Nike, Inc.

good afternoon everyone welcome to nike inc's first quarter fiscal 2026 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 trestle vp of corporate finance and treasurer now i would like to turn the call over to paul trestle thank you operator hello everyone and thank you for joining today

to discuss Nike Inc.' 's first quarter fiscal 2026 results. Joining us on today's call will be Nike Inc. President and CEO, Elliott Hill, and EVP and 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 the call 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. And I'll now turn the call over to Nike Inc. President and CEO, Elliot Hill. Thank you, Paul.

It's great to be here with everyone today. Before we begin, I want to start with a thank you. I want to thank my Nike Inc. teammates around the world. Because of their passion, commitment, and determination, we made tangible progress from where we were 11 months ago, driven by our Win Now actions that focused our team on our culture, product, brand marketing, marketplace, and our ground games. This quarter, our win now actions drove momentum in the areas we prioritized first, running, North America, and wholesale partners. It showed that we're making the right choices. Consumers are responding. We're getting some wins under our belt. What you can't see in the results is the effort that I've seen in our stores, distribution centers, and offices around the world. Since my return, Not a day has gone by that I haven't asked each of my teammates to commit themselves fully to building a better Nike. That takes a lot of work. And this quarter in particular, we asked even more from our teams as we realigned approximately 8,000 teammates to our sport offense, which I will explain shortly. It's a massive achievement for everyone involved. What I want this audience to know is that our teams also understand how much we still must do to meet our full potential. Because the truth is, Nike's journey back to greatness has only just begun. There is significant work ahead, especially in the areas of Sportswear, Greater China, and Nike Direct. And as I said to the team, progress won't be perfectly linear, but the direction is. On our last call, I said it was time to turn the page. And I believe this quarter reflects the many ways we're doing just that. As you've heard me say, it's imperative to bring our entire organization closer to the athletes we serve. That's why the sport offense is going to be so critical to our success. This new formation and ways of working will align our three brands, Nike, Jordan, and Converse into more nimble, focused teams by sport. We'll gain sharper insights to fuel innovation in storytelling and connect with the communities of each sport in more meaningful ways. Collectively, we'll have a better coordinated attack with each brand forming a distinct identity and delivering a clear attention to serve different consumers. In the marketplace, organizing by sport gives us a much clearer point of view. The House of Innovation in New York is a great example where we redesign a retail experience by sport. I walked the floors in early September, and we're now able to take a consumer into a world of Jordan, a world of Nike running, or a world of Nike global football. It's an immersive sport experience. and the refresh has already led to double-digit revenue increases. That clarity works in small format doors as well. We recently redesigned our South Congress store in Austin to focus only on running and training, and sales have significantly increased. Ultimately, the sport offense will maximize Nike Inc.' 's complete portfolio. It is designed to drive growth across all our dimensions. We believe the opportunity to serve so many athletes across sports with three distinct brands in retail channels at every price point is an advantage that no one else has in our industry. Now let's take a deeper look and tell where we're driving progress. Our running business gives us an early window into the kind of impact we expect. out of the sport offense. Our running team moved fastest into our new formation and was the first to get sharper on the insights of their athletes. It turns out runners mostly want three things from their running shoes, big cushioning, stability, or an everyday shoe that returns energy. In response, we've moved with a sense of urgency and completely redesigned the Vamero, the Structure, and the Pegasus to solve for these three insights, integrating our industry-leading innovation platforms like Nike Air, Flyknit, ZoomX, and ReactX. Having a consistent structure of silos and price points allows us to introduce at least one new major running footwear style each season. Our running business continues to be a strong proof point of progress. We're getting back to delivering a relentless flow of innovation that serves real athlete needs, and we're pulling it all the way through the marketplace in consumer-friendly ways. The early results have been positive, with Nike running growing over 20% this quarter. Our opportunity is to quickly seize the benefits of a sport offense and apply them to more sport and sport culture including global football, basketball training, and sportswear. I will remind you that each sport is in a different stage of development. Our global football team is preparing for the energy of the 2026 World Cup and is ready to move forward. We will utilize the world's biggest sports stage to debut an exciting new apparel innovation platform that will later be leveraged across other sports. And we will connect with a younger consumer by launching several football streetwear collections. As we're doing in running, football booths are also fueled by three silos at multiple price points, addressing the needs of three different styles of play. This quarter, we launched the revamped Phantom 6 with great sell-through, And we'll follow that up with a new Tiempo in Q3 and a new Mercurial in Q4. And finally, we reset the football brand identity this quarter with our Scary Good campaign. From a football innovation and brand standpoint, we're ready to go. In the marketplace, we're moving quickly to improve our position to tell football innovation stories in more inspiring ways at point of sale. The longer-term vision is for the impact of the sport offense to be felt far beyond the traditional sports where we currently compete. We now have dedicated teams to bring our creativity to additional market opportunities. These are spaces for us to take design