NIKE, Inc. (NKE) Q2 2025 Earnings Summary

Executive Summary

Q2 FY25 revenue was $12.35B, down 8% YoY; diluted EPS was $0.78; gross margin contracted 100 bps to 43.6%. Management said results “largely met expectations” amid portfolio shift and heavier markdowns in NIKE Direct .
Gross margin decline came in better than the prior quarter’s guidance (-150 bps) at -100 bps, a modest positive surprise versus company expectations given higher discounts and mix headwinds partially offset by lower product costs .
Guidance pivot: Q3 revenues expected to be down low double digits and gross margin down ~300–350 bps, with a greater headwind in Q4 as NIKE accelerates inventory clean-up, shifts NIKE Digital to full price, and raises demand creation spend to reignite brand momentum through sport .
Strategic catalysts: accelerated rebalancing away from classic footwear franchises, rebuilding wholesale partnerships, premium repositioning of NIKE Direct/Digital, and renewed long-term sports assets (NFL extension through 2038), but near-term revenue and margin pressure likely increases in 2H FY25 .
Wall Street consensus (S&P Global) was unavailable due to data limits; comparisons below focus on company-reported actuals and guidance ranges. S&P Global estimates not retrieved due to request limit.

What Went Well and What Went Wrong

What Went Well

Recommitment to sport-led product creation and premium brand storytelling; CEO Elliott Hill outlined near-term actions to reignite momentum, including “fields of play” focus, franchise discipline, and empowering key-country/city teams .
Running, training, basketball, and football showed pockets of strength; EMEA digital off-price mix declined strongly as NIKE repositioned Digital as a premium platform; North America’s Black Friday week delivered NIKE Digital’s largest demand week ever .
Strategic assets renewed: long-term NFL partnership (player safety, global expansion), reinforcing NIKE’s sports marketing depth; quarterly dividend lifted to $0.40 (23rd consecutive annual increase) .

What Went Wrong

NIKE Direct revenues fell 13% with NIKE Digital down 21% on heavy promotions amid soft traffic; wholesale -3% (reported) as portfolio resets weighed on sell-through and mix .
Greater China revenue declined 11% YoY; higher markdowns pressured gross margin in a competitive, promotional environment; inventory levels were higher than desired, requiring accelerated clean-up actions .
EBIT margin fell to 11.3% (vs 14.2% prior-year quarter), with CFO guiding to steeper GM pressure in Q3 (down ~300–350 bps) and larger headwinds in Q4 as NIKE reduces aged inventory and shifts Digital to full price .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$12.61	$11.59	$12.35
Diluted EPS ($USD)	$0.99	$0.70	$0.78
Gross Margin (%)	44.7%	45.4%	43.6%
EBIT Margin (%)	13.3%	10.9%	11.3%

Segment Revenues ($USD Billions)	Q1 2025	Q2 2025
North America	$4.83	$5.18
EMEA	$3.14	$3.30
Greater China	$1.67	$1.71
APLA	$1.46	$1.74
Converse	$0.50	$0.43

KPIs	Q4 2024	Q1 2025	Q2 2025
NIKE Direct Revenue ($B)	$5.10	$4.70	$5.00
Wholesale Revenue ($B)	$7.10	$6.40	$6.90
Inventories ($B)	$7.52	$8.25	$8.00
Cash & ST Investments ($B)	$11.58	$10.30	$9.80
Effective Tax Rate (%)	13.1%	19.6%	17.9%
Dividends Declared/Share ($)	$0.370	$0.370	$0.400
Share Repurchases ($B)	$1.00	$1.20	$1.10

Note: S&P Global consensus estimates were unavailable due to request limits; estimate comparisons are omitted.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q2 2025	Down 8–10% YoY	Actual: Down 8% YoY	Met range
Gross Margin	Q2 2025	Down ~150 bps YoY	Actual: Down 100 bps YoY	Better than guided
Revenue	Q3 2025	N/A	Down low double digits YoY	Newly provided; lowered outlook
Gross Margin	Q3 2025	N/A	Down ~300–350 bps YoY	Newly provided; larger contraction than Q2 guide
SG&A	Q3 2025	Q2 ~flat YoY	Q3 slightly down YoY (prior-year included restructuring)	Lower vs Q2 guide
Other Income & Expense	Q2 2025	$30–$40M	$30–$40M (Q3)	Maintained range
Effective Tax Rate	Q2 2025	High teens	17.9% actual	In range
FY Guidance Policy	FY 2025	Full-year guidance withdrawn; quarterly guidance to be provided	Quarterly guidance maintained	Maintained approach
Dividend	Q2 2025	$0.370 prior quarterly rate	$0.400 declared; +8%	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
NIKE Digital premium repositioning	Digital pressured; off-price mix elevated; plan to elevate marketplace	Shift to full-price model; reduce performance marketing; near-term liquidation through less profitable channels	Accelerating repositioning (near-term headwinds)
Classic footwear franchise reset	Headwind to revenue; classics down ~50% on Digital in Q1	Further deceleration vs total business; significant reduction in weeks of supply planned	Deeper reset underway
Running and performance offense	Running momentum building; Peg 41 success; spring units up double digits	Performance fields of play grew YoY; segments in training/football/basketball showed strength	Improving in performance
Wholesale partnership rebuild	Early engagement; pilot concepts (DICK’S women’s fitness; Foot Locker HomeCourt)	CEO engaged directly with major partners; priority to earn shelf space; invest in mutual sell-through	Strengthening relationships
Greater China macro/promotions	Promotional marketplace; inventory assistance; innovation resonating (Peg, Alphafly, Sabrina)	Retail traffic declines; higher markdowns; focus on local Express Lane product and sport community	Challenging near term
Supply chain and cost leverage	Cost reductions aided margins in Q4/Q1	CSCO reporting directly to CEO; actions to clean inventory; potential margin expansion focus	Organizational emphasis

