Q3 2025 Nike Inc Earnings Call
Good afternoon, everyone welcome to Nike incorporated fiscal 'twenty 'twenty five third quarter conference call for those who want to reference today's press release, you'll find it at investors Nike Dotcom leader.
Speaker Change: Leading today's call is Paul Trussell, Vice President of corporate Finance and Treasurer.
Now I'd like to turn the call over to Paul Trussell.
Yeah.
Paul Trussell: Thank you operator.
Speaker Change: Hello, everyone and thank you for joining us today to discuss Nike, Inc. 's fiscal 2025 third quarter results.
Speaker Change: Joining us on today's call will be Nike, Inc, President and CEO Elio Hugh.
Matt Friend: Our CFO Matt friend.
Matt Friend: 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.
Matt Friend: These risks and uncertainties are detailed in Nike's reports filed with the SEC.
Matt Friend: In addition, participants may discuss non-GAAP financial measures and nonpublic financial and statistical information.
Please refer to Nike's earnings press release, or Nike's website investors Nike Dot com for comparable GAAP measures and quantitative reconciliations.
Matt Friend: All growth comparisons on the call today are presented on a year over year basis, and our 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 you limiting your initial.
Matt Friend: Question to one thanks for your cooperation on this.
Matt Friend: I'll now turn the call over to Nike, Inc, President and CEO Elliot here.
Speaker Change: Thank you Paul good afternoon, everyone.
Speaker Change: I'll start by saying I'm proud of the progress we made against the key actions, we committed to 90 days ago.
Speaker Change: While we met the expectations we set.
Speaker Change: We're not satisfied with our overall results.
Speaker Change: We can.
And we will be better.
Speaker Change: For the quarter the big takeaway for me was clear when we lead with sport, we create impact for Nike.
Speaker Change: Cold inspiring athlete stories, we brought more energy to sports biggest moments and we introduced performance product across an integrated marketplace.
Speaker Change: We delivered something due to the consumer week after week and that's exactly the kind of sustained pace, we need to strengthen our business.
Speaker Change: Last quarter I shared my initial observations and where we need to focus.
Speaker Change: The last 90 days only reinforced my early assessment of the areas that are most important.
Since our last call I continue to meet with wholesale partners to discuss to discuss the distinct role each can play with Nike.
Speaker Change: I also had an incredibly inspiring trip to visit factory partners in Nike teammates in Asia to see how we're executing in our supply chain with a focus on production for our new innovation most.
Speaker Change: Most importantly.
Speaker Change: I continue to spend meaningful time with our Nike teammates.
Speaker Change: We focused in two areas.
Speaker Change: Strengthening our culture at.
Speaker Change: A committee to our top priorities.
Speaker Change: In fact right. After my first call with you in December we met with our teams and shared the five priority actions, we outlined on the call.
Speaker Change: With a sharp focus on five fields of play.
Speaker Change: Three countries.
Speaker Change: And five cities.
Speaker Change: We call these strategic priorities when now.
Speaker Change: We have a clearer picture on our path forward and despite the global economic uncertainty I believe our priority actions will continue to drive progress.
Speaker Change: The first action is to ignite our winning culture.
Speaker Change: As I mentioned, our teams are building momentum, we're hustling and being opportunistic.
Speaker Change: Next assay.
Speaker Change: Is shaping our brand for distinction.
Speaker Change: This is about lining up the story storytelling power of Nike to celebrate the passion and emotion of sport.
Speaker Change: In February I attended the Super Bowl and the NBA All star weekend to see firsthand the kind of impact we may when we line up all of our advantages towards one moment.
Speaker Change: Our third action is to accelerate a complete product portfolio.
Speaker Change: We're fully committed to creating a more breadth and depth season after season.
Speaker Change: While we added innovation across our five key field to play this quarter.
Speaker Change: It's not enough to offset the continued headwinds of our classic franchises.
Speaker Change: Elevate and grow the marketplace before a vaccine is a balanced approach, where we're supporting wholesale partners to drive healthy growth.
Speaker Change: And returning Nike direct to a premium destination.
Speaker Change: We're in the early stages of repositioning Nike digital.
And we're restoring our sales organization and go to market processes.
Speaker Change: The final action went on the ground.
Speaker Change: It's where we celebrate local athletes make cultural connections and support grass roots communities.
Speaker Change: A big reason for our running product success this quarter was.
Speaker Change: It was the resources, we put into building energy through the ground ground game.
Speaker Change: Of all the priority actions.
Speaker Change: We knew we could move quickly on investing in our brand.
Speaker Change: You saw that in several defining moments this quarter.
Speaker Change: I'll start with the Super Bowl in New Orleans. It was of course it starts with our close partnership with the NFL and our high performance uniforms cleats and gloves that everyone sees on the field.
Speaker Change: Our product visibility goes well beyond four quarters.
