Nike, Inc. shares were stable on Thursday evening, March 20 after the company reported fiscal 2025 third quarter results for the period ended February 28.

Fiscal third quarter revenues were $11.3 billion, down 9 percent on a reported basis compared to the prior year and down 7 percent on a currency-neutral basis.  The top-line result surpassed Wall Street estimates of $11.03 billion. North America revenues retreated 40 percent year-over-year. Gross margin decreased 330 basis points to 41.5 percent of sales, presumably due to to increase promotional activity to clear inventory.

The market will be more focused on the conference call this evening, as most are looking for direction and timelines rather than numbers from last quarter.

“The progress we made against the ‘Win Now’ strategic priorities we committed to 90 days ago reinforces my confidence that we are on the right path,” said Elliott Hill, President and CEO, Nike, Inc. “What’s encouraging is Nike made an impact this quarter leading with sport – through athlete storytelling, performance products and big sport moments.”

Fiscal Third Quarter Summary
Revenues for Nike, Inc. were $11.3 billion, down 9 percent on a reported basis compared to the prior year and down 7 percent on a currency-neutral basis.

  • Nike Brand revenues were $10.9 billion, down 9 percent on a reported basis and down 6 percent on a currency-neutral basis, driven by declines across all geographies.
  • Nike Direct revenues were $4.7 billion, down 12 percent on a reported basis and down 10 percent on a currency-neutral basis, primarily due to a 15 percent decrease in Nike Brand Digital and a 2 percent decrease in Nike-owned stores.
  • Wholesale revenues were $6.2 billion, down 7 percent on a reported basis and down 4 percent on a currency-neutral basis.
  • Revenues for Converse were $405 million, down 18 percent on a reported basis and down 16 percent on a currency-neutral basis, due to declines across all territories.

Divisional Revenues

Regional Summary

Income Statement Summary

  • Gross margin decreased 330 basis points to 41.5 percent, primarily due to higher discounts, higher inventory obsolescence reserves, higher product costs and changes in channel mix, partially offset by restructuring charges in the prior year.
  • Selling and administrative expense decreased 8 percent to $3.9 billion.
    • Demand creation expense was $1.1 billion, up 8 percent, primarily due to an increase in brand marketing expense.
    • Operating overhead expense decreased 13 percent to $2.8 billion, primarily due to the restructuring charges of $340 million in the prior year and lower wage-related expenses.
  • The effective tax rate was 5.9 percent compared to 16.5 percent for the same period last year, primarily due to a one-time, non-cash deferred tax benefit provided by recently finalized US tax regulations related to foreign currency gains and losses.
  • Net income was $0.8 billion, down 32 percent, and diluted earnings per share was 54 cents, a decrease of 30 percent year-over-year, but easily above consensus estimates for 30 cents per share.

Balance Sheet Summary

  • Inventories for Nike, Inc. were $7.5 billion, down 2 percent compared to the prior year, reflecting product mix shifts, partially offset by an increase in units.
  • Cash and equivalents and short-term investments were $10.4 billion, down approximately $0.2 billion from last year, as cash generated by operations was more than offset by share repurchases, cash dividends and capital expenditures.

Shareholder Returns
Nike continues to have a strong track record of consistently increasing returns to shareholders, including 23 consecutive years of increasing dividend payouts.

In the third quarter, the company returned approximately $1.1 billion to shareholders, including:

  • Dividends of $594 million, up 6 percent from the prior year.
  • Share repurchases of $499 million, reflecting 6.5 million shares retired as part of the company’s four-year, $18 billion program approved by the Board of Directors in June 2022.

As of February 28, 2025, a total of 119.3 million shares have been repurchased under the program for a total of approximately $11.8 billion.

Image courtesy Nike, Inc.