Management Commentary

CEO Elliott Hill: “We lost our obsession with sport… We will lead with sport and put the athlete at the center of every decision,” outlining “fields of play” by men’s/women’s/kids, franchise discipline, premium NIKE Direct, and recommitment to wholesale partners .
CFO Matt Friend: “Revenues were down 8%… Gross margins declined 100 bps… Earnings per share was $0.78,” noting soft traffic and elevated promotions, with NIKE Digital off-price mix up high-single digits YoY; Q3 guide: revenue down low-double digits and GM down ~300–350 bps .
Strategic sport assets: NFL partnership extended to 2038 to drive global expansion, player safety, and youth football development; reinforces brand and sport-led strategy .

Q&A Highlights

Wholesale shelf space and partner confidence: Management emphasized delivering “innovative coveted product” and “bold brand statements” to drive “mutually profitable growth,” with major partners encouraged by closer collaboration and product pipeline .
Investment phasing and margin-first approach: Demand creation to rise over coming quarters; accelerated marketplace clean-up (returns, wholesale discounts, factory store markdowns) to create capacity for fall/holiday ’25; near-term revenue/margin headwinds accepted to reset for sustainable growth .
Degree and duration of reset: Two buckets—near-term channel/product mix headwinds and transitory inventory/supply chain deleverage; larger headwinds in Q4 than Q3 anticipated .
Fields of play prioritization: Focus on running, basketball, global football, training, and sportswear across genders; women’s basketball program expanding (Sabrina, Asia, Caitlin), plus premium running models and GT series pipeline .
Regional actions: North America aggressive reset with running specialty investment; China focus on “China-for-China” products via local Express Lane and NSRL; reset bigger, bolder consumer-led NIKE concepts with Topsports and Pou Sheng .

Estimates Context

S&P Global consensus estimates (EPS, revenue, margin) for Q2 FY25 were unavailable due to request limits. As a proxy, company guidance set last quarter (Q2 revenue down 8–10%; GM down ~150 bps) versus actual Q2 results (revenue -8%; GM -100 bps) suggests outcomes were within or slightly better than management’s directional expectations .
Given the updated Q3/Q4 outlook and strategy, Street models may need to reflect lower revenue trajectories, deeper GM contraction in Q3 (~300–350 bps), higher demand creation spend, and a staged recovery tied to performance newness and wholesale shelf-space rebuild .

Key Takeaways for Investors

Expect tougher 2H FY25: Q3 revenue down low double digits and GM down ~300–350 bps with even larger headwinds in Q4 as NIKE accelerates inventory clean-up and shifts Digital to full price; near-term EPS risk remains elevated .
Watch the performance-led comeback: Running (Pegasus, Vomero, premium cushioning), GT basketball, and women’s basketball pipeline are central to the recovery narrative; monitoring unit growth and full-price realization will be key .
Channel mix reset: Premium NIKE Direct and less reliance on paid performance marketing aim to restore brand equity and margin rate over time; short-term traffic/sales could be impacted as promotions recede .
Wholesale partnership rebuild is a critical lever: Evidence of stronger engagement and access to best products should support shelf-space gains and more balanced marketplace growth over the next few seasons .
China remains a swing factor: Promotional environment and traffic softness challenge near term; localization of product and sport community investments are intended to stabilize and rebuild pull dynamics .
Capital returns intact: Dividend raised to $0.40 and ongoing buybacks ($1.1B in Q2) highlight confidence in long-term value creation despite near-term reset .
Tactical positioning: Near-term caution warranted given step-up in headwinds; the inflection to improvement likely tied to visible product newness scaling and improved full-price mix exiting calendar 2025 .

Sources: Q2 FY25 press release and 8-K (financials, divisional and balance sheet tables, shareholder returns) ; Q2 FY25 earnings call transcript (prepared remarks, guidance, themes, Q&A) ; Q1 FY25 press release and call (prior-quarter comps and guidance) ; Q4 FY24 press release (trend context) ; NFL partnership press release ; Dividend press release .