the next step is to realign into dedicated, cross-functional teams by sport. We're organizing into a sport offense to have deeper relationships with the athletes we serve, to gain better insights, to drive sport-specific innovation, telling inspiring stories, and differentiating ourselves in the marketplace. Instead of a men's, women's, and kids' construct, Nike, Jordan, And Converse teams will now come to work every day with a mission to create the most innovative and coveted product, footwear, apparel, and accessories for the specific athletes they serve. These sport-obsessed teams will create greater dimension and distinction for our three brands, will make us more competitive, and will accelerate our growth. We'll pay it off in an integrated marketplace of our own design. We'll invest in Nike Direct digital and physically, and thoughtfully segment wholesale partners to serve sport-specific consumers across channels and up and down price points. Strategically, sharper marketplace segmentation in a sport offense allows us to deliver unique assortments and storytelling opportunities across different channels and partners to better serve our consumers and to help drive profitable, sustainable growth for our partners. We're already moving on a number of these fronts. To better serve wholesale partners, we're in the process of hiring retail marketing, visual merchandising, and account management teammates. And in Nike Direct, we're getting into the rhythm of lining up against sport moments and key product launches. Two wholesale partnership examples this quarter were with Dick's through our 24-7 training collection and with JD through the Air Max 95. The results? Elevated presentations, better consumer connections, and increased sell-throughs. Earlier this month, Our Nike L.A. door at the Grove was home base for a highly successful global after dark run series. Hosting thousands of women runners in L.A. created energy throughout the week. The day before the race, we captured our best sales day at the Grove in three years. And at the conclusion of the inspiring French Open Finals, Nike Digital posted the pre-, during, and post-game looks of Carlos Alcaraz and Yannick Center with a 30% bump in day-to-day sell-through. Consumer right, sport-led assortments, in-the-moment storytelling, and elevated presentations in a segmented and differentiated marketplace, these are some of the many ways we will compete brand-by-brand, sport-by-sport, geo-by-geo. The truth is we're in a fight in every sport we're in, and each sport has different competitors. As we began to align our iconic brands by sport, we'll have a closer line of sight so we can develop targeted plans to match up against each one of them. We're approaching every opportunity with an athlete mindset, passion, commitment, and determination. Our teams are also making strong progress in expanding our distribution with strategic partners. I'll focus briefly on North America, who in this quarter led a Gen Z targeted experience with Urban Outfitters, becoming the number one brand in select doors on the opening weekend. We entered over 200 women's-led doors, including boutiques like Aritzia's. We hosted 30 running specialty accounts from around the world at the Nike campus for four-day immersion in our upcoming running innovations. We leveraged two of our iconic brands, Nike and Jordan, to create meaningful product activation with key city specialty partners along the I-95 corridor. And finally, we announced a new partnership with Amazon. This fall, They'll carry a select assortment of footwear, apparel, and accessories, and Nike will have a featured brand store on the platform focused on running, training, basketball, and sportswear. The Nike integrated marketplace is beginning to take shape. Along with the Nike Direct, these partners will play an important role in serving a wider range of consumers. This is Nike at its best, leveraging our portfolio of brands, and sport-led product offerings across multiple channels and up and down price points. Q4 was also filled with a number of sport moments for Nike, Jordan, and Converse. All three brands showed up with louder brand statements to leverage the emotion of epic storylines. At the golf majors with Rory and Scotty, with Asia to kick off a new WNBA season, at the Champions League final with PSG and Inter Milan, with Shea for both his MVP and the Thunder's NBA championship, and at Roland Garros with Alcaraz and Center. All of that is in 90 days. It's a reminder of the strength of Nike's athlete relationship and our brand's far-reaching influence across all sports. Shifting to our product portfolio, We made progress this quarter in rebalancing sportswear and performance. We're getting back to executing our formula more consistently to create innovative and coveted product, accelerate demand through emotional storytelling, and then scale at an unmatched level to meet the growing demand in the marketplace. Take Nike running as an example, which grew high single digits overall for the quarter. The energy was led by Barbaro 18, which in just over 90 days has already become a $100 million plus franchise with strong sell-through. In basketball, our women's business expanded more than 50% this fiscal year, proving that product demand is catching up to the spike in energy surrounding the women's game. The biggest basketball headline this quarter was the retail release of Asia Wilson's signature collection, and her first shoe, the A1. It showed how effective we are when we line everything up for a thoughtful journey, closely planned with the athlete. The first launch sold out in three minutes on Nike Digital in North America and will double the amount of Asia pairs in coming seasons. In sportswear, the look of running footwear saw continued strength through products like P6000, Bomero 5, and Shox. And we're reintroducing the Air Max 95 to a new generation of consumers through a more thoughtful seeding journey of high energy driving models through different channels, account by account, and through early adopters like athletes and creative partners in our key cities. While we have a ways to go to return to a truly diversified sportswear lineup at scale, I'm pleased with the progress the team is making. I'll close by saying a few words on fiscal year 26. As we put the sport offense in place, we're building a full pipeline of innovative product and driving momentum in the marketplace. I see a clear path to recovery ahead. A strong signal of our progress is the momentum we're seeing in Nike performance products. which we expect to continue throughout fiscal year 26. In running, our nine box footwear lineup will continue to deliver new innovation. We'll approach basketball through multiple dimensions, and we'll build on apparel opportunities in training, golf, and tennis that span the spectrum of sport and style. In global football, the stage is set for an intense World Cup battle. We're prepared with an upgrade of all three football boot silos in a 12-month window. Our kits look phenomenal and will debut an exciting apparel innovation that'll scale across multiple sports. The early feedback to the product pipeline from our wholesale partners at our engagements meetings has been positive. For example, Our order book is improving sequentially with our holiday orders up. We're finding a better balance with our portfolios, sport performance, and new dimensions of sportswear expected to offset the declines in our classic franchise with wholesale partners. As I step back and look at the overall progress against our win now actions by geography, Momentum and confidence are building in North America and EMEA. APLA's progress varies by individual country, and China will take longer due to the unique characteristics of the marketplace. We've been operating in China for over four decades, and our teams know what is required to return to growth. We're executing our plans and trending in the right direction. but a full recovery will take time. I believe we have everything we need to win, and we are ready for the new fiscal year. We're laser focused on what we can control, inspiring and innovating for the 8 billion consumers we have the privilege to serve. We know what it'll take to set off the next wave of growth for Nike. From here, it's on us. to get back to executing at the level we expect. And like Faith Kipyagan, our entire team is ready to run towards something bigger and is committed to writing the next great chapter for our beloved company. From here, I'll pass it to Matt.