risks, to be innovative, and to be irreverent, which is so important to our brand's DNA. Nike ACG, for example, has brought an athletic, youthful approach to outdoor product for nearly 30 years. As more people stay active outdoors, we will invest in Nike ACG to address the opportunity. This quarter, we launched an elite ACG race team who have helped us make high-performance outdoor product. Together, we just revealed some exciting innovations. a breathable apparel innovation platform called Radical Air, and a trail-tuned super shoe with the ACG Ultra Fly. ACG professional racer Caleb Olsen wore both innovations in his victory at the Western States 100 race, finishing with the second fastest time in the history of the race. Our new partnership with Skims is another opportunity to bring something unexpected to a new consumer. Nike's innovation expertise and SKIM's dedication to inclusive apparel has the potential to create performance training products with a very different look. We debuted the product line last week with 58 silhouettes, and early consumer response was very strong. The opportunity exists to create more dimension around the most established sports as well. Look at this year's U.S. Open of Tennis as an example. Over the course of the three-week tournament, we celebrated the wins and on-court looks of Alcarez and Sabalenka. We designed custom dresses for Naomi's incredible comeback and for Sharapova's induction into the Tennis Hall of Fame. We excited sneaker fans with a retro launch of Agassi's Tech Challenge sneakers, and we brought it all together in New York's House of Innovation in an immersive tennis experience. In the past 10 months alone, as part of our Win Now actions, we've activated 12 sport takeover moments that connected the inspiring performances of our athletes and teams to commercial assortments in the marketplace. This quarter, that included the England women's national team winning the European Championship, Sinner's Wimbledon title, Scottie's Open Championship title, and Chelsea winning the Club World Cup. Sport and the world's greatest moments will always be Nike's runway. And only we can bring it all together across three brands, so many sports, performance, and lifestyle. This is Nike maximizing the full power of our portfolio. While the sports performance teams are finding a higher gear, our sportswear teams have work to do to get sharper on the consumers we're serving. And we see it in our results. Our business continues to decline. Continuing to build a clear product construct in sportswear, as we're doing in our performance sports, remains a priority. We do have pockets of strength. especially in our deep vault of look of running footwear, but we are still in the process of putting our largest classic franchises into a healthier position for the Nike, Jordan, and Converse brands. Air Force One is stabilizing. Air Jordan 1 inventory levels are returning to health. The Dunk continues to be managed aggressively down in all geos, and the Chuck Taylor, is in the early stages of a global market reset. With Converse, we just put new leadership in place, and we're going to take aggressive actions to better position the brand for profitable growth in the future. Of the priority win-now actions, elevating the full marketplace is in the early innings. The positive is that North America, where we invested first took some big steps forward this quarter. The team continues to give more consumers access to the brand in more premium environments. We reset over 1,300 running spaces in the quarter, from Dick's to Nordstrom's to Heartbreak Hill. And we are also pleased with the launch of the Nike Brand Store on Amazon, where we are driving stronger engagement and sales than anticipated. While our North America teams are setting the tone, we're still far from our ultimate goal of elevating an integrated marketplace, digital and physical, wholesale and Nike direct in all geographies. Greater China, as I mentioned on the last call, is facing structural challenges in the marketplace. Our business was down 10% for the quarter. Seasonal sell-through continues to underperform our plans. requiring larger investments to keep the marketplace clean. My leadership team and I were in China a few weeks ago. We traveled to three cities, spending time with our greater China leadership team, consumers and our partners. We are even more committed to the opportunity for growth in China. They are a nation that's passionate for the games of basketball and global football and a nation that is embracing a healthy lifestyle through running and training. When we lead with exciting innovations like the Romero 18 or the Jordan Game Shoe, or have athletes like Ja and LeBron visit key markets, we drive traffic and demand. It is even more clear that our path to winning in China is through sport. Our team is moving with urgency to develop consistent plans across all sports, and refresh some of our retail environments into distinct sport experiences. With over 5,000 monobrand stores in China, this will take investment, and it will take time. Globally, Nike Digital is still working to find solid ground. We made the strategic decision to become less reliant on classic franchises and pull back on our promotions for the long-term health of our brands and marketplaces in all geographies. Organic traffic has slowed. We are working to find the right assortment and marketing mix to consistently bring consumers back to our digital ecosystem. For a company our size with three brands that serves consumers in nearly 190 countries, not all sports, channels, or countries will recover on the same timelines. I've spent a lot of time reflecting on the last several months. What keeps me grounded is every time I return from a major sporting event, meeting with athletes, or being in the marketplace. I'm even more convinced that the Win Now actions are absolutely the right focus for our teams. With that said, we're also realistic that we are turning our business around in the face of a cautious consumer tariff uncertainty, and teams that are still settling into the sport offense. We know we have a lot left to prove. What gives me confidence is that through the sport offense, we're hyper-focused on the athlete. The creative ideas keep coming, and we're covering a lot of ground in the marketplace. Like I said at the start, the Nike team, this team We have a lot of fight in us. I look forward to what we're about to do together. Thank you, and I'll pass it to Matt.