Nike, Inc.

Good afternoon, everyone, and welcome to Nike Inc.'s fourth 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 Trussell, VP of Corporate Finance and Treasurer. I'd 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 fourth 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'd 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, Elliott Hill.

Thank you, Paul. I'm proud of the progress our team made in fiscal year 26. When I look back at where we started the year and where we are today, it's clear that we're building a much stronger foundation for our company. Through our Win Now priorities, we're elevating the fundamentals of our business across our team culture, innovative product, brand strength, and how we serve consumers in our countries and cities. We're making meaningful structural improvements in each of them. Win Now. It's making the comeback possible. And importantly, it's what's enabled us to move about 8,000 teammates into vertical sport teams under our new operating model, the sport offense, while also taking meaningful steps to simplify and accelerate our supply chain and technology. As our foundation approves, the sport offense is starting to create impact. Our renewed obsession with sport and the success of our athletes is fueling energy for our brands and building momentum in our performance business, which grew mid-single digits this fiscal year. Overall, the results aren't there yet. We know we're not living up to our full potential, particularly in Nike Sportswear and Jordan Streetwear, where sell-through remains challenged, impacting both current discounting and future order books. We're operating in a more complex macro environment where we're seeing added pressure on traffic and discretionary spending across our geographies. But we're focused on what we can control, bringing each sport together across product, brand, marketplace, and operations, and deepening our connections with athletes, consumers, and partners. When those dimensions connect, they create the Nike multiplier. It's repeatable and sustainable. That's why I'm confident we're building Nike the right way, not for the next quarter, but for the next decade. Now the opportunity is consistency, execution across every part of the portfolio. From here, we have to prove it every season. Now let me walk you through the details of the clearest signals of our progress in FY26. This year, we directed our marketing, social, and communications outreach to build influence across a wide network of sport-specific communities. We did that through our deep portfolio of athletes, creators, and sport partners. And through those networks, we brought energy and a uniquely Nike point of view to sports moments. both big and small. When we lead with sport authentically, consumers respond. And we see that in both internal and external brand tracking. Our focus now is translating that brand strength into healthier demand, cleaner marketplaces, and sustainable growth. You can see the same energy in our broader product pipeline too. We're now We've now delivered five consecutive quarters of double-digit growth in Nike running, and over that period, we've added roughly a billion dollars to our running business. And FY26, across Western Europe and North America, we gained five points of running market share in statement footwear, more than any other top five brand. The integrated marketplace. is one of our most important areas of transformation. We've been rebuilding our wholesale relationships, expanding our outreach, and improving how we show up across channels. For the fiscal year, wholesale revenue grew 4%, led by double-digit growth in North America. and we've also made significant investments in physical marketplace, refreshing more than 15,000 spaces in wholesale doors around the world. In Nike Direct, we've taken equally important steps. We're elevating the user experience by leading with performance, celebrating sport moments and we're discounting less on Nike Digital. In FY26, We've elevated more than 150 stores with sport-led experiences. Over time, we will continue to rezone and elevate our fleet and close the doors that are no longer aligned to our strategy. At our scale, this takes time. We're not finished yet. I'm confident our investments in the integrated marketplace will pay dividends for years to come. We're also investing in experiences in our key countries and cities to accelerate demand. In global football, our grassroots tournament, TOMA, has reached more than 10,000 kids across 25 cities to date. In basketball, we continue to invest globally from our partnerships with the Chinese High School Basketball League and its 600 teams to Jordan's The One tournament in 20 cities around the world. And running, we launched the After Dark Tour in Shanghai. It will reach seven cities this fall. Last year, 50,000 runners joined, and a third were first-time runners. And with our more expanded reach, we expect even more impact. Being more local matters. It deepens connection. It builds loyalty. And it creates a pull market for our brands and products. As we strengthen Nike Inc.'s foundation, we're taking decisive action across our supply chain to lower cost, streamline operations, and right-size our distribution network to match the demand ahead. We've redeployed resources from our Nike Direct technology teams to better support the company end-to-end across the entire value chain. We're investing in advanced tools and capabilities to improve speed, precision, and reliability in everything we create, from air manufacturing and materials innovation to how we plan, make, and move product to the marketplace. At its core, this work is about serving athletes better and creating a more profitable business. That's especially