Speaker Change: From J Lynn Hertz, wearing his red and black on Bannable, Jordan plead steward warm ups.
Speaker Change: To kindred halftime show, where and Dr. Sandra Sanders retrofits.
Speaker Change: And Serena Williams and says we're in Chuck Taylors, our three iconic brands, we're front and center.
Speaker Change: We of course also debuted so when our first Super Bowl AD in 27 years, where we celebrated the winning mindset of the top athletes in the world.
Speaker Change: We also showed up on the ground in New Orleans to support flag football with a sharp focus on girls and a commitment to increasing their participation in the game.
Speaker Change: We created pop up retail spaces across the city with partners like Dick's Sneaker politics inhibits.
Speaker Change: And both Nike and Jordan houses to connect with athletes influences partners.
Speaker Change: And wholesale retailers.
Speaker Change: After the win we followed it up with strong reactive campaigns.
Speaker Change: The Nike brand created it's good to be green for the Eagles win.
Speaker Change: And for <unk> MVP, the Jordan brand aired its first Super Bowl AD and history Love Hurts.
Speaker Change: That is how we create impact.
Speaker Change: And that.
Speaker Change: Is Nike and Nike.
Speaker Change: We transitioned from one raising weekend right into another for the NBL NBA All star weekend in the Bay area.
Speaker Change: Our brands in one word dominate it.
Speaker Change: Both sides of the Bay, Nike, Jordan and converse, one performance and the culture of the game.
Speaker Change: Connecting with young athletes and fans through unique experiences.
Speaker Change: Nike celebrated the future of basketball hosting games with top high School Prep stars.
Speaker Change: At the Alameda Navy yard that Jordan Fam first celebrated the brand's biggest moments for its 40th anniversary with thousands of fans.
Speaker Change: And converse unveiled the first signals signature shoe for Shay Gil just Alexander the Shay one.
Speaker Change: Designed by say himself as the new creative director for Comverse basketball.
Speaker Change: The shoe will launch this fall.
Speaker Change: All told Nike, Inc. Lit up the marketplace on the ground, our Nike San Francisco flagship flagship store at its best commercial day in 10 years.
Speaker Change: And just down the street, we created energy and Buzz with our wholesale partners foot locker and shoe palace.
Speaker Change: One thing it was great to see for.
Speaker Change: For the right product drops like.
Speaker Change: Like the Nike Black label collection.
Speaker Change: Kobe approach rose, Jordan Red ones and Jordan for cements.
The passion of Sneaker culture is alive.
Speaker Change: I saw lines down the block all weekend.
Speaker Change: An important part of our strategy moving forward will be to harness the full power of our portfolio of brands.
Speaker Change: We made significant progress in adult and elevating the voices and distinct position of our brands at the Super Bowl.
Speaker Change: And all Star weekend.
Speaker Change: Shifting to product we're.
Speaker Change: We're beginning to drive a more diversified portfolio.
Speaker Change: It will take time to reach the volume to replace the handful of classic franchises, we over indexed on.
Speaker Change: But our approach is simple.
Speaker Change: Help consumers fallen in love with something new from Nike.
Speaker Change: And Thats something it's not replacing one eikon for another it's about building a supporting cast of multiple styles.
Speaker Change: Some that are gaining traction with men.
Speaker Change: And others with women's.
Speaker Change: Segmenting and differentiating our wholesale partners across the integrated marketplace investing in the presentation of our products at point of sale digital and physical.
Speaker Change: And having an intentional ground game and influential cities.
Speaker Change: And we will lead with performance with a disciplined approach that balances product that seating.
Speaker Change: With product that's scaling.
Speaker Change: Running was the standout field of play for the quarter growing mid single digits.
Speaker Change: <unk> 41 is continuing to drive healthy volume in all Geos.
Speaker Change: And to innovations that have just begun to see are the <unk> premium.
Speaker Change: And the <unk> 18.
Speaker Change: The pet premium is Nike, bringing something totally unique to the market a full visible air zoom unit that for the first time, we sculpted to the foot. So it springs back for better energy return.
Speaker Change: It's a great ride.
Speaker Change: A beautiful looking too.
Speaker Change: Early seed payers nearly sold out across the North American marketplace.
Speaker Change: And the peg premium will scale through fall 'twenty five.
Speaker Change: This quarter, we launched with Romero 18 created for the everyday runner, we align the storytelling of the <unk>, 18th Big phone and maximum cushioning across over 1800 doors in the integrated marketplace RFG sporting goods Nike direct.
Speaker Change: The results have been outstanding.
Speaker Change: We plan to build on the momentum and double the distribution of <unk> 18.
Speaker Change: By mid April.
Speaker Change: Supported by a large scale running campaign.
Speaker Change: You can expect new additions to the franchise to release and our next fiscal year.
Speaker Change: And running.
Speaker Change: We're on the path to meeting our high standards of execution.
Speaker Change: In the end.
