Q3 2024 Nike Inc Earnings Call

Operator: Good afternoon, everyone. Welcome to Nike Inc.'s Fiscal 2024 Third 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.

Good afternoon, everyone welcome to Nike, Inc. 's fiscal 2024 third quarter conference call for those who want to reference today's press release, you'll find it at investors Nike Dotcom, 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.

Paul Trussell: Thank you operator, Hello, everyone and thank you for joining us today to discuss Nike, Inc. 's fiscal 2024 third quarter results joining us on today's call will be Nike, Inc, President and CEO, John Donahoe, and our CFO, Matt friend beef.

Paul Trussell: Hello, everyone, and thank you for joining us today to discuss Nike Inc.'s fiscal 2024 third quarter results. Joining us on today's call will be Nike President and CEO John Donahoe and our CFO Matt Frim. 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.

Speaker Change: Before we begin let me remind you that participants on this call. We 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 <unk> reports filed with the SEC.

Speaker Change: C.

Speaker Change: In addition, participants may discuss non-GAAP financial measures and nonpublic financial and statistical information. Please refer to Nike's earnings press release, our Nike's website investors Nike Dot com for comparable GAAP measures and quantitative reconciliations all growth comparisons on the call today.

Paul Trussell: Please refer to Nike's earnings press release or Nike's website, investors.nike.com, for comparable gap measures and quantitative reconciliation. 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 it if you limited your initial question to one. Thanks for your cooperation.

Speaker Change: Are presented on a year over year basis, and our currency neutral unless otherwise noted.

Speaker Change: 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.

Appreciate you limiting your initial question to one thanks for your cooperation on this.

John J. Donahoe: I'll now turn the call over to Nike Inc. President and CEO John Donahoe. Thank you, Paul, and hello to everyone on today's call. Before I get into our Q3 performance, I want to take a moment to acknowledge the tragic passing of Kelvin Kipton last month. Kelvin had just set the marathon world record in Chicago.

Speaker Change: Now I'll turn the call over to Nike, Inc, President and CEO John Donahoe.

Thank you, Paul and Hello to everyone on today's call.

John J. Donahoe: Before I get into our Q3 performance.

John J. Donahoe: Want to take a moment to acknowledge the tragic passing of Calvin kicked off last month.

John J. Donahoe: All of it is just set the marathon world record in Chicago. He was a world class athlete and champion and up a loved member of the Nike family.

John J. Donahoe: He was a world-class athlete and champion and a beloved member of the Nike family. Kelvin was an inspiration to so many of us, and he'll long be remembered and honored for the impact he had both on the running community and beyond. Looking at our business, Q3 performed in line with our expectations. That said, we know Nike is not performing at its potential. While our consumer direct acceleration strategy has driven growth and direct connections with consumers, it's been clear that we need to make some important adjustments. Simply put, we need to make adjustments in four areas. We need to sharpen our focus on sport.

John J. Donahoe: Kelvin was an inspiration to so many of us in.

John J. Donahoe: And he'll long be remembered and honored for the impact he had both on the running community and beyond.

John J. Donahoe: Looking at our business Q3 performed in line with our expectations.

That said, we don't Nike is not performing at our potential.

John J. Donahoe: While our consumer direct acceleration strategy has driven growth and direct connections with consumers. It's been clear that we need to make some important adjustments.

John J. Donahoe: Simply put we need to make adjustments in four areas.

John J. Donahoe: We need to sharpen our focus on sport, we must drive a continuous flow of new product innovation.

John J. Donahoe: We must drive a continuous flow of new product innovation. Our brand marketing must become bolder and more distinctive. And while Nike Direct will continue to play a critical role, we must lean in with our wholesale partners to elevate our brand and grow the total marketplace. And this is exactly what we're doing. Starting last June, we aligned our organization to put the consumer and a sharp focus on sport back at the center of everything we do. We integrated our leadership structure, appointing Heidi ONeill and Craig Williams as co-presidents.

John J. Donahoe: Our brand marketing must become bolder and more distinctive.

John J. Donahoe: While Nike direct we will continue to play a critical role we must lead in with our wholesale partners to elevate our brand and grow the total marketplace.

John J. Donahoe: And this is exactly what we're doing.

John J. Donahoe: Starting last June we aligned our organization to put the consumer and a sharp focus on sport back at the center of everything we do.

John J. Donahoe: We integrated our leadership structure appointing highly O'neill and Craig Williams as co presidents.

John J. Donahoe: We've reinvested in consumer-led, sport-focused teams that are the foundation of our offense, and we're driving our winning formula of creating a relentless flow of innovative products combined with distinct brand storytelling delivered through differentiated marketplace experiences. And while we still have much work to do, we are making significant progress. We're well on our way to building a multi-year cycle of innovation that's bringing freshness and newness to consumers. We've pulled forward several innovations for more than a year, and our intent is to delight consumers and disrupt the industry. Our brand storytelling will leverage our athletes and sport moments to become sharper and bolder, beginning with the Olympics this summer, and we're increasing our investment in wholesale to help us elevate and grow the entire marketplace. We recognize that our wholesale partners help us scale our innovation and newness in physical stores and connect our brands to the path of the consumer. Most importantly, we're back on our front foot with growing confidence in our innovation pipeline. We know it'll take some time to scale these innovations, but we see some early green shoots.

John J. Donahoe: We've reinvested in consumer led sport focus teams that are the foundation of our offense.

John J. Donahoe: We're driving our winning formula of creating a relentless flow of innovative products.

John J. Donahoe: Bind with distinct brand storytelling delivered through differentiated marketplace experiences.

John J. Donahoe: And while we still have much work to do we are making significant progress.

John J. Donahoe: We're well on our way to building a multiyear cycle of innovation, that's bringing freshness and newness to consumers. We pulled forward several innovations more than a year and our intent is to delight consumers and disrupt the industry.

John J. Donahoe: Our brand storytelling will athlete will leverage our athletes in sport moments to become sharper in Boulder, beginning with the Olympics. This summer.

John J. Donahoe: And we're increasing our investment in wholesale to <unk>.

John J. Donahoe: US elevate and grow the entire marketplace, we recognize that our wholesale partners help us scale, our innovation and newness and physical stores and connect our brands in the path of the consumer.

John J. Donahoe: Most importantly, we're back on our front foot with growing confidence in our innovation pipeline.

John J. Donahoe: So it will take some time to scale these innovations, but we see some early green shoots.

John J. Donahoe: And we're also carefully managing our most important franchises for their long-term health. And as a result, our product portfolio will go through a period of transition over the coming quarter. But all together, we are relentlessly focused on driving Nike's next chapter of healthy and sustainable growth, and we look forward to sharing our plans in depth at an investor day later this year. Now, as we said before, our success always starts with innovative products. And so that's where I'm going to focus on today's call.

And we're also carefully managing our most important franchises for the long term health.

John J. Donahoe: And as a result of our product portfolio will go through a period of transition over the coming quarters.

John J. Donahoe: But altogether, we are relentlessly focused on driving Nike's next chapter of healthy and sustainable growth.

John J. Donahoe: And we look forward to sharing our plans in depth at an Investor day later this year.

John J. Donahoe: Yeah.

John J. Donahoe: Now as we said before our success always starts with innovative product and so that's where I'm going to focus on today's call.

John J. Donahoe: Today, our innovation engine is moving with speed. Our innovation, design, and product creation teams are working hand in hand with urgency and creativity. They're leveraging new technologies to be faster, more collaborative, and more expansive in their thinking.

John J. Donahoe: Today, our innovation engine is moving with speed.

John J. Donahoe: Our innovation design and product creation teams are working hand in hand, with urgency and creativity.

John J. Donahoe: Leveraging new technologies to be faster more collaborative and more expansive in their thinking.

Eric: We have many platforms at Nike that drive growth. But today, let's go deep on our greatest innovation platform and a true source of competitive advantage. Eric.

John J. Donahoe: We have many platforms at Nike that drive growth.

John J. Donahoe: But today, let's go deep on our greatest innovation platform.

John J. Donahoe: And a true source of competitive advantage are.

Eric: Today, as a platform, AIR is a double-digit billion-dollar business on its own, larger than some Fortune 500 companies. There's nothing like AIR. It's a proprietary technology that lets us iterate and revolutionize. It drives breakthrough performance benefits for athletes and defines the future of sportswear. AIR offers stability, resilience, and energy return unlike any other cushioning platform.

Today as a platform.

John J. Donahoe: There is a double digit billion dollar business on its own.

John J. Donahoe: Larger than some fortune 500 companies.

John J. Donahoe: There is nothing like air it's a proprietary technology that lets us iterate and revolutionize.

It drives breakthrough performance benefits for athletes.

John J. Donahoe: And define the future of sportswear.

John J. Donahoe: Air offers stability resilience and energy return unlike any other cushioning platform.

Eric: Simply put, air helps athletes win. Decade after decade, we've developed new breakthroughs in air. And as we approach the Olympics in Paris this summer, we continue to innovate with AIR with a focus on helping the world's greatest athletes compete and win on sports' largest stage. And so this summer, you're going to see AIR drive major advancements in measurable performance benefits on the track, on the court, and on the pitch. In addition to AlphaFly3, which continues to set the standard for distance racing, you'll see air and new footwear that brings elite performance to everyday runners.

Simply put air helps athletes win.

John J. Donahoe: Decade after decade, we've developed new breakthroughs in air.

And as we approach the Olympics in Paris. This summer, we continue to innovate with air with a focus on helping the worlds greatest athletes compete and win on sports largest stage.

John J. Donahoe: And so this summer you're going to see are drive major advancements in measurable performance benefits.

John J. Donahoe: On the track on the court and on the pitch.

John J. Donahoe: In addition to Alpha <unk>, three which continues to set the standard for distance racing.

John J. Donahoe: Youll see are new footwear that brings elite performance to everyday runners.

Eric: You'll see air in football and basketball footwear in new and more visible ways, and you'll see air in the fastest track spikes we've ever created. You're going to get a chance to see all of these products, in fact, our full Olympics innovation lineup two weeks from now at our Innovation Ignition event that we'll be hosting in Paris. Now, beyond creating leading-edge performance innovation, we also continue to bring new sensations of air across our business, including our lifestyle portfolio. For instance, Dynamic Air, our newest innovation platform, is a true breakthrough, delivering a uniquely comfortable sensation with each step. It's a total rethinking of what airbags can be. Historically, airbags have been fixed instead of the pictured inflatable rafts. They compress when you step and then immediately return to their original shape, ready for the next step.

John J. Donahoe: You'll see are in football and basketball footwear, and new and more visible ways.

John J. Donahoe: And Youll see air and the fastest track spikes we've ever created.

John J. Donahoe: Youre going to get a chance to see all of these products in fact, our full Olympics innovation lineup two weeks from now at our innovation ignition events that we'll be hosting in Paris.

Now beyond creating leading edge performance innovation.

John J. Donahoe: We also continue to bring new sensations of air across our business, including our lifestyle portfolio.

John J. Donahoe: For instance, dynamic error.

Our newest innovation platform is a true breakthrough delivering a uniquely comfortable sensation with each step.

John J. Donahoe: It's a total rethinking of what airbags can be.

John J. Donahoe: Historically airbags had been fixed as data picture inflatable raft.

John J. Donahoe: They compressed when you step and then immediately returned to their original shape ready for the next step.

Eric: Dynamic Air changes the game. It un-chambers the air to create a new underfoot sensation that's truly responsive. As the consumer takes a step, our new four-tubed air unit allows air to flow freely between the tubes, responding to the pressure of each unique stride to deliver maximum comfort. We will scale Dynamic Air across many of our leading air franchises. But it starts with the Air Max Dn, a shoe that offers just the latest example of how we're using air to craft a new lifestyle franchise. I've been wearing DN all week, and, in fact, I'm wearing it right now.

John J. Donahoe: Dynamic air changes the game is unchanged the air to create a new underfoot sensation that's truly responsive.

John J. Donahoe: As the consumer takes a step our new <unk> Air unit allows air to flow freely between the tubes responding to the pressure of each unique strive to deliver maximum comfort.

John J. Donahoe: We will scale dynamic are across many of our leading air franchises.

John J. Donahoe: But it starts with the air Max CN.

John J. Donahoe: I shoot their offers just a latest example of how we're using air to craft a new lifestyle franchise.

I've been wearing BD and all week and in fact, I'm aware of right now it.

Eric: And it really is a unique and great sensation. And what's more, Deanne's bold style and design identity is deeply rooted in youth culture and the next generation. We're excited for consumers to experience it, and next week will be Nike's 10th Air Max Day. It'll be a day when you see us thrive in an integrated offense of innovation, storytelling, and consumer activations that we're very excited about. AirMaxDN will be debuting in more than 4,000 stores globally on AirMax Day, creating impact like we haven't seen in years. When we teased the end last month, we saw a rise in other Air Max franchises. This is common.

John J. Donahoe: It is really is a unique and great sensation.

John J. Donahoe: And what's more the end bold style designed identity is deeply rooted in youth culture and the next generation.

John J. Donahoe: We're excited for our consumers to experience it.

John J. Donahoe: And next week, we'll be Nike's tense air Max day.

John J. Donahoe: It'll be a day when you see us drive an integrated offensive innovation storytelling and consumer Activations that we're very excited about it.

John J. Donahoe: <unk> will be day viewing in more than 4000 stores globally on air Max day, creating impact like we haven't seen in years.

John J. Donahoe: When we <unk> last month, we saw a rise in other air Max franchise.

John J. Donahoe: This is common or.

John J. Donahoe: Our experience has been that when we launch a strong new product, it creates energy for the whole family. It all speaks to the confidence we feel when we look at our overall innovation engine and pipeline from air to the rest of the portfolio. So earlier I mentioned the impact Nike can have as we sharpen our focus on sports. And the world got a great reminder of that today with the announcement of the awarding of the German football contract. I was fortunate enough to be in Germany for our pitch earlier this week.

John J. Donahoe: Our experience has been when we launched a strong new product it creates energy for the whole family.

It all speaks to the confidence we feel when we look at our overall innovation engine and pipeline from air to the rest of the portfolio.

John J. Donahoe: Yeah.

John J. Donahoe: Now earlier I mentioned the impact Nike can have as we sharpen our focus on sport.

John J. Donahoe: And the world's got a great reminder of that today with the announcement of the awarding of the German football contract.

John J. Donahoe: I was fortunate enough to be in Germany for our pitch.

John J. Donahoe: And I can tell you, it was simply Nike at its very best. It started with our deep and unparalleled commitment to sport. We are the world's leading sports brand. The largest sports brand, and the leader in football, the world's most popular sport.

John J. Donahoe: Earlier this week and I can tell you it was simply Nike at its very best.

John J. Donahoe: It started with our deep an unparalleled commitment to sport.

John J. Donahoe: We are the world's leading sports brand.

Largest sports brand the leader in football the world's most popular sport.

John J. Donahoe: Our focus started with product innovation, both on the pitch, with unmatched Kits and footwear that popped and had style and performance and extended into distinct and fashionable lifestyle designs. Our ability to tell stories, to make the German team a global brand and make their athletes global heroes, and our ability to expand the game, expanding the women's football game and inviting youth culture into football, All Matter. It was a remarkable team effort and a great proof point that when Nike brings out its best, no one can beat us. And so, we feel deeply honored and privileged to partner with the German Football Federation starting in 2027.

John J. Donahoe: Our focus started with product innovation.

John J. Donahoe: On the pitch.

John J. Donahoe: With unmatched.

Kits and footwear that popped in had style and performance and extend it into distinct and fashionable lifestyle design.

John J. Donahoe: Our ability to tell stories shone through.

John J. Donahoe: To make the German team, a global brand and make their athletes global hereof.

John J. Donahoe: And our ability to expand the game expanding the women's football game and inviting youth culture in the football all.

John J. Donahoe: All mattered.

John J. Donahoe: It was remarkable team effort and a great proof point that when Nike brings out our best.

John J. Donahoe: No one can beat us.

John J. Donahoe: And so we feel deeply honored and privileged to partner with the German football Federation starting in 2027.

John J. Donahoe: Before wrapping up, let me touch on something else that's core to our DNA as a company: Nike's Purpose. Purpose will always be our foundation, and remains deeply embedded in our strategy. We're defined by our commitment to the future of sport in service to athletes around the globe, and Purpose continues to guide us and redefine our own potential for positive impact in the world.

Speaker Change: Before wrapping up let me touch on something else, that's core to our DNA as a company.

Speaker Change: Nike's purpose.

Speaker Change: Purpose will always be our foundation remains deeply embedded in our strategy.

Were defined by our commitment to the future of sport and service to athletes around the globe.

Speaker Change: And purpose continues to guide us.

Redefine our own potential for positive impact in the world.

John J. Donahoe: We're pleased with the progress we've made against our 2025 purpose targets across representation, sustainability, and community. To learn more, please see our recently released FY23 Nike Inc Impact Report. In the end, we're acting with urgency as we make the adjustments needed to compete and win. And I'd like to conclude by saying that I deeply appreciate how much our team has kept our focus on delivering results amid macro volatility and an organizational restructure. This has been a difficult time for our organization, and I feel truly grateful for our teammates who've shown such dedication and commitment to our work together. It's thanks to them that I feel so confident in Nike's future. And with that, I'll turn the call over to Matt.

Speaker Change: We're pleased with the progress we've made against our 2025 purpose targets across representation sustainability and community.

Speaker Change: To learn more please see our recently released FY2023 Nike Inc impact report.

In the end, we're acting with urgency as we make the adjustments needed to compete and win.

Speaker Change: And I'd like to conclude by saying that I deeply appreciate how much our team has kept our focus on delivering results amid macro volatility and an organizational restructure.

Speaker Change: This has been a difficult time for our organization.

Speaker Change: And I feel truly grateful for our teammates who've dedicated and demonstrated such dedication and commitment to our work together.

Speaker Change: It's thanks to them that I feel so confident in nikes future.

Speaker Change: And with that I'll turn the call over to Matt.

Matt: Thanks, John, and hello to everyone on the call. Nike's third quarter showcased the operating discipline of our team, and our first quarter showcased the operating discipline of our team, as we delivered revenues up slightly on top of the prior year's double-digit growth, outperforming our expectations in North America and more than offsetting dynamic conditions in some other geographies. We executed well to recapture transitory cost headwinds and expand gross margin, even in a promotional environment. Our inventory position remains healthy, with total marketplace units down double digits versus the prior year and weeks of supply at their lowest levels since the pandemic.

Speaker Change: Okay.

Matthew Friend: Thanks, John and Hello to everyone on the call.

Matthew Friend: <unk> third quarter showcase the operating discipline of our teams.

Matthew Friend: We delivered revenues up slightly on top of the prior year's double digit growth.

Matthew Friend: Outperforming our expectations in North America, and more than offsetting dynamic conditions in some other geographies.

Matthew Friend: We executed well to recapture transitory cost headwinds and expand gross margins even in a promotional environment.

Matthew Friend: Our inventory position remains healthy with total marketplace units down double digits versus the prior year and weeks of supply at their lowest levels since the pandemic.

Matt: Most importantly, our teams are focused on what matters most to capture the strong growth opportunity we see in the market. This means creating more value for consumers by scaling new product innovation with greater brand impact across the full market and with even more inspiration through sport and our athletes. Last quarter, we highlighted that, particularly in an uneven macro environment, newness and innovation are what drives brands. Consumers are moving quickly to access new products, trends are igniting in different places and rapidly spreading around the world. Nike needs to be fast.

Matthew Friend: Most importantly, our teams are focused on what matters most to capture the strong growth opportunity, we see in the marketplace.

Matthew Friend: This means creating more value for consumers by scaling new product innovation with greater brand impact across the full marketplace with even more inspiration through sport and our athletes.

Last quarter, we highlighted that particularly in an uneven macro environment newness and innovation are what drives brand distinction.

Matthew Friend: Consumers are moving quickly to access new products trend.

Matthew Friend: Trends are igniting in different places and rapidly spreading around the world.

Matthew Friend: Nike needs to be faster.

Matt: And so we are accelerating a multi-year innovation cycle, and while our new product cycle is just getting underway, this quarter showed that we are on the right track. Since the start of this fiscal year, new and updated footwear models have grown into a majority of our top 20 growing footwear franchises.

And so we are accelerating our multiyear innovation cycle.

Matthew Friend: And while our new product cycle is just getting underway. This quarter showed that we are on the right track.

Matthew Friend: Since the start of this fiscal year, new and updated footwear models have grown into a majority of our top 20 growing footwear franchises in.

Matthew Friend: In Q3.

Matt: All together, footwear products introduced over the past several quarters are on track to generate a multi-billion dollar run rate on an annual basis, and we see even more opportunity ahead. On the whole, we see momentum where we are focused most. Performance Footwear grew high single digits, with double digit growth from $100 plus franchises, including Kobe and John basketball, Metcon and Motiva and fitness, and Structure and Vimero in running. Women's fitness footwear grew double digits, and key apparel franchises, such as $100 plus leggings, continued scaling with a strong cell, New Product Journey. From Book 1 to Vimero 5 and V2K, to Lunar Rome and Travis Scott's Jordan Jumpman Jack drove consumer energy to the top of the world, and ahead of a new wave of Nike Air innovation, The Air Zoom AlphaFly 3 debuted with a marathon world record and sellout launches across multiple markets around the world. As you heard from John, we believe the Paris Olympics will serve as a catalyst for our growth as we launch our newest Most importantly, this is just the beginning.

Added up footwear products introduced over the past several quarters are on track to generate a multibillion dollar run rate on an annual basis.

Matthew Friend: And we see even more opportunity ahead.

On the whole, we see momentum where we're focused most.

Matthew Friend: Performance footwear grew high single digits, this quarter with double digit growth from $100, plus franchises, including Kobe, and John basketball, Netcom, and Motiva and fitness and structure and Humira in running.

Matthew Friend: Womens fitness footwear grew double digits and key apparel franchises, such as $100 plus leggings continued scaling with strong sell through.

Matthew Friend: New product journeys.

Matthew Friend: Book, one to <unk>, five and <unk> <unk>.

Matthew Friend: Lunar Rome, and Travis Scott Jordon jump Magicjack drove consumer energy.

And ahead of a new wave of Nike Air innovation, the Air Zoom Alpha Slide three debuted with a marathon world record and sellout launches across multiple markets around the world.

Matthew Friend: As you heard from John We believe the Paris Olympics will serve as a catalyst for our brands.

Matthew Friend: As we launch our newest Nike air innovations for athletes.

Matthew Friend: Most importantly, this is just the beginning with a growing portfolio of new concepts platforms and capabilities. Our innovation teams are well positioned to continue driving breakthroughs in performance and lifestyle over the coming years.

Matt: With a growing portfolio of new concepts, platforms, and capabilities, our innovation teams are well positioned to continue driving breakthroughs in performance and lifestyle over the coming years. Now, to maximize the impact of our new product cycle, we are accelerating several important actions lined up against key brands and sports. First We are elevating and differentiating the consumer experience with our brands at retail, especially as consumers continue to shift back into physical stores. This includes increased investment to support strong seasonal retail marketing execution, Breath and Depths of a Sort, and elevated service in product presentation. You heard John say that we will initially launch the Air Max DN next week at more than 4,000 doors.

Matthew Friend: Now to maximize the impact of our new product cycle, we are accelerating several important actions lined up against key brands and sports moments.

Matthew Friend: First we are elevating and differentiating the consumer experience with our brands at retail, especially.

Matthew Friend: Especially as consumers continue to shift back into physical stores.

Matthew Friend: This includes increased investment to support strong seasonal retail marketing execution breath.

Matthew Friend: Breadth and depth of assortment.

Matthew Friend: And elevated service and product presentation.

Matthew Friend: You heard John say that we will initially launch the air Max Dia and next week at more than 4000 doors.

Matt: We will increasingly leverage our full portfolio of thousands of physical doors to position our newest products in the path of. Second, we are sharpening our brand storytelling to tell fewer, bigger stories with greater reach. We will focus our demand creation investments to elevate our brand and most distinctive products. Leading with the voice of the athlete, amplifying our new innovations, and engaging consumers at the point of sale. As we look forward, we see that our Olympics Air for Athletes campaign will be the boldest expression of Nike's brand voice in many years.

Matthew Friend: We will increasingly leverage our full portfolio of thousands of physical doors to position our newest products in the path of consumers.

Matthew Friend: Second we are sharpening our brand storytelling to tell fewer bigger stories with greater reach.

Matthew Friend: We will focus our demand creation investments to elevate our brand and most distinctive products.

Matthew Friend: Leading with the voice of the athlete amplifying, our new innovation and engaging consumers at the point of sale.

Matthew Friend: As we look forward, we see that our Olympics are for athletes campaign will be the boldest expression of Nike's brand voice in many years.

Matt: Third, we are in the midst of shifting our product portfolio towards newness and innovation. Last quarter, we spoke of our intentional actions to reduce marketplace supply of certain key franchises to ensure they remain healthy and strong while feeding and scaling new products. Given the way consumers are responding to our newest product journey, even amidst a more promotional environment, we have decided to accelerate our action. For example, we are pulling back supply of classics such as Air Force One, and we're reducing supply of Pegasus ahead of the launch of new innovation in the PEG-41. We've been here before.

Matthew Friend: Third we are in the midst of shifting our product portfolio towards newness and innovation.

Last quarter, we spoke of our intentional actions to reduce marketplace supply of certain key franchises to ensure they remain healthy and strong while seeding and scaling new products.

Matthew Friend: Given the way consumers are responding to our newest product journeys, even amidst a more promotional environment, we have decided to accelerate our actions.

Matthew Friend: For example, we are pulling back supply of classics, such as the Air Force one.

Matthew Friend: And we're reducing supply of Pegasus ahead of launching new innovation in the <unk> 41.

Matthew Friend: We've been here before 12 months ago, our basketball portfolio was meaningfully impacted when we exited a key signature franchise.

Matt: 12 months ago, our basketball portfolio was meaningfully impacted when we exited a key signature franchise. Since then, we've more than offset that impact by scaling innovation with the GT series, introducing newness to consumers in JAW, Sabrina, COVI, and Book, and returned a strong double-digit growth this quarter in basketball. Looking ahead, we expect lifecycle management of key product franchises to create some near-term headwinds, particularly on digital. However, we are confident that we are taking the right actions to fuel brand momentum and return to stronger long-term growth.

Matthew Friend: Since then we've more than offset that impact by scaling innovation with the GT series, introducing newness to consumers and jaw Sabrina Coby and book.

Matthew Friend: And returned to strong double digit growth this quarter in basketball.

Matthew Friend: Looking ahead, we expect lifecycle management of key product franchises to create some near term headwinds, particularly on digital.

Matthew Friend: However, we are confident that we are taking the right actions to fuel brand momentum and return to stronger long term growth.

Matt: Last, while we continue to bring operational discipline as we manage our business through these shifts and a multi-year period of higher cost inflation, we're also positioning Nike for the future. This includes restructuring our organization to sharpen our focus and increase our investment in the consumer in sports, which we believe will fuel our next phase of long-term growth. This quarter, we began streamlining support and operating functions.

Matthew Friend: Yeah.

Last while we continue to bring operational discipline as we manage our business through these shifts and a multi year period of higher cost inflation.

Matthew Friend: We're also positioning Nike for the future.

Matthew Friend: This includes restructuring our organization to sharpen our focus and increase our investment on the consumer and sport, which we believe will fuel our next phase of long term growth.

This quarter, we began streamlining support and operating functions.

Matt: Reducing management layers and shifting more of our resources towards consumer-facing. In particular, we are increasing investment in areas such as design, product creation, Merchandising, Brands, and our ground game to drive greater impact for consumers, dimensions of sport, and the marketplace. Overall, our focus is on allocating our resources to drive more returns, while building an operating model with greater speed and better cost productivity as we grow. Now let me turn to our Nike Inc. third quarter results. In Q3, Nike Inc. revenue was up slightly on a reported and currency-neutral basis, with low single-digit growth in the Nike brand, partially offset by declines at content.

Reducing management layers and shifting more of our resources towards consumer facing activities.

Matthew Friend: In particular, we are increasing investment in areas such as design product creation merchandising brand and our ground game to drive greater impact for consumers dimensions of sport and the marketplace.

Matthew Friend: Overall, our focus is on allocating our resources to drive more return while building, an operating model with greater speed and better cost productivity as we grow.

Speaker Change: Now, let me turn to our Nike, Inc. Third quarter results in.

Speaker Change: In Q3, Nike, Inc. Revenue was up slightly on a reported and currency neutral basis with low single digit growth in the Nike brand, partially offset by declines at converse.

Matt: As a reminder, this follows 14% reported and 19% currency neutral growth one year ago as we were liquidating excess inventory in Q3 of fiscal 23. Nike Direct was up slightly versus the prior year, with Nike stores up 6% and Nike Digital down 4%. Gross margins expanded 150 basis points to 44.8% on a reported basis. Driven by strategic pricing action, lower ocean freight rates, and improvements in supply chain efficiency, partially offset by higher product input costs. This also includes 50 basis points of negative impact from restructuring charges. SG&A grew 7% on a reported basis, as increased investments in demand creation were partially offset by disciplined expense management. This quarter, SG&A was also impacted by approximately $340 million in restructuring charges. Our effective tax rate for the quarter was 16.5%, compared to 16% for the same period last year. Diluted earnings per share was 77%, excluding the impact of the restructuring charges.

As a reminder, this follows 14% reported and 19% currency neutral growth one year ago, as we were liquidating excess inventory in Q3 of fiscal 'twenty three.

Nike direct was up slightly versus the prior year with Nike stores up 6% and Nike digital down 4%.

Speaker Change: Wholesale grew 3%.

Gross margins expanded 150 basis points to 44, 8% on a reported basis driven by strategic pricing actions lower ocean freight rates and improvements in supply chain efficiency, partially offset by higher product input costs.

Speaker Change: This also includes 50 basis points of negative impact from restructuring charges.

Speaker Change: SG&A grew 7% on a reported basis as.

Speaker Change: As increased investments in demand creation was partially offset by disciplined expense management.

Speaker Change: This quarter SG&A was also impacted by approximately $340 million and restructuring charges.

Speaker Change: Our effective tax rate for the quarter was 16, 5%.

Speaker Change: Compared to 16% for the same period last year.

Speaker Change: Diluted earnings per share was <unk> 77.

Speaker Change: Excluding the impact of the restructuring charges earnings per share would have been 98.

Matt: Earnings per share would have been 98%, up 24% versus the prior year. Now, let me turn to our operating segments. In North America, Q3 revenue grew 3%. Nike Direct grew 2% in the last year, with Nike stores up 3% and Nike Digital up 1%. Wholesale grew 5.5%, and EBIT grew 18% on a reported basis.

Speaker Change: Up 24% versus the prior year.

Speaker Change: Now, let me turn to our operating segments.

Speaker Change: In North America, Q3 revenue grew 3% Nike direct grew 2% with Nike stores up 3% and Nike digital up 1%.

Speaker Change: Wholesale grew 5% and EBIT grew 18% on a reported basis.

Matt: This builds on extraordinary growth in the prior year, with North America revenue of 27%, including Nike Direct up 23% and wholesale up 32%, in Q3 of fiscal 23. This quarter, we exceeded our expectations in North America with strong holiday sales, lighter markdowns than our competitors and unit growth versus the prior year. Inventory is also down double digits at the end of Q3. Kids grew double digits across footwear and apparel.

Speaker Change: This builds on extraordinary growth in the prior year with North America revenue up 27%, including Nike direct up 23% and wholesale wholesale up 32% in Q3 of fiscal 'twenty three.

Speaker Change: This quarter, we exceeded our expectations in North America with strong holiday sales lighter markdowns than our competitors and unit growth versus the prior year.

Speaker Change: Inventory is also down double digits at the end of Q3.

Kids grew double digits across footwear, and apparel with seasonal fleece and performance footwear resonating.

Matt: With seasonal fleece and performance footwear responding, we also saw positive momentum in women's lifestyle and fitness, with strong growth from the dunk, free Metcon, and retro running styles. Jordan Remix and Sport Performance grew double digits, and in running, Structure, Vimero, and The Invincible delivered double-digit growth. In EMEA, Q3 revenue declined 4%. Nike Direct declined 4% as Nike stores grew 6%, and Nike Digital declined 10%. Wholesale was down 5%, and EBIT declined 6% on a reported basis.

Speaker Change: We also saw positive momentum in women's lifestyle, and fitness with strong growth from the dunk free metcom and retro running styles.

Speaker Change: Jordan remix and sport for performance grew double digits.

Speaker Change: And in running structure, the marrow and the invincible delivered double digit growth.

Speaker Change: In EMEA Q3 revenue declined 4%.

Speaker Change: Nike direct declined 4% as Nike stores grew 6% and Nike.

Speaker Change: Digital declined 10%.

Speaker Change: Wholesale was down 5% in.

And EBIT declined 6% on a reported basis.

Matt: As a reminder, these results compared to tremendous growth in Q3 of fiscal 23, when EMEA revenue was up 26%, Nike Direct was up 39%, and Wholesale was up 20%. However, our sales in the geography fell short of our expectations, as we navigated increased macro volatility and softening consumer demand. That said, newness and brand distinction continue to fuel momentum in OMEA. In running, a cell AlphaFly 3 launch energized our road racing portfolio.

Speaker Change: As a reminder, these results compare to tremendous growth in Q3 of fiscal 'twenty three.

When EMEA revenue was up 26% Nike direct was up 39% and wholesale was up 20%.

However, our sales in the geography fell short of our expectations. This quarter as we navigated increased macro volatility and softening consumer demand.

That said newness and brand distinction continues to fuel momentum in EMEA.

And running a cellphone alpha slide three launch energized our road racing portfolio.

Matt: In lifestyle, P6000 and Vimero 5 continued to scale, and Fitness grew double digits as we activated our ground game with brand activations and our trainer network. Overall, inventory remains healthy, with units down double digits versus the prior year. And as we look forward, we see the launch of Air Max DN, Euro Champs 24, and the Paris Olympics Olympics as opportunities to create near-term brand momentum despite a challenging consumer backdrop. In Greater China, Q3 revenue grew 6%, in line with our revised expectations that we shared at the end of last quarter. Nike Direct declined 1%, with Nike stores growing 6% and Nike Digital declining 13%.

Speaker Change: In lifestyle piece 6000, and <unk> continued to scale.

Speaker Change: Fitness grew double digits as we activated our ground game with brand Activations and our trainer network.

Speaker Change: Overall inventory remains healthy with units down double digits versus the prior year and as we look forward, we see the launch of air Max the yen.

Speaker Change: Euro Champs 24 in the Paris Olympics as opportunities to create near term brand momentum despite a challenging consumer backdrop.

Speaker Change: In greater China, Q3 revenue grew 6%.

Speaker Change: In line with our revised expectations.

That we shared at the end of last quarter.

Speaker Change: Nike direct declined 1% with Nike stores, growing 6% and Nike digital declining 13%.

Matt: Wholesale grew 12% EBIT grew 3% on a reported basis, with multiple points of impact from foreign exchange headwinds. Chinese New Year sales grew year over year, with our Nike and Jordan Year of the Dragon Express Lane collections driving excellent sales, and retail sales with our partners grew double digits in Q3 versus the prior year. Kids led our growth in the quarter with performance dimensions of strong double digits. In basketball, Book One, Kobe, and GT Cut 3 launched with strong self-confidence.

Speaker Change: Wholesale grew 12%.

Speaker Change: EBIT grew 3% on a reported basis with multiple points of impact from foreign exchange headwinds.

Speaker Change: Chinese new year sales grew year over year, with our Nike and Jordan year of the Dragon Express Lane collections driving excellent sell through.

Speaker Change: And retail sales with our partners grew double digits in Q3 versus the prior year.

Speaker Change: Kids led our growth in the quarter with performance dimensions up strong double digits.

Speaker Change: In basketball book, one Kobe and GT cut three launched with strong sell through.

Matt: In running, the structure, the invincible, and the Vamero drove strong growth, and the Jordan brand delivered double-digit growth in women's and kids with consumer anticipation building ahead of this week's opening of Jordan World of Flight Beijing, which will be the brand's first pinnacle retail concept in China. In APLA, Q3 revenue grew 4% Nike Direct grew 4%, and Nike with Nike stores up 18%, and Nike EBIT declined 3% on a reported basis. In Central and South America, we delivered double-digit growth and improved return on sales in the first full year of our shift to a distributor model.

Speaker Change: In running the structure, the invincible and of the marrow drove strong growth this quarter.

Speaker Change: And the Jordan brand delivered double digit growth in women's and kids with consumer anticipation building.

Speaker Change: This week's opening of Jordan World of flight Beijing.

Speaker Change: Which will be the brand's first pinnacle retail concepts in China.

In <unk> Q3 revenue grew 4%.

Nike direct grew 4% and Nike with Nike stores at 18% and Nike digital declining 6%.

Speaker Change: Wholesale grew 3% and.

Speaker Change: And EBIT declined 3% on a reported basis.

Speaker Change: In Central and South America, we delivered double digit growth and improved return on sales in the first full year of our shift to a distributor model in.

Matt: In Mexico, we gained brand strength and momentum with strong growth in football, and in Japan, running grew double-digit. Across the EPLA, football and basketball grew double-digit, fueled by the Mercurial, LeBron, and the GT series, and Women's Holistic Fitness grew across all channels. With Motiva and Statement leggings in particular, Now, let me turn to our financial outlook. As we look forward, we are driving earnings growth and offsetting softer second half revenue with strong gross margin execution. Discipline Cost Control and healthy and more productive inventory levels across the market. Excluding restructuring charges, we expect to deliver on the full year earnings outlook that we communicated at the beginning of this fiscal year. More specifically, for the full year, we continue to expect revenue to grow approximately. We now expect Q4 revenue to be up slightly, reflecting some shipment timing benefits in Q3, and lower digital growth due to franchise lifecycle management. Q4 also has one point of negative impact on reported revenue from a stronger U.S. dollar.

In Mexico, we gained brand strength and momentum with strong growth in football and in Japan running grew double digits.

Speaker Change: Across the EPL.

Speaker Change: Football and basketball grew double digits fueled by the material <unk> and the GT series.

Speaker Change: And women's holistic fitness grew across all channels with Motiva and statement leggings and particular resonating.

Speaker Change: Now, let me turn to our financial outlook.

Speaker Change: As we look forward, we are driving earnings growth and offsetting softer second half revenue with strong gross margin execution disciplined cost controls and healthy and more productive inventory levels across the marketplace.

Speaker Change: Excluding restructuring charges, we expect to deliver on the full year earnings outlook that we communicated at the beginning of this fiscal year.

Speaker Change: More specifically for the full year, we continue to expect revenue to grow approximately 1%.

Speaker Change: We now expect Q4 revenue to be up slightly reflecting some shipment timing benefits in Q3.

Speaker Change: And lower digital growth due to franchise lifecycle management.

Speaker Change: Q4 also has one point of negative impact on reported revenue from a stronger U S. Dollar.

Matt: Moving down the P&L, I will note that our guidance includes restructuring charges of approximately $450 million in our second half. With $403 million incurred in the third quarter, this primarily impacts SG&A, with approximately 15 basis points of impact on full year gross. We expect Q4 gross margins to expand approximately 160 to 180 basis points. This guidance continues to reflect benefits from strategic price increases, Lower Ocean Freight Rates, Lower product input costs, and improve supply chain efficiency. However, our outlook is now partially offset by higher markdowns, reduced benefits from ChannelMix due to franchise lifecycle management, and worsening foreign exchange headwinds. For the full year, this translates into gross margins expanding approximately 120 basis points for the year, including approximately 60 basis points of impact from foreign exchange headwinds.

Speaker Change: Moving down the P&L I will note that our guidance includes restructuring charges of approximately $450 million in our second half.

Speaker Change: With $403 million incurred in the third quarter.

Speaker Change: This primarily impacts SG&A with.

Speaker Change: With approximately 15 basis points of impact to full year gross margins.

We expect Q4 gross margins to expand approximately 160 to 180 basis points.

Speaker Change: This guidance continues to reflect benefits from strategic price increases lower ocean freight rates lower product input costs and improved supply chain efficiency.

Our outlook is now partially offset by higher markdowns reduced benefits from channel mix due to franchise lifecycle management.

Speaker Change: And worsening foreign exchange headwinds.

Speaker Change: For the full year this translates into gross margins expanding approximately 120 basis points.

Speaker Change: Including approximately 60 basis points of impact from foreign exchange headwinds.

Matt: We now expect Q4 SG&A to be down slightly versus the prior year, including restructuring charges, reflecting improvement versus our prior guidance. For the full year, this translates into SG&A growing in low single digits, including restructuring, also reflecting improvement versus our prior guidance. Excluding the impact of restructuring charges, we expect full-year SG&A to be roughly flat.

Speaker Change: We now expect Q4 SG&A to be down slightly versus the prior year.

Including restructuring charges, reflecting improvement versus our prior guidance.

Speaker Change: For the full year this translates into SG&A growing low single digits.

Speaker Change: Including restructuring charges also reflecting improvement versus our prior guidance.

Speaker Change: Excluding the impact of restructuring charges, we expect full year SG&A to be roughly flat.

Matt: Our guidance for other income and expense and our effective tax rate remain unchanged. Additionally, given the strategic actions we walked through earlier, I want to share some early thoughts on how we are planning for our next fiscal year. First, we expect revenue and earnings to grow versus the prior year with operating margins expanding, excluding the impact of the restructuring charges in fiscal. However, we are prudently planning for revenue in the first half of the fiscal year to be down low single digits. As I mentioned earlier, this reflects near-term headwinds from lifecycle management of our key product branches, more than offsetting the scaling of new products. As we shift our product portfolio toward newness and innovation, this also continues to reflect the subdued macro outlook around the world.

Speaker Change: Our guidance for other income and expense and our effective tax rate remain unchanged.

Speaker Change: Additionally, given the strategic actions, we walked through earlier I wanted to share. Some early thoughts on how we are planning for our next fiscal year.

First we expect revenue and earnings to grow versus the prior year with operating margins expanding excluding the impact of the restructuring charges in fiscal 'twenty four.

Speaker Change: However, we are prudently planning for revenue in the first half of the fiscal year to be down low single digits.

Speaker Change: As I mentioned earlier this reflects near term headwinds from lifecycle management of our key product franchises.

Speaker Change: More than offsetting the scaling of new products as we shift our product portfolio towards newness and innovation.

Speaker Change: This also continues to reflect the subdued macro outlook around the world.

Matt: Most importantly, we are focused on amplifying brand strength and consumer impact, which is the foundation for how we drive sustainable long-term growth. Looking ahead, we are confident in our product pipeline for fiscal 25 and the momentum that we will build throughout the year, moment by moment, creating brand impact and deep consumer connection through. With that, we will open up the call to questions. As a reminder, to ask a question, simply press star 1 on your telephone keypad.

Speaker Change: Most importantly, we are focused on amplifying brand strength and consumer impact.

Speaker Change: Which is the foundation for how we drive sustainable long term growth.

Speaker Change: Yeah.

Speaker Change: Looking ahead, we are confident in our product pipeline for fiscal 'twenty, five and the momentum that we will build throughout the year moment by moment.

Speaker Change: Creating brand impact and deep consumer connections through sport.

Speaker Change: With that let's open up the call for questions.

Speaker Change: As a reminder to ask a question simply press star one on your telephone keypad. Our first question will come from the line of Jay sole with UBS. Please go ahead.

Operator: Our first question will come from the line of Jay Sole with UBS. Please go ahead. Great, thank you so much.

Matt: Maybe just to start, Matt, I want to ask you about the fiscal 25 commentary you made. You're talking about low single-digit growth. You said operating margin. I think you said growth, actually, restructuring charges and EPS growth. Can you give a little bit more to mention around what you expect for operating margin next year? Like what kind of growth you expect? Will it and the rest of the board.

Jay Daniel Sole: Great. Thank you so much maybe just to start Matt I wanted to ask you about the fiscal 'twenty. Five commentary you made you were talking about low single digit growth for the first half of the year.

Jay Daniel Sole: You said operating margin I think you said grow extra restructuring charges and EPS growth can you give a little bit more to mention around what you expect for operating margin next year like what kind of growth you expect.

Growth on the reported numbers from this year or would be sort of below that and then I guess just bigger picture, if we could take a step back.

John J. Donahoe: And then I guess just the bigger picture, if we could take a step back. You know, Keith, talk about the operating model. Companies switched to a men's, women's, and kids' construct a couple years ago away from the category offense. How is that?

Jay Daniel Sole: You know it keeps talking about the operating model company switched from men's women's kid's contracts couple years ago away from the category offense how is that.

John J. Donahoe: change. How have you perceived that change? Has it been what you expected it to be?

Jay Daniel Sole: Change.

Jay Daniel Sole: How would you pursue that changes have been what you expected it to be just Nike plans to make any changes to.

John J. Donahoe: Does Nike plan to make any changes to the operating model? Thank you. You know, Matt, why don't I take the second part of that question and then you take the first? So, Jay, as I mentioned, we are making, and started nine months ago, important adjustments in our office. And that started with putting the consumer and sport squarely back into our office. And so that allows sharpness across men's, women's, kids, and Jordan around sports. And so there's sharpness around running end to end, around fitness, around basketball, around football, and around lifestyle. So we brought the best of category offense right back in, along with a sort of gender umbrella.

Speaker Change: The operating model. Thank you so much.

Speaker Change: Matt why don't I take the second part of that question and then you take the first.

Speaker Change: Okay.

Speaker Change: As I mentioned.

Matthew Friend: We are making and started nine months ago important adjustments in our offense.

Matthew Friend: And that started with putting the consumer and sport squarely back into our offense.

Speaker Change: And so that allows a sharpness.

Speaker Change: Across men's women's kid's and Jordan around sport.

Speaker Change: And so theres, a sharpness around running end to end around fitness around basketball around football and around lifestyle. So we brought the best of the category offense right back in.

Speaker Change: Along with the sort of gender umbrella and that's resulted in consumer led sport focus teams that.

John J. Donahoe: And that's resulted in consumer-led sport-focused teams that are back on our front foot as we talk about building a strong innovation pipeline. And, in classic Nike form, it's not just one or two products. It's building a three-year pipeline so that we can bring innovation season after season in each sport. In fact, just this week, we had three or 400 of our top leaders here for spring 25, that edition of the next Round of innovation. I can tell you our teams are excited, and it's not just one season. It's a full three-year pipeline. We're combining that with elevating our brand and bigger, bolder stories grounded in sport and athletes that cut through and connect with impact. And again, you'll see that in the Olympics. And you saw that a little bit with Caitlin Clark and with Sabrina.

Speaker Change: At our back on our front foot as we talked about building a strong innovation pipeline.

Speaker Change: And in classic Nike farm, it's not just one or two products. It's building a three year pipeline. So that we can bring innovation season. After season in each sport. In fact, we were just this week, we had three or 400 of our top leaders here for spring 'twenty five.

Speaker Change: That addition of the next.

Round of innovation I can tell you. Our teams are excited and it's not just one season. It's a full three year pipeline, we're combining that with elevating our brand and bigger bolder stories grounded in sport athletes that cut through and connect with impact and again Youll see that in the Olympics and you saw that a little bit with <unk>.

John J. Donahoe: Most recently, little examples of it getting back to what we do best. And we're doing that with the brand and then in the marketplace. While we have a sports focus, we're combining the best of our direct offense with reinvestment with our wholesale partners. So we bring a more holistic offense that grows the market and gets in the path of our consumer. And so that's what's driving our growth. We've made the necessary adjustments to bring the best of what's worked in our proven formula so that we can move forward.

Speaker Change: And Clark and with Sabrina most recently little examples of it getting back to what we do best and we're doing that with brand and then in the marketplace.

Speaker Change: We have a sport focus we're combining both the best of our direct offense, but a re investment with our wholesale partners. So we're bringing a more holistic offensive grows the market and gets in the past of our consumer and so that's that's what's driving our growth we've made the necessary adjustments to bring the best of.

Speaker Change: What's worked and our proven formula.

Speaker Change: So that we move forward.

Matt: And Jay, the way I think about fiscal 25 is that we are taking our product portfolio through a period of transition. We talked about this last quarter in terms of our focus on scaling, newness, and innovation and the green shoots that we were seeing in terms of the way the consumer is responding to the newness that we're bringing to market, and this quarter only gave us more confidence that that is where we need to focus and how we will continue to create greater impact and distinction from a brand point of view. And so this quarter, you know, we saw a majority of our And the new products that have been created this year.

Speaker Change: And the way I think about fiscal 'twenty five is that we are taking our product portfolio through a period of transition.

Speaker Change: We talked about this last quarter.

Speaker Change: In terms of our focus on scaling newness and innovation and the green shoots that we were seeing in terms of the way the consumer is responding to the newness that we're bringing to market and this quarter only gave us more confidence that that is.

That is where we need to focus and how we will continue to create greater impact and distinction from a brand point of view and so this quarter. We saw a majority of our top 20 top 20 growing footwear products.

Speaker Change: The new products that have been created this year and those products are on a trajectory to deliver multi billions of our annual run rate of incremental revenue.

Matt: And those products are on a trajectory to deliver multi-billions of annual run rate of incremental revenue, and that's where our focus is. At the same time, we're bringing some of our largest lifestyle franchises and some of our performance franchises back to make space for the new notes. And that's going to have a corresponding offsetting impact.

Speaker Change: And that's where our focus is at the same time, we're managing some of our largest lifestyle franchises and some of our performance franchises back to make space for the newness and thats going to have a corresponding offsetting impact.

Matt: And because we've been missing some product newness at scale in our portfolio over the last several seasons, these actions are resulting in a decline of low single digits is how we're thinking about the first half of the year, but we believe we will rebound in the second half and grow next year on top. And when we step back and think about the importance of newness and innovation, and not just to drive the top line, but to create consumer impact at scale That's the foundation for us to drive long-term growth. Our next question will come from the line of Matt Boss with JPMorgan. Please go ahead.

Speaker Change: And.

Speaker Change: Because we've been missing some product newness at scale in our portfolio over the last several seasons.

Speaker Change: These actions are resulting in a decline of low single digits is how we're thinking about the first half of the year, but we believe we will inflect in the second half and grow next year on the top line.

Speaker Change: And when we step back and think about the importance of newness and innovation.

Speaker Change: And not just to drive the top line, but to create consumer impact that scale.

Speaker Change: That's the foundation for us driving long term growth.

Speaker Change: Our next question will come from the line of Matt Boss with Jpmorgan. Please go ahead.

Operator: Great, thanks. So, John, could you elaborate on the new multi-year innovation cycle and how best to think about the timeline for transitioning to the next chapter of growth that you cited? And maybe, Matt, staying on that topic, high level, any material changes to consider with the top line growth profile or your high teens margin target as we think about this next chapter of growth? Yeah, Matt. Well, I can't tell you the change in the feeling of our innovation design and product creation teams getting back on their feet. And it's not just about a product or an item here and there.

Great. Thanks, So John could you elaborate on the new multiyear innovation cycle and how best to think about the timeline for transition to the next chapter of growth that you cited and maybe Matt staying on that topic high level any material changes to consider.

Matthew Robert Boss: With the topline growth profile or your high teens margin target as we think about this next chapter of growth.

John J. Donahoe: Yes, Matt.

Matt: I can't tell you the change in the feeling of our innovation design and product creation teams getting back on their front foot and it's not just about a product or an item.

John J. Donahoe: It's around building a robust pipeline of innovation. As I mentioned in my remarks, AIR. Air has been probably the single largest innovation platform in Nike's history, and we continue to innovate with Air, both in performance, which you'll see at the Olympics, and you'll see it impact almost every sport dimension, and you get to see that in a couple of weeks, and measurable performance benefits. Again, classic Nike innovation and then also in lifestyle. Let me just take the Air Max DN.

Matt: Here and there it's around building a robust pipeline of innovation. So I mentioned in my remarks are.

Air has been probably the single largest innovation platform in Nike's history, and we continue to innovate with air both in performance, which Youll see in the Olympics and Youll see it impact almost every sport dimension and you'll get to see that in a couple of weeks and measurable performance benefits.

Again classic Nike innovation and then also in lifestyle. So let me just take their map CN, we're launching <unk> next week.

John J. Donahoe: We're launching Air Max DN next week, but we already have next year's Air Max and the following year, developed, which are further innovations in air. So it's not just one year; it's three years in the pipeline that we're working on improving and improving and improving as we bring it with power to consumers. Beyond that, let me take running. I was over, Matt and I were in the running room. It was yesterday, I think, Matt. Wasn't it? It was yesterday.

Matt: But we already have next year's air Max and the following year.

Matt: <unk>, which are further innovations in air.

So that it's not just one year, it's three years and the pipeline that we're working on improving and improving improving as we bring it with power to consumers.

Beyond that let me take a running I was over Matt and I Rover, and the and the running room.

Matt: Yesterday, I think that when it was yesterday.

John J. Donahoe: And the three-year pipeline of innovation is clear across Bomero, Structure, and PEG. So we'll have PEG 41 launch in June, PEG Premium will be, as well as other members of the PEG family, PEG Trail, all coming in the second half of the year. And we're clear what's coming in 25 and 26 across PEG and Structure. Pipeline. Same thing in women's. We went into the women's

Matt: <unk>.

Matt: The three year pipeline of innovation is clear across both narrow structure and peg. So we will have peg 41 launch in June peg premium will be as well as other members of the Peg family Peg Trail all coming in the second half of the year and we're clear what's coming in 'twenty five.

Matt: Five and 26 across peg.

Matt: Romero and structure again.

Matt: Pipeline same thing in women's we went into the women's from <unk>, Tanya and team have lined up not just whats coming in the short term, but what's coming season. After season, which is what allows Nike to drive innovation at scale and consistency.

John J. Donahoe: Amy Montagna and her team have lined up not just what's coming in the short term but what's coming season after season, which is what allows Nike to drive innovation at scale and consistency. And I'll just, I'll hit on the question about the timeline of transition. I'll just reiterate what I just said, which is that we believe that transition is going to occur in the second half of fiscal 25. You will continue to hear us talking about the way we're scaling newness and innovation from this point forward. The products that are already out in the market, we expect to continue to scale, and then John mentioned the DN, the PEG 41, and we've got other things that are coming in the first half of this year. And so, you know, that's what we're excited about, offset by the way we're managing some of our franchisees. When I think about your question about material changes in the long term, I'm going to hit on maybe a couple points here.

Matt: And I'll just I'll hit on the on the question that on the on the timeline of transition I will just reiterate what I just said, which is we believe that transition is going to occur.

Matt: In the second half of fiscal 'twenty five you'll continue to hear us talking about the way, we're scaling newness and innovation from this point forward.

Matt: The products that are already out in the market. We expect to continue to scale and then John's referenced the D and the <unk> 41, and we've got other things that are coming in the first half of this year.

Matt: And and so.

Matt: So that's what we're excited about offset by the way, we're managing some of our franchises.

John J. Donahoe: When I think about your question about material changes to the long term I'm going to hit on maybe a couple of points here I think the first one I'd say is that while our strategy over the last few years has been consumer led.

Matt: I think the first one I'd say is that while our strategy over the last few years has been consumer-led, what I would say is that in the last year or so, we've been more focused on trying to achieve a mix of marketplace targets than we have served consumer demand where the consumer is shopping. And so there's been more focus on trying to achieve the 40% digital metric or the 60% direct metric when that was always a consumer-focused strategy. The consumer is still clearly shopping in multi-brand retail, and we need to elevate our brand and our positioning to be able to serve the consumer and to have the maximum impact from the new innovations that we're bringing to market. And so those measures are not the ones that are guiding our forward-looking plans.

John J. Donahoe: What I would say is is that the last couple of the last year or so.

John J. Donahoe: We've been more focused on trying to achieve mix of marketplace targets. Then we have serving consumer demand where the consumer is shopping.

John J. Donahoe: And so there's been more focus on trying to achieve the 40% digital metric or the 60% direct metric when that was always in our consumer focused strategy. The consumer is still clearly shopping and multi brand retail and we need to elevate our brand and our positioning to be able to serve the consumer.

John J. Donahoe: And to have the maximum impact from the new innovations that we're bringing to market and so those measures are not measures that are guiding our forward looking plants. Okay. The second I would say is is that when we look at the industry and step back overall stepping back from being in a moment of transitioning our product portfolio.

Matt: Okay? The second thing I'd say is that when we look at the industry and step back overall, stepping back from being in a moment of transitioning our product portfolio, we continue to see strong growth potential in our sector. We think we continue to have industry tailwinds, consumer interest in sport, more people participating in running events and marathons, and more people focused on fitness and living a healthy lifestyle. There are natural consumer tailwinds that are going to continue to drive growth in our sector, and we expect to grow and take share like we always have. As it relates to our long-term margin target, I think this quarter and this year have been a great proof point for us recapturing some of the transitory cost headwinds that have been in our face the last couple of years, but also showing how we can execute to deliver gross margin expansion and be disciplined in the way we're managing costs while we're investing in the consumer. As I look forward, I think we can continue to drive more profitable And the margins that we've discussed and the opportunity for margin expansion are still significant within our model.

John J. Donahoe: Leo we continue to see strong growth potential in our sector.

John J. Donahoe: We think we continue to have industry trail tailwind.

John J. Donahoe: Sumer interest in sport more people participating in running events in marathons to more people focused on fitness and living a healthy lifestyle.

John J. Donahoe: There are natural consumer tailwind that are going to continue to drive growth in our sector and we expect to grow and to take share like we always have.

John J. Donahoe: As it relates to our long term margin target I think this quarter and this year has been a great proof point on.

John J. Donahoe: US recapturing some of the transitory cost headwinds that had been in our face the last couple of years.

John J. Donahoe: But also showing how we can execute to deliver gross margin expansion and be disciplined in the way we are managing costs, while we're investing in the consumer when I look forward I think we can continue to drive more profitable growth.

John J. Donahoe: And.

John J. Donahoe: The margins that we've discussed.

John J. Donahoe: And the opportunity for margin expansion is still significant within our model.

Matt: But having a strong brand is the foundation for us to be able to drive long-term growth and profitability, and we're focused on what it takes through this flow of innovation, and many more. Our next question will come from Brooke Roach with Goldman Sachs. Please go ahead.

John J. Donahoe: But having a strong brand is the foundation for us to be able to drive long term growth and profitability and we're focused on what it takes through this flow of innovation authenticating ourselves being authenticated and sport and elevating our presence across the marketplace and if we can do this we think we can do.

John J. Donahoe: Driving attractive growth and high profitability and when we get to Investor Day. Later this year. What we'll do is we will update our algorithm and our expectations over the next five year period.

Operator: Good afternoon, and thank you for taking our question. I was hoping to get your updated thoughts on the pricing power of the Nike brand and the markdown opportunities that you see as you build into this new multi-year innovation cycle. Are there any near-term or medium-term offsets that we should contemplate as you work through franchise management and the current macro? And how are you thinking about the most important drivers of operating margin expansion into next fiscal year? Thank you.

John J. Donahoe: Our next question will come from the line of Brooke Roach with Goldman Sachs. Please go ahead.

Brooke Siler Roach: Good afternoon, and thank you for taking our question I was hoping to get your updated thoughts on the pricing power of the Nike brand and the markdown opportunity that you see as you built into this new multiyear innovation cycle are there any near term or medium term offsets that we should contemplate as you work through franchise management in the current macro and how are you thinking.

Brooke Siler Roach: About the most important drivers of operating margin expansion into next fiscal year. Thank you.

Matt: Yeah, let me start by talking about pricing power. One of the biggest benefits of a strong brand, an innovative brand, a brand that's continuing to bring freshness and newness to the consumer is its pricing power. And over the last couple of years, given our brand strength, we've been able to implement strategic pricing in order to be able to offset some of the headwinds that we've been facing. But as we look forward, we believe that more newness, more freshness, products that are more connected to stories that are relevant to consumers should give us the ability, on a structural basis, to continue to expand our profitability. The point I was trying to make in response to Matt's question is that when the brand is strong, the biggest driver of growth and margin expansion is strong consumer demand for the products we have and high levels of full price real estate.

Yes, let me start.

Speaker Change: By talking about pricing power.

Speaker Change: One of the biggest.

Speaker Change: One of the biggest benefits to our strong brand and innovative brand a brand thats continuing to bring freshness and newness to the consumers pricing power.

Speaker Change: And over the last couple of years, given our brand strength, we've been able to implement strategic pricing in order to be able to offset some of the headwinds that we've been facing but as we look forward, we believe that more newness more freshness.

Speaker Change: <unk>.

Speaker Change: Products that are more connected to stories that are relevant to consumers should give us the ability on a structural basis to continue to expand.

Speaker Change: Our profitability and the point I was trying to make in response to Matt's question is that when the brand is strong the biggest driver of growth and margin expansion is strong consumer demand for the products, we have and highest levels of full price realization and that ultimately is the fundamental as we carry forward in the near term.

Matt: And that ultimately is the fundamental as we carry on. In the near term, one of the headwinds that we're going to see is that, not surprisingly, our digital business carries a higher mix of the biggest franchises that consumers love. And so as we manage the supply of our larger franchises, we do expect that there will be a near-term channel mix headwind from transitioning our product portfolio, but we view that as being a near-term factor. Because ultimately, for Nike to grow at the rates that we aspire to grow to, we have to grow units across the market.

Speaker Change: <unk>.

Speaker Change: One of the headwinds that we're going to see is that not surprisingly.

Our digital business carries a higher mix of the biggest franchises that consumers love.

Speaker Change: And so as we manage the supply of our larger franchises. We do expect that there will be a near term channel mix headwind.

Speaker Change: From.

Speaker Change: From transitioning our product portfolio, but we view that as being.

Speaker Change: Our near term a factor because ultimately for Nike to grow at the rates that we are there.

Speaker Change: We aspire to grow too we have to grow units across the marketplace. We have to go grow units and Nike direct through digital and our stores and we've got to grow units through our partners.

Matt: We have to grow units in Nike Direct through digital in our stores, and we've got to grow units through our, And so that is where our focus is. Dimensionalize through sport, our fields of play, the way we've always segmented the marketplace to grow so that we can work and serve the consumer where the consumer is. As far as operating profitability long term, we continue to believe that we can expand gross margins by running our operating model and also driving value out of some of the things that we've talked about in the past, like product cost initiatives to lower our input costs. We're actually already starting to see some benefits of that in the back half of this year, continuing to drive supply chain efficiency.

Speaker Change: So that is where our focus is demur.

Speaker Change: Dimensionalize through sport, our fields of play the way, we've always segmented the marketplace to grow so that we can work and serve the consumer where the consumer that as far as operating profitability long term. We continue to believe that we can expand gross margins by running our operating model and also driving value out of.

Speaker Change: Some of the things that we've talked about in the past like product cost initiatives to lower our input costs, we're actually already starting to see some benefits on that in the back half of this year.

Speaker Change: Continuing to drive supply chain efficiency, and then as I mentioned the way that we're thinking about.

Matt: And then, as I mentioned, the way that we're thinking about managing our SG&A, shifting more of our resources to be consumer facing, we're focused on building an operating model that's got greater speed and drives greater productivity as we grow. And we think that will also be a source of long-term margin expansion. Our next question will come from the line of Michael Binetti with Evercore ISI. Please go ahead.

Speaker Change: Managing our SG&A shifting more of our resources to be consumer facing.

Speaker Change: We're focused on building an operating model, that's got greater speed and drives greater productivity as we grow and we think that will also be a source of long term margin expansion for the company.

Our next question will come from the line of Michael Binetti with Evercore ISI. Please go ahead.

Operator: Hey guys, thanks for all the detail and diagnosis about a lot of the moving parts in the business here today. Very helpful. I guess. As we look at the second quarter in a row, I think wholesale in China has grown a lot faster than DTC. Obviously, that's a very important market for you, and there are a lot of important things for us to think about in that market. Can you help us paint a little color on the different trends in that market that you see? And then I guess as we think about how you'll manage these franchises into next year. We've also heard some good growth rates in some parts of the wholesale channel for the first half of your fiscal year. So I'm assuming we'll see more of that franchise management on the DTC side.

Michael Charles Binetti: Hey, guys. Thanks for all the detail and diagnosis of a lot of moving parts in the business here today very helpful.

Michael Charles Binetti: I guess.

Michael Charles Binetti: Yes.

Michael Charles Binetti: As we look at the second quarter in a row with.

Michael Charles Binetti: Wholesale in China is growing a lot faster than DTC would you obviously, that's a very important market for you a lot of important things for us to think about in that market can you help us a little color on the different trends in that market that you see and then I guess as we think.

Michael Charles Binetti: Think about how youll manage these franchises into next year, but we've also heard some good growth rates in some parts of the wholesale channel for the first half of your fiscal year I'm, assuming we'll we'll see more of that franchise management on the DTC side and if so considering that as an important channel for the rest of the P&L I'm, assuming we can orient ourselves around gross margin pressure.

Operator: And if so, considering that's an important channel for the rest of the P&L, I'm assuming we can orient ourselves around gross margin pressure at the start of next year as you work your way through that before we see the influence of returning to growth down the P&L. Yeah, Matt went on to do the first part of that. He's the second.

At the start of next year as you work your way through that before we see the influence of returning to growth down the P&L.

Speaker Change: Yeah, Matt why don't I take the first part of that in the second so so Michael in China.

John J. Donahoe: So, Michael and China, interestingly, Angela Dong and her team and all of our top partners were here for the last week. As you know, we have 6,000 model brand doors. They were here for our innovation, and a couple of things are clear. Sport is strong in China, and Nike is strong in China. Our growth in Q3 was 6%, which was in line with our plan, and we're gaining share. We're certainly gaining share against the global brands, and we're gaining share against the local brands. So Nike's brand is strong on its back. With regard to ChannelMix and your specific questions, part of what's driving that is the consumer is back on the street. And so, I would say that the physical retail channel in China is stronger than digital. And then within digital, Tmall, which was historically the biggest digital driver, is experiencing less growth.

Speaker Change: Interestingly initial dog and her team and all of our top.

Speaker Change: [noise] partners.

Speaker Change: We're here for the last week.

Speaker Change: As you know we have 6000 mono brand doors. They were here for our innovation and a couple of things are clearer.

Speaker Change: Sport is strong in China, and Nike is strong in China.

Speaker Change: Our growth in Q3 was 6% which was in line with our plan and we're gaining share we're gaining share certainly against the global brands and we're gaining share against the local brands. So nike's brand is strong and its back.

Speaker Change: With regard to channel mix and your specific question.

Speaker Change: Part of what's driving that is the consumers back on the street and so I would say that though.

Speaker Change: Physical retail channel in China is stronger than digital and then within digital team.

Speaker Change: Tmall, which was historically the biggest digital driver is experiencing less growth, we're still the number one sports brand on Tmall.

John J. Donahoe: We're still the number one sports brand on Tmall. Social Commerce. Daoyan is growing, and we're not yet on Daoyan. We're just getting started on Daoyan.

Speaker Change: <unk>.

Speaker Change: Social commerce.

Speaker Change: Dalian is growing and we're not yet on Davita and we're just getting on Dalian.

John J. Donahoe: And so you'll see us expanding our growth into social commerce, which is the growing digital Chinese channel in China. But I can tell you Matt and I had a chance, and Craig Williams and others, to meet with our partners in China. They came away seeing our innovation pipeline that I've been talking about, Matt and I have been talking about on this call, what we've got in store. And it was the first time they'd been on our campus in four years since COVID, and they came away excited, leaning in.

So, we'll you'll see us expanding our growth into social commerce, which is the growing digital China channel in China, but I can tell you our baton Hydro Chad and Craig Williams and others to meet with our partners from China. They came away seeing our innovation pipeline that I've been talking.

Speaker Change: About Matt and I have been talking about on this call what we've got in store coming in it was the first time they've been on our campus in four years since Covid and they came away excited leaning in and so we are very optimistic about the future in China, and we will grow across multi channels to grow the market is probably the <unk>.

John J. Donahoe: And so we are very optimistic about the future in China, and we will grow across multichannels to grow the market. It's probably the area of the world we do that best. Yeah, and to John's point, not only do we have 6,000 stores, but China is a monobrand market. And so whether it's owned or partnered, it's a monobrand market, which gives us the ability to have the best expression in front of the consumers, to be able to direct the assortment so that as we bring newness and innovation and new stories, we partner with our partners. And the last thing I was going to say, Michael, is that the penetration of Nike Direct in China is lower than what it is across our other geographies.

Speaker Change: For the World, we do that the best.

And to John's point, not only do we have 6000 stores, but China is a mono brand market and so whether its owned or partnered it's a mono brand market, which gives us the ability to have the best expression in front of the consumers to be able to directly assortment. So that as we bring newness and innovation and new stories.

Speaker Change: We partnered with our partners.

Speaker Change: And.

Speaker Change: The last thing I was going to say Michael is just our the penetration of Nike direct in China is lower than what it is across.

Our other.

Speaker Change: Our other geographies.

John J. Donahoe: In terms of your question about where we'll see franchise management, yes, you're right. It will be more Nike Direct and primarily because we continue to see a heavy level of promotional activity happening across digital, across all of our geographies. And while we continue to see as we've supplied our largest franchises to our wholesale partners, we're actually seeing incredibly strong weekly sell through on these franchises. We're seeing high levels, high above our targets of full price realization. And so our franchises are healthy. In fact, we could sell more of these products if we wanted to, but we don't think that's the right thing to do from a brand point of view.

Speaker Change: In terms of your question about where we will see the franchise management, yes, you're right it will be more in Nike direct.

Speaker Change: And primarily because we continue to see a heavy level of promotional activity happening across digital across all of our geographies.

Speaker Change: And while we continue to see as we've supplied our largest franchises to our wholesale partners.

Speaker Change: We're actually seeing.

Speaker Change: Credibly strong weekly sell through on these franchises.

We're seeing high levels high above our targets of full price realization and so our franchises are healthy in fact, we could sell more of these products. If we wanted to.

But we don't think that's the right thing to do from a brand point of view.

Matt: And we know that we manage these franchises for long-term health, and so we're focused on scaling the newness and creating the consumer space for us to tell stories about new things that we're bringing to drive energy. And that's where our focus is, and so that's ultimately where our teams are spending their time. And that's what's influencing the near-term transition that I highlighted a little bit earlier.

Speaker Change: And we know that we manage these franchises for long term health.

Speaker Change: So we're focused on scaling the newness and creating the consumer space for us to tell stories about new things that we're bringing to drive energy and Thats, where our focus is.

Speaker Change: And so that's that.

Speaker Change: That's ultimately where our teams are spending their time and thats whats influencing the near term transition that I highlighted a little bit earlier.

Matt: As far as the margin question goes, you know, what I'll say is that we are going to grow revenue and earnings next year, and we expect to drive operating margin expansion, excluding the impact of the restructuring, and that's going to come through gross margin expansion first, and then continuing to be disciplined in the way we manage SG&A in order to be able to drive more productive growth. Our next question will come from the line of Alex Stratton with Morgan Stanley. Please go ahead.

Speaker Change: As far as the margin question goes.

Speaker Change: What I'll say is that we're going to grow revenue and earnings next year, and we expect to drive operating margin expansion, excluding the impact of the restructuring charge and thats going to come through gross margin expansion first and then continuing to be disciplined in the way, we manage SG&A in order to be able to.

Speaker Change: Drive more productive growth.

Speaker Change: Our next question will come from the line of Alex <unk> with Morgan Stanley. Please go ahead.

Operator: Perfect. Thanks for taking the question. Just a couple from me.

Speaker Change: Okay.

Alex: Perfect. Thanks for taking the question just a couple from me on <unk>.

Matt: On the front half 25 revenue guidance down low single digits, can you give us any color on how you're thinking about it by geography or channel? And then, just bigger picture on this kind of wholesale reentering, are you having any trouble kind of rebuilding the muscle there, facing any difficulty as you reenter? Has Nike's criteria changed at all in terms of how you think about the right partners or distribution going forward? Thanks a lot.

Alex: <unk> 25.

Alex: Revenue guidance download examples that Chad can you give us any color on how youre thinking about it by geography or channel and then just bigger picture on this kind of a wholesale re entering are you, having any trouble kind of rebuilding the muscle theyre facing any difficulty as you reenter.

Alex: How has <unk> criteria changed at all in terms of how you think about the right partners our distribution going forward.

Speaker Change: Thanks, a lot.

Matt: John, why don't I take the first part and then I'll start the second one if you want to jump in on that and go for it. So, Alex, I think the only thing I would say at this point is, you know, the way that we're thinking about the geography splits is we're not assuming that economic conditions in the international markets, in particular, get better. It assumes a status quo relative to where we are today.

Chad: Okay, John when I take the first part and then I'll start the second one okay on rate and go for it so Alex I think the only thing I would say at this point.

John J. Donahoe: The way the way that we're thinking about the geography split is we're not assuming that.

John J. Donahoe: That economic conditions in the international markets in particular that get better.

John J. Donahoe: Status quo relative to where we are today.

Matt: And, you know, next quarter, I'll provide more tangible insights into, you know, not only the first half but our full year growth for fiscal 25. On the wholesale side, what I would say is that I think the biggest thing to take away is that we don't like the way our brand is showing up in wholesale, and we own that. And we need to focus on elevating the experience for consumers when they come into interaction. If you segment our marketplace by dimension and by where we sell our seasonal units on a full price basis, our wholesale partners represent three quarters of the market from a unit. And so the importance of being able to elevate and position our brand correctly and to tell stories about the products that we're bringing to market in that environment is an absolutely critical way not only to help consumers fall in love with the products we have, but also to give consumers that tangible ability to come into real life connection with the Nike brand.

Speaker Change: And next quarter I will provide more more more more tangible insights into.

Speaker Change: Not only the first half, but our full year growth over over our fiscal 25 on the wholesale side, what I would say is that.

Speaker Change: I think the biggest thing to take away is that.

<unk>.

Speaker Change: We don't like the way our brand is showing up in wholesale and we own that and we need to focus on elevating the experience for consumers when they come into interaction with our brand. If you segment our marketplace Bye bye.

Speaker Change: By dimension and bye Bye bye, where we sell our units are seasonal units on a full price basis, our wholesale partners represent three quarters of the market from a unit perspective, and so the importance of being able to.

Speaker Change: To elevate and to position our brand correctly and its health stories about the products that we're bringing to market.

Speaker Change: That environment is an absolutely critical way not only to help consumers fall in love with the products, we have but to also give consumers that tangible ability to come into a real life connections with the Nike brand and so what we're focused on beginning with the DN is we're going to see and Youll feel the DN.

Matt: And so what we're focused on, beginning with the DN, is we're going to see, and you'll feel, the DN launch in 4,000 doors initially across the market. And then when we look at the way we're going to scale that innovation over the next several seasons through product journeys with different partners, telling different stories in different parts of the marketplace, we continue to, we're very excited about the impact that that could have on the market. And we know that it's what we need to do.

Speaker Change: Launching 4000 doors doors initially across the marketplace and then when we look at the way we're going to scale that innovation over the next several seasons through product journeys with different partners, telling different stories in different parts of the marketplace.

Speaker Change: We continue to we're very excited about the impact that that could have on the market and we know that it's what we need to do and so the investments will be in things like seasonal marketing campaigns elevating the presentation of our product investing in the breadth and depth of the assortment, including color. So the consumer gets more choice.

Matt: And so the investments will be in things like seasonal marketing campaigns, elevating the presentation of our product, investing in the breadth and depth of the assortment, including color, so that the consumer gets more choice on the products that we care about the most in order to be able to create that kind of impact across the market. We think we've got the right partners. But our strategy and our approach to the marketplace is constantly evolving based on where the consumer is, based on where the consumer is shopping, and who's connecting most with the consumer. So apart from some of the areas that we've been talking about where we need to create new distribution because we see growth opportunities that don't line up with our current partners, our focus is on our current partners right now and elevating the experience of our brand. And I just build on what Our partners want us. They need Nike to help grow the market. They want newness.

Speaker Change: Off of the products that we care about the most in order to be able to create that kind of impact across the market. We think we've got the right partners, but our our strategy and our approach to the marketplace is constantly evolving based on where the consumer is based on where the consumer is shopping and where and who is connecting most with the consumers.

Speaker Change: Apart from some of the areas that we've been talking about where we need to create new distribution, because we see growth opportunities that don't line up with our current partners. Our focus is on our current partners right now and elevating the experience of our brand with them and I would just build on.

Speaker Change: What Matt said, Alex the first part of your question our partners want us they need Nike to help grow the market.

John J. Donahoe: They want Nike freshness. They want us to lean in with them, and that's exactly what we're doing. So the reception has been very strong and very good. And we'll continue to capitalize on that and leverage that so that we collectively grow the entire market, in service of the consumer. Our final question will come from the line of Bob Durbel with Guggenheim Securities. Please go ahead. Hi, good afternoon.

Speaker Change: They want newness, they want Nike freshness, they want us to lean in with them and that's exactly what we're doing so the reception has been very strong and very good.

Speaker Change: And we will continue to to capitalize on that to leverage that so that we collectively.

Speaker Change: Grow the entire market.

Speaker Change: In service of the consumer.

Our final question will come from the line of Bob <unk> with Guggenheim Securities. Please go ahead.

Speaker Change: Hi.

Operator: Just two quick questions for me. The first one is in the running area. When you talk about wholesale, can you talk about any progress that you're seeing with the RSGs as partners? And then the second question is, Matt, you mentioned just the opportunity or the ability to see a catalyst in sales from the Olympics. Can you just talk about your opportunity to capitalize on some of those products and your expectation from that? Thanks.

Bob: Just two quick questions from me the first one is in the running area.

Bob: When you talk about wholesale can you talk about any progress that you're seeing with the RFG as partners and then the second question is Matt you mentioned, just neat opportunity or the ability to see a catalyst in sales from the Olympics can you just talk about your opportunity to capitalize on some of those products is in your expectation from that thanks.

John J. Donahoe: Bob, as I mentioned earlier, we've had a chance to be with Heidi and her teams looking at the running pipeline and the everyday running pipeline, and there are clearly already some early green shoots. The Vimero 17 and the Structure 25 are out in the market today, both growing double digits to very strong reception.

Bob: Above I as I mentioned earlier, we've had a chance to be with Heidi and her teams on on looking at the running pipeline.

Bob: The everyday running pipeline.

Bob: And there are clearly already some early green shoots <unk> 17 in the structure 25 out in the market today, both growing double digits to very strong reception as I mentioned earlier, the the peg family starting with Peg 41, Peg premium Peg trail coming in the second half of the year. The order book is looking good.

John J. Donahoe: As I mentioned earlier, the PEG family, starting with PEG 41, PEG Premium, and PEG Trail coming in the second half of the year, the order book is looking good. We're also, in direct answer to your question, investing in our ground game, with more focus and specificity around running than before. That includes being where runners are. So being at the marathons, at the local races, at the local runs.

Bob: We're also.

Bob: A direct answer to your question investing in our ground game with more focus and specificity around running then before that includes being where runners are so being at the marathons at the local races. At the local runs we had a strong presence a BLA marathon.

John J. Donahoe: We had a strong presence at the LA Marathon and activations there with very positive responses. In fact, we had a shoe exchange effort that went crazy with so many people switching over to Nike because we were there with them. We'll continue to do that. And then, in the RSD channel, as you mentioned, we've increased our focus and penetration with RSDs and other new partners that authenticate our brand. And we've doubled our eK

Bob: And Activations there with very positive response in fact, we had a shoe exchange effort that went crazy with so many people switching over to Nike because we're there with them. We will continue to do that and then in the <unk> channel as you mentioned, we've increased our focus and penetration in Rfps and other new.

Partners that authenticate our brand and we've doubled our rate our <unk> and as you know our <unk> are the experts who provide our partners with even greater Nike expertise and personal engagement. So if you take the combination of strong innovative product portfolio and pipeline with more ground game.

John J. Donahoe: And as you know, our eKins are the experts who provide our partners with even greater Nike expertise and personal engagement. So if you take the combination of a strong innovative product portfolio and pipeline with more ground game and presence where runners are combined with a greater marketplace distribution, including RSDs and with our eKins in the field, we feel like we're already seeing some green shoots of progress in everyday running. And we'll continue to see that quarter after quarter. It won't happen overnight, but we're already seeing momentum in North America. And we believe that will continue around the world.

Bob: <unk> presence, where runners are combined with a greater marketplace distribution, including <unk> and with our regions in the field, we feel like we're already seeing some green shoots of progress and everyday running and will continue to see that quarter after quarter. It won't happen overnight, but we're already seeing momentum in North America.

Matt: Yeah, Bob, and another indicator of a green shoot for us is that our bookings for fall 24, which is the fall season coming up in running footwear, delivered strong growth. And to John's point, that's across our $100 plus products, but also us coming back into the market with a new line of core running footwear. And so it's another green shoot for us that we see momentum in running in particular, and one that we're focused on continuing to ignite. And I think the Olympics will actually help that, as a segue to your second point. The opportunity that we see starts with our brand. The opportunity starts with our Air for Athletes campaign that we're going to be bringing to the Olympics, combined with the products that John referenced, the ones that you will see on the track, on the streets, vis-a-vis the marathon, on the football pitch with visible air, to the basketball court with air being visible, leveraging this similar technology that we've leveraged through the AlphaFly 3.

Bob: And we believe that will continue around the world, Yes, Bob and another another indicator of a green shoot for US is that our bookings for fall 'twenty, four which is the <unk>.

Bob: The fall season coming up in running footwear delivered strong growth and to John's point, that's across our $100 plus products, but also as coming back into market with a new line of core running footwear and so it's another green shoot for us that we see momentum in running in particular and.

Bob: And one that we're focused on continuing to ignite and I think the Olympics actually will help that as a segue to your second point the opportunity that we see starts with our brand the opportunity starts with.

Bob: Our air for athletes campaign that we're going to be bringing through the Olympics combined with the products that John referenced to ones that you will see on the track on the streets vis vis the marathon.

Bob: Two on the football pitch with visible air to the basketball court with air being visible leveraging the similar technology that debt that we've leveraged through the alpha fly three and so we're just we're excited about the innovation, we're bringing but it's an ignition point because it there is material value from the products that we will see.

Matt: And so we're just, we're excited about the innovation we're bringing, but it's an ignition point because there is material value from the products that we will sell that we sold in around these Olympic stories, but it's about igniting the air platform as we go forward. And so the way we think about it is that it's a catalyst from both a brand and a business point of view because it will be an important moment on the world's biggest stage to showcase the best and greatest innovations in these, and then the connection of the innovation to the pipeline of products that's coming that we expect will drive growth through the balance of 25 and into 26, especially as you think about the next iteration and the one after that, which we So, from our perspective, it's a tremendous opportunity to catalyze energy, but more importantly, to reposition Nike in sport with the athlete and drive the next chapter of. And that does conclude our conference for today. We thank you all for joining us. You may now disconnect your lines.

Bob: Well that we sold in around these Olympics stories, but it's about igniting the air platform as we go forward and so the way we think about it is that it's a catalyst from both a brand and a business point of view because it will be at an important moment on world the world's biggest stage to showcase the best and greatest innovations.

In these sports and then the connection of the innovation to the pipeline of product that's coming that we expect will drive growth through the balance of 25 and into 'twenty six, especially as you think about the next air iteration and the one after that which we already have in development so from our <unk>.

Bob: It's a tremendous opportunity.

Bob: To catalyze energy, but more importantly to reposition Nike sport with the athlete and drive the next chapter of growth for us.

Speaker Change: And that does conclude our conference for today, we thank you all for joining you may now disconnect your lines.

Yeah.

Speaker Change:

Speaker Change:

Speaker Change: Yeah.