important in Greater China. A critical long-term growth market for Nike, where we are fully committed to winning. Our teams in China are executing a comprehensive reset, returning to sport and innovation, taking a more local approach to product creation, and building a territory-level offense. At the same time, we're reimagining how we operate in the marketplace. We are working with partners in evaluating new ways to accelerate our return to growth so we can be more premium, more culturally connected, and move at the speed of the Chinese consumer with seamless journeys across digital and physical retail. In the near term, we're executing, cleaning up inventory, investing in must-win doors, and when we invest, we're seeing sales, Inc., increase high single digits. I'm confident in our leaders and our plans to restore long-term marketplace health in Greater China. Converse sharpened its strategy this quarter. It's getting clearer on the role it plays within Nike, Inc., and where it will grow, especially with the Chuck Taylor and Jack Purcell franchises. As part of that focus, we announced that Shay Gilgis Alexander has joined the Nike basketball family. Shay and Nike basketball are a perfect match. This move allows Converse to fully focus on serving creators through its lifestyle business. That clarity matters. When we're focused, we win. And right now, global football is the best example of that playing out through the sport offense. It's been an incredible few weeks of the World Cup. What feels different this time around is we're not treating the tournament as a single moment. We're using it to reshape our business, telling a connected story over time, engaging different communities in relevant ways, and building momentum that carries well beyond the tournament. We built a full Nike football universe. It started with a simple image of 31 Polaroids, a map of what was to come. An epic film called Rip the Script followed, branching off into individual athlete stories, collaborator collections, innovation unveils, retail experience, and local tournaments. We built it this way because the next generation wants to engage with sport on their terms. Discovering, sharing, and participating in the story as it unfolds. Every beat, every story is a doorway, giving different micro communities their own way in. This is the way to reach scale in today's culture. By the first week of the World Cup, we had 1.5 billion views of our various stories. This is about deeply understanding today's consumers and building modern, meaningful, and innovative connections with them. This is nothing new for Nike. Once again, we're out front rewriting our own marketing playbook. At the center of the Nike football universe is amazing product. We launched AeroFit in our national team kits to help athletes compete in extreme conditions. By the start of the tournament, we had already sold 2.5 times the number of kits compared to the same period in World Cup 22. Earlier in the year, we redesigned our Tiempo and Phantom franchises, and before the tournament, we launched our new Mercurial in two expressions of speed. At launch, the Mercurial became the fastest selling 24-hour launch for cleated footwear, and the history of Nike Direct. We also connected Nike Mind to the tournament in team colors to fuel our new innovation. With our X2 collections, we created amazing energy with leading creatives and we reached scale through Nike Sportswear, Skate, Cactus Shack and N7 to connect deeper with broader football culture. And as we talked about last quarter, We're activating the marketplace, elevating over 5,000 footballers around the world. The World Cup is always a moment to prove ourselves. It's one of the toughest battlegrounds in sport, and we're coming with our best. We're leading the conversation and shaping football culture, a strong early proof point for the sport offense. As we move into fiscal year 27, We're focused on building on that momentum. Here's what you can expect from our teams. As we scale the sport offense across more sports, we expect growth to expand beyond running into training, basketball, and ACG. But that progress will continue to be uneven. We expect sportswear and Jordan streetwear to continue to be negative this fiscal year with improvement expected in the back half. We know changing their trajectory is critical to restoring sustainable top-line growth because together they represent approximately half of our revenue. We are moving quickly to reposition both businesses. In the second half, Nike Sportswear will introduce more than a dozen new footwear styles, each with distinct consumer journeys. But this work will take time to scale and translate Our teams are also focused on inspiring the consumer in modern ways while driving commercial impact at local sports moments. And we will continue to invest in how we show up as a premium brand in both digital and physical retail, including a plan to elevate 50% of our Nike Direct-owned fleet by the end of the fiscal year. Across the enterprise, will operate with even greater discipline to improve planning accuracy, strengthen inventory management, and expand our margins over time. Most importantly, we look forward to sharing the next phase of our growth strategy at our investor day on November 16th and 17th. Before I pass it to Matt, I want to take a moment and recognize him for his many contributions to Nike, over his nearly 18 years at this company. Matt helped guide the company through a demanding stretch, and he has been a trusted partner to me and to this team. I appreciate his continued support and his commitment to ensuring a seamless transition in the coming weeks and months. I'd like to thank him for all he has done for Nike and wish him the very best in his next chapter.