Speaker Change: Turning to sportswear, our lives largest icons Nike and Jordan Street, where are in different states of transition.
Speaker Change: Where the Air Force, one Doc and Air Jordan, one it's about right sizing not sunsetting.
Speaker Change: Each franchise will always have a place in our stable of products, they're timeless staples with loyal fans.
Speaker Change: Our Best example of healthy diversification in sportswear footwear right now is our look of running so for barrel five double its revenue this quarter Nike shop has grown its revenue by over 10 times in the last three quarters.
Speaker Change: And while in the seating stage recently released shoes like the air Super fly in the Lv 1000 are getting a lot of positive interest in the media and on social channels.
Speaker Change: Air Max a brand in itself is a platform that consumers expect us to reinvest.
This quarter, we brought fresh energy with the new DNA, which is resonating well with consumers in Japan, and Korea, and women's silhouette and the Air Max News.
Speaker Change: For another new innovation platform with air Max and FY 'twenty six.
Speaker Change: Diversifying our sportswear apparel offense is equally important.
Speaker Change: We want to minimize our reliance on fleece and push the edges to build new businesses.
Speaker Change: And that doesn't have to fit neatly into the sportswear category either.
Speaker Change: This quarter's new $24 seven collection brings performance materials to high style training apparel.
Speaker Change: The new impossibly soft and perfect stretch fabrics.
Speaker Change: Give us the opportunity to tell a deep technical apparel story.
Speaker Change: The first month of sales of $24 seven have exceeded our expectations.
Speaker Change: And we're ramping up capacity to meet the demand.
Speaker Change: We also made some noise with the announcement of a new brand this quarter Nike scales.
Speaker Change: Together, we identified a consumer need and are creating new a new market of style led product that skulls and performs or.
Speaker Change: Our first comprehensive collection launches next quarter in North America through both Nike and skills direct channels.
Speaker Change: And we will scale globally over multiple seasons.
Speaker Change: The apparel space is right for fresh thinking and I've asked our team to keep innovating innovating across the spectrum of performance.
Speaker Change: <unk> style and to seek out white space in the market to complement our brands and product portfolio.
Speaker Change: Our responsibility is to grow the overall market and one of the most powerful ways. We do that is through a relentless flow of coveted and innovative product.
Speaker Change: Through our powerful brands in both performance and sportswear for men women and kids across footwear, apparel, and accessories and up and down price points.
Speaker Change: We're moving with focus and urgency to get back into a rhythm of delivering across all dimensions.
Speaker Change: The final topic I'd like to discuss in detail is the integrated marketplace.
Speaker Change: We create consumer led experiences across Nike direct or our wholesale partners.
Speaker Change: Physical or digital.
Speaker Change: And the almost 190 countries in which we do business, we have over 40000 points of distribution and a digital business with massive reach our footprint is.
Speaker Change: He is an unbeatable competitive advantage.
Speaker Change: That means that a lot of change is in motion.
Because we want to be great at all touch points and I'm, playing an active role in this one leveraging my years of experience and relationships in the marketplace.
Speaker Change: Here's where we're going to go on to prioritize.
Speaker Change: <unk> I mentioned, we're restoring our sales organization and go to market processes.
Speaker Change: Partnering with Nike must feel like a world class experience that means building growth plans together.
Speaker Change: Creating distinct consumer positions in consumer right Assortments.
Speaker Change: Again, Jean way earlier in the process and asking for product feedback.
Speaker Change: Delivering our assortment at the right time, right place and at the right depth.
Speaker Change: Educating their teams on new innovations, providing marketing support and.
Speaker Change: And making certain Theyre Nike presentation as premium.
Speaker Change: So we capitalize on every sale opportunity.
Speaker Change: And Nike direct.
Speaker Change: Digital will feel the changes more quickly.
Speaker Change: Already reducing the promotional days and discounting at lower rates.
Speaker Change: In fact <unk>.
Speaker Change: Impairing last year's January and February to this years Nike.
Speaker Change: Nike digital in North America went from over 30 promotional days.
Speaker Change: Two zero.
Speaker Change: And our ecosystem the.
Speaker Change: The consumers are already seeing a more elevated content and storytelling with a greater focus on our performance fields of play.
Speaker Change: Now that I've had the opportunity to visit each geography.
Speaker Change: We're clear, where we will focus to make an immediate impact.
Speaker Change: Through our win now strategic priorities will start with three key countries, the United States, China, and the United Kingdom.
Speaker Change: And five key cities, New York, Los Angeles, London, Beijing and Shanghai.
Speaker Change: We will invest to make sure each has innovated and covenant product, a loud and proud locally relevant brand voice, a consumer led and balanced integrated marketplace and passionate Nike teammates on the ground.
Speaker Change: Each country has unique dynamics and is in different state of development.
Speaker Change: China, specifically is where we're being the most proactive and cleaning up the marketplace and we will get back to inspire and the Chinese consumer in a more meaningful way.
Speaker Change: To close.
Speaker Change: Our consumers and partners felt a different pace for Nike this quarter.
Speaker Change: We're off to a solid start.
Speaker Change: And where we are making progress in our five priority actions.
Speaker Change: It's mostly through serving athletes.
Speaker Change: In the sport and performance.
Speaker Change: That's exactly where we want to be.
Speaker Change: The bottom line is we are looking for opportunity on all fronts.
Now, it's up to us to be consistent.
Speaker Change: Some of the bigger shifts I cover will take multiple seasons of excellent execution.
Speaker Change: Our teams are moving with focus and urgency and are up to the challenge of writing the next great chapter for Nike.
Speaker Change: I'll pass it to Matt to provide initial the initial thoughts on the building blocks to return to sustainable and profitable growth.
Speaker Change: And I'll be back to close out the call.
Speaker Change: Okay.
Speaker Change: Thanks, Elliot and Hello to everyone on the call.
Speaker Change: The team is moving aggressively to reignite brand momentum through sport and stabilize our business our.
Speaker Change: Our third quarter financial results reflect the headwinds from the window actions, we identified for you last quarter.
Speaker Change: Today, I will review, our third quarter results and provide context on the progress we have made.
Speaker Change: Then I will share additional insight for how we expect our win now actions to shape our business performance over the near term.
Speaker Change: This quarter revenues were down 9% on a reported basis and down 7% on a currency neutral basis.
Speaker Change: The quarter benefited from strong holiday results in December, including a non comp benefit from cyber Monday, followed by double digit declines in January and February.
Speaker Change: Nike direct was down 10% with Nike digital declining, 15% and Nike stores declining 2%.
Speaker Change: Wholesale was down 4% largely due to declines in greater China.
Speaker Change: Gross margins declined 330 basis points to 41, 5% on a reported basis due to higher markdowns on Nike direct higher wholesale discounts inventory obsolescence and product cost and channel mix headwinds.
Speaker Change: SG&A was down 8% on a reported basis has increased investments in brand marketing and sports marketing were more than offset by declines in operating overhead.
Speaker Change: Our effective tax rate was five 9% compared to 16, 5% for the same period last year.
Speaker Change: Primarily due to a onetime tax benefit from U S tax regulations related to foreign currency gains and losses.
Speaker Change: Earnings per share was 54.
Speaker Change: Now, let me provide additional insight into our progress against our win now actions this quarter.
Speaker Change: Let's begin with our product portfolio.
Speaker Change: Our performance business grew in the third quarter led by improving brand and business momentum in training and running with new product launches strong sell through of innovation and a more complete offense across price points in footwear and apparel.
Speaker Change: This momentum is encouraging since these two sports represent our largest performance businesses.
Speaker Change: For Q3, this momentum was more than offset by declines in Nike sportswear and the Jordan brand.
Speaker Change: Led by a double digit decline in our classics footwear franchises.
Speaker Change: These franchises again decelerated faster than the overall business with.
Speaker Change: With a more pronounced impact on Nike digital.
Speaker Change: Turning to our marketplace. Our teams have taken the initial steps to reposition Nike digital is a full price business.
Speaker Change: We remain competitive and promotional in December finishing with strong holiday results. However in January and February we significantly reduce days of promotion in North America and EMEA.
Speaker Change: This resulted in a several percentage point improvement in demand at full price.
Speaker Change: With regards to wholesale.
Speaker Change: Since Elliot has returned we are working as closely with our partners as ever.
Speaker Change: We are creating confidence through the investments we are making in product engagement commercial terms and rebuilding the scale talent and capabilities of our sales organization.
Speaker Change: Within our fall order book in North America, EMEA, and APAC MLA, we see the declines in classics footwear franchises, almost being offset by growth in performance dimensions of our portfolio, such as running training and basketball as well as newness in sportswear.
Speaker Change: Now, let's talk about the health of our brands.
Speaker Change: Elliot mobilized our teams this quarter to go bigger and bolder and sports biggest moments.
Speaker Change: As a result, we supported several new product launches across all three brands and also delivered outsized brand impact with emotional storytelling in the air and on the ground in key cities.
Speaker Change: And you felt it.
Speaker Change: To support this action demand creation expenses grew high single digits versus the prior year.
Speaker Change: Last let's discuss inventory inventory.
Speaker Change: <unk> declined 2% versus the prior year.
Speaker Change: But as I said last quarter inventory remains elevated across all geographies as.
Speaker Change: As we implemented our win now actions after inventory was purchased and in transit.
Speaker Change: While we are seeing some increases in customer cancellations. The larger driver of our inventory is the buys for Nike direct.
Speaker Change: In addition across the marketplace. We are beginning to see Air Force one inventory stabilize with current retail sales.
Speaker Change: While our air Jordan, one and dumped remained elevated with continued actions planned to have.
Speaker Change: With that let me turn to our operating segments.
Speaker Change: I will focus my commentary on the progress we have made in each of our geographies on our window actions.
Speaker Change: In North America, Q3 revenue declined 4% Nike direct declined 10% with Nike digital down, 12% and Nike stores down 6%.
Speaker Change: Wholesale increased 3% due primarily to favorable shipment timing and increased shipments to our value partners in the third quarter.
Speaker Change: EBIT declined 21% on a reported basis.
Speaker Change: Throughout the quarter, we delivered bull that inspiring storytelling and key sport moments as Elliot mentioned, which drove heat and energy for our brand training led performance growth this quarter and running grew high single digits.
Speaker Change: In Q3, we hosted dozens of key partners for product engagement and future growth planning, including a summit for partners serving core price points.
Speaker Change: We have taken initial steps to expand distribution to support our expanded core product offering which.
Speaker Change: Which is a meaningful market opportunity for Nike.
Speaker Change: In EMEA Q3 revenue declined 6% Nike direct declined 12% with Nike digital down, 25% and Nike stores up 9% wholesale declined 3% EBIT declined 35% on a reported basis.
In Q3 performance dimensions continued to build momentum fueled by the material in global football and new product launches and running.
We celebrated many juniors best FIFA Men's player award with a short video can't stop the dance featuring the chrome material and we amplify the peg premium launch with a unique activation at the London eye featuring Nike athletes.
Speaker Change: In the marketplace. In addition to taking steps to reposition Nike digital we also started a journey with JD sports sports direct and snipes to elevate our brand physical retail with improved product positioning and visual merchandising.
Speaker Change: In greater China, Q3 revenue declined 15% Nike.
Speaker Change: Nike direct declined 11% with Nike digital down, 20% and Nike stores down 6%.
Speaker Change: Wholesale declined 18%.
EBIT declined 42% on a reported basis.
Speaker Change: In Q3 traffic declined double digits and retail sales underperformed our plan.
Speaker Change: While the macro environment is challenging sport is growing in China, and we must accelerate our pace the.
Speaker Change: The market continues to be promotional especially in consumer moments and in the digital channel and we are taking aggressive steps to clean up the marketplace with the priority being the health of our partners.
Speaker Change: These steps had a negative impact on our revenue and gross margin this quarter.
Speaker Change: At the same time, our team is focused on creating brand distinction through sport and serving consumers with new innovation and hyper local product. We saw strong consumer response to the peg premium and primarily <unk> and running.
Speaker Change: And in basketball, we launched the year of the Mamba with strong growth in Kobe Pro trio we.
Speaker Change: We continue to see locally designed express lane product resonate with strong sell through of our Chinese new year product.
Speaker Change: The opportunity in greater China continues to be significant for Nike.
Speaker Change: Notwithstanding the highly competitive and fast moving dynamics in this marketplace.
Speaker Change: Our brand remains strong.
Speaker Change: But our actions to energize the marketplace will take some time.
Speaker Change: Okay.
Speaker Change: <unk> Q3 revenue declined 4% Nike.
Speaker Change: Nike direct declined 4% with Nike digital down, 8% and Nike stores up 1%.
Speaker Change: Wholesale was down 4% EBIT declined 27% on a reported basis.
Speaker Change: While we saw mixed performance across territories, and APL, a Japan and Latin America, each returned to growth this quarter.
Speaker Change: In Q3, we created energy on the ground and running communities. We launched the after dark tour with incredible response from female runners and executed disruptive race takeovers at the whole Kony Ikea did in Japan, the Mumbai Marathon and the Thailand Marathon.
Speaker Change: This fueled continued momentum in running with growth across footwear and apparel.
Speaker Change: Now, let's look forward.
Speaker Change: Elliott said earlier that we are even more confident that the five wind now actions are the right moves to create better balance in our business and reignite brand momentum.
Speaker Change: So as we begin to have greater clarity and confidence in the steps that we're taking.
Speaker Change: I will provide some additional thoughts on our path forward over the next several quarters.
Speaker Change: First we are accelerating our product portfolio transition.
Speaker Change: We expect sport performance dimensions to lead our growth.
Speaker Change: With a relentless flow of newness across each field of play.
Speaker Change: We are focused on increasing the contribution of newness as a percentage of our over all seasonal assortment.
Speaker Change: Including new models, new colors and new materials.
Speaker Change: At the same time, we are moving fast to right size the contribution of our classics footwear franchises.
Speaker Change: In regards to this transition we are making progress.
Speaker Change: In the last quarter of this fiscal year, we expect our classics footwear franchises will be down by more than 10 points as a percent of our total footwear mix.
Speaker Change: We intend to drive this mix lower in fiscal 'twenty six.
Speaker Change: With total units planned down double digits with the most aggressive actions on the dock.
Speaker Change: Second we are repositioning Nike digital within an integrated marketplace.
Speaker Change: To do this we are reducing promotional days, reducing markdown rates and shifting closeout liquidation to our Nike factory stores.
Speaker Change: Due to these actions and as we continue to reduce investment in paid media, we expect digital traffic to be down double digits in fiscal 'twenty six.
Speaker Change: Gradually we expect organic traffic to stabilize and grow.
Speaker Change: With new product launches and our increased brand marketing investments.
Speaker Change: Third we are cleaning up the marketplace.
For Nike digital we are tightening our buys to support a full price business model.
Speaker Change: For Nike factory stores, we are increasing markdowns to drive velocity of higher volumes of closeout inventory.
Speaker Change: And for our wholesale partners, we are making investments in sales related returns, reducing forward supply and providing higher wholesale discounts to liquidate aged inventory.
Speaker Change: We expect these actions will continue through the first half of fiscal 'twenty six.
Speaker Change: Last.
Speaker Change: When we get back to a steady flow of new product at scale.
Speaker Change: Prove brand engagement.
Speaker Change: Reposition our Nike digital business to complement our wholesale partners.
Speaker Change: And returned to a healthy and clean marketplace.
Speaker Change: We expect our wholesale business to return to growth.
Speaker Change: Each of our geographies have made varying levels of progress on each of these actions.
Speaker Change: And as a result, our working against different timelines.
Speaker Change: But when taken altogether.
Speaker Change: These are the building blocks for Nike to return to sustainable profitable growth.
Speaker Change: Yeah.
Speaker Change: Now I'll turn to our fourth quarter guidance.
Speaker Change: Our second half plan is in line with what we communicated last quarter.
Speaker Change: With some shifts occurring between Q3 and Q4.
Speaker Change: Looking ahead, we believe that the fourth quarter will reflect the largest impact from our wind now actions.
Speaker Change: And at the headwinds to revenue and gross margin will begin to moderate from there.
Speaker Change: We are also navigating through several external factors that create uncertainty in the current operating environment.
Speaker Change: Including geopolitical dynamics, new tariffs volatile foreign exchange rates and tax regulations.
Speaker Change: As well as the impact of this uncertainty and other macro factors on consumer confidence.
Speaker Change: Our fourth quarter guidance includes our best assessment of these factors based on the data we have available to us today.
Speaker Change: We expect Q4 revenues to be down in the mid teens range, albeit at the low end.
Speaker Change: This includes several points of unfavorable shipment timing in North America.
Speaker Change: As well as two points of negative impact from foreign exchange headwinds.
Speaker Change: We expect Q4 gross margins to be down approximately 400 to 500 basis points.
Speaker Change: Including restructuring charges during the same period last year.
Speaker Change: We have included the estimated impact from newly implemented tariffs on imports from China and Mexico.
Speaker Change: We expect Q4 SG&A dollars to be up low to mid single digits, including restructuring charges in the prior year.
Speaker Change: We will continue to tightly manage expenses, while we increased investment to fuel our win now priorities, most notably demand creation.
Speaker Change: We expect other income and expense, including net interest income to be 45 to 55 million for Q4.
Speaker Change: And we expect the tax rate for the full year to be in the mid teens range.
Speaker Change: We are focused on what we can control and for Nike at this moment, serving athletes with new product innovation and reigniting brand momentum is what matters most.
Speaker Change: Our collective experience as well as the early signals, we are seeing with consumers gives us confidence in the path ahead.
Speaker Change: With that I'll turn it back over to Elliot. Thank you Matt.
Elliot: I'll close by taking a minute to talk about my teammates at Nike.
Speaker Change: Look.
Speaker Change: It's been a tough couple of years.
Speaker Change: We've been through a lot of change, but what's encouraging is that in the 150 days since I've been back.
Speaker Change: We've reclaimed our identity.
Speaker Change: Know, who we are Nike, Inc. Is a sports company, we inspire through iconic brands and create innovative products for all athletes.
Speaker Change: It may seem like an obvious direction, but we needed to say it out loud to reawaken the fire in our teams and I have been unrelenting and that message.
Speaker Change: One of the things that makes it special to work at Nike is we invite athletes coaches and teams to our business mediums to spend time with our teammates.
Speaker Change: One conversation that stirred something up and made this quarter.
Speaker Change: As with coach Ryan day coach of the National Champions, The Ohio State Buckeyes.
Speaker Change: He had an answer to the question that really connected with how I'm thinking about our team right now and the tone we're setting.
Speaker Change: The question to him was.
Speaker Change: How do you stay on the offense and what's the key to keeping our program moving forward.
Speaker Change: His answer was at Ohio State applies pressure constantly and all three phases of the game no matter, who he's plan get vertical down the field on offence play suffocating man coverage. So no one no throw as easy go after clients and have as best athletes returning kicks.
He just paint this picture of a team that is relentlessly pushing and challenging being aggressive in making an uncomfortable place to play against.
Speaker Change: I love that attitude.
Speaker Change: And that's how I think about Nike when we're at our best.
Speaker Change: Success for Nike has never been about protecting our turf we force others to play our game, we drive trends grow markets we lead.
Speaker Change: <unk> made it clear that it takes complete by and to be a championship team.
Speaker Change: That's exactly what we're asking of our teammates right now.
Speaker Change: Keep up the intensity.
To move with focus and urgency.
Speaker Change: <unk> passion and take pride in all that we do.
Speaker Change: And to.
Speaker Change: To win as a team.
Speaker Change: With that I'll turn it over for questions.
Speaker Change: Thank you.
Speaker Change: And we will now begin the question and answer session.
Speaker Change: If you have dialed in and would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.
Speaker Change: I would like to withdraw your question Press Star one a second time.
Dan: If you are call Dan.
Speaker Change: If you are called upon to ask your question and our listening via Speakerphone on your device. We ask that you. Please pick up your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: To be able to take as many questions as possible. We ask that you. Please limit yourself to one question.
Speaker Change: Again, it is star one if you would like to join the queue and your first question comes from the line of Lorraine Hutchinson with Bank of America. Your line is open.
Lorraine Hutchinson: Thank you good afternoon.
Lorraine Hutchinson: Can you provide a timeline on when you can classic shoe inventories will be clean in the wholesale channel and then same question towards the direct channel as well.
Lorraine Hutchinson: Thanks for the question Lorraine before I dive.
Speaker Change: Too deeply in to the specific question I do want to start.
Speaker Change: Really quickly because I think it's important to set the tone here on the call for these types of questions that were 90 days ago, we declared five actions to return to growth.
Speaker Change: And what we will say 90 days later I'm, even more convinced that these are the right actions to move our brand and business forward.
Speaker Change: These win now actions really start with our culture, our product portfolio, which is a question that youre asking here and I'll dive into that here in just a second.
Speaker Change: Shaping our brand for the strength distinction elevating to grow in the marketplace and winning on the ground and what we did add to our teams after coming off the call was providing them a sharp focus on which sports we have five sports running basketball football training and sportswear three key countries outlined for you and then the five cities. So.
Speaker Change: So the teams are really rallying around this win now.
Speaker Change: <unk>, even calling it the $5 five to three five so now let me let me jump more specifically in the product for you and I will also start start a little higher level before I dive into.
Speaker Change: The specific question around.
Speaker Change: The key franchises.
What we are going to run a balanced and complete portfolio Thats why I want to make sure everybody on the call here is that we're going to run that through all three brands Nike Jordan converse.
Speaker Change: Across performance and sportswear men's women's kid's footwear pro accessories, and up and down price points, and we're going to be sharper on specific sports and I touched on those already so I'll dive too deeply on those five sports, but we have said teens up against each of those four times gender.
Speaker Change: And we have small teams cross functional teams, taking the insights from those ports and those consumers and driving innovative products. So I feel good about where the team is heading on the performance side.
Speaker Change: The business and we're starting to see some great success and I am sure. We will hit on that here in a moment, what I'd say about franchise management and to answer your question specifically specifically.
Speaker Change: Is that we have decade long experience of managing franchises and I will also say this we had the three air force one Doc AJ one they are still beloved silhouettes. So.
Speaker Change: So it's not about.
Speaker Change: Sunsetting needs, it's about right sizing them and we asked our teams to accelerate our actions.
Speaker Change: Matt spoke to in his prepared remarks of right sizing that inventory. So that we can get back to running that complete and balanced portfolio and so we're confident that we're making the right moves from a performance perspective, and we're seeing some wins, there running and training that Matt touched on and we're <unk>.
Speaker Change: Size into three key franchises and at the same time starting to plant some newness in the sportswear side of our business.
Speaker Change: With Romero five P 6000 shocks, we touched on some of these Super fly Air Max News and Air Max 95, So feel like the teams are taken all the right actions against those key footwear franchises right sizing the inventory and getting back to running a relentless flow of innovative and coveted products.
Lorraine Hutchinson: Hey, Lorraine I will just add that.
Lorraine Hutchinson: What I said in my prepared remarks was that we intend to drive we've made really good progress over the past year and as Elliot came in he challenged the teams to increase the pace at which we reduce the supply of those three franchises in the marketplace and as a result of that it had some impact on our Q4 <unk>.
Lorraine Hutchinson: Winds that we talked about.
Lorraine Hutchinson: But it's going to it will continue to be a headwind.
Lorraine Hutchinson: In fiscal year 'twenty six by the time, we exit Q4, we expect that we will have reduced the contribution of those franchises by 10 percentage points as a percent of our overall footwear mix and we intend to drive that down more in fiscal year 'twenty six.
Lorraine Hutchinson: When I think about it through the lens of channels, what I would say to you is that.
Lorraine Hutchinson: On the Nike direct side and the digital side in particular.
Lorraine Hutchinson: We're already taking action as Elliot and I, both outlined to reduce the number of promotional days and to reducing the discounts that we that we see in the marketplace. The challenge we have in the near term is that we were buying against a different plan.
Lorraine Hutchinson: And so we've tightened the buys against Nike digital, but we really did that towards the end of summer and heading into fall that inventory will not end up in the digital channel, we will directly transition it to our factory stores and we will clean it in a value channel like we like we typically do as we clean up the season on the wholesale side, we're making investments and I talked about.
Lorraine Hutchinson: Us.
Lorraine Hutchinson: Needing to use the first half of fiscal year 'twenty six in order to be able to clean up the marketplace and.
Lorraine Hutchinson: What I would tell you there is that the combination of the actions that we're taking in digital plus the actions that we've communicated and work through with our partners. We're already starting to see fruit and what I mean by that is one inventory of Air Force. One is beginning to stabilize with retail sales for Air Force one, but secondly, when you look at the.
Lorraine Hutchinson: Order book and wholesale for our partners in North America, EMEA, and APAC, where we are seeing.
Lorraine Hutchinson: Growth in the performance dimensions of our business plus newness in sportswear almost offset the declines we're managing in the classic footwear franchises and that gives us a lot of confidence that our partners are coming behind us and that we are moving down the right path to.
Lorraine Hutchinson: To affect the cleanup.
Lorraine Hutchinson: Yeah.
Speaker Change: And your next question comes from the line of Brooke Roach with Goldman Sachs. Your line is open.
Brooke Roach: Good afternoon, and thank you for taking our question.
Brooke Roach: I was hoping to get your latest thoughts on innovation within Nike.
Brooke Roach: How do you feel about the strength of your innovation team and the pipeline ahead and how are you thinking about innovating into some of the sportswear franchises as we look into fiscal 'twenty six thank you.
Brooke Roach: Okay.
Brooke Roach: Yes, Thank you Brook.
Speaker Change: Let me first start on innovation and when we think about innovation, we think about it really in two four if we have long term.
Let's call it three to plus five years, and we have a dedicated team.
Speaker Change: Against that over at our La Brian James Nike Sports Research lab, and what I would say I'm really confident in the team that we have there.
Speaker Change: And not only the team, but the work that they are doing long term, creating new new innovation.
Speaker Change: <unk>, so thats a little longer term I spent a lot of time with John Hogan his team over there and and excited about some of the products that are coming through the Nike Sports Research lab shorter term.
Speaker Change: And more near term.
Speaker Change: Again I touched on it in my first answer and it's really coming back to.
Speaker Change: Driving newness and freshness against performance and sportswear men's women's kid's footwear apparel and accessories, not just footwear and we've got some really interesting innovation coming.
Speaker Change: From apparel I'd touch on it briefly.
Speaker Change: And in my prepared remarks around $24 seven and that is it comes out of our training line, but it is also viewed as sportswear and Theres. Some innovation, there and I'm really pleased with the sell through on 24 seven.
Speaker Change: And the reorders that or comment on on that from an apparel perspective, and then on a footwear perspective will continue to right size. The three franchise that I touched on we still believe all three of them are meaningful products and then youll see us continue to invest in innovation around.
Speaker Change: Sportswear.
Speaker Change: On some of those products.
Speaker Change: <unk> 6000 shocks shocks as having a really building some momentum air Max 95, et cetera, and then I'll just close out the year Brooke.
Speaker Change: This week, we had our spring 'twenty six.
Speaker Change: Product review, where we re all of our.
Speaker Change: Partners here to the campus to go through our.
Speaker Change: Our spring 'twenty six line in what I'll tell you is.
Speaker Change: We are all excited about the products that are coming for shrink spring 'twenty six we're starting to see our win now focus on accelerating our product portfolio against these five sports running basketball football training and sportswear paying dividends I'm really excited about the work I saw there and.
Speaker Change: While I have you I'll just add one other thing that I saw that I was excited about we are also working on elevating the marketplace and the retail team has done some phenomenal work around elevating our presentation at both wholesale and physical retail and so excited about some of that work. So overall.
Speaker Change: Our innovation pipeline is there and we just now have to flow through it to get back to building the brand and the business.
Speaker Change: Okay.
Speaker Change: And your next question comes from the line of Alicia Sherman with Bernstein. Your line is open.
Alicia Sherman: Thank you so much.
Alicia Sherman: That's my follow up on the comment that you just made about the spring 'twenty fixed product review based on some of the comments earlier from that around performance growth almost offsetting classics declines do you expect that inflection point to be in spring 'twenty six time I know you don't have the orders yet but is that when you expect performance growth to more than offset classics in your total wholesale order book to <unk>.
Paul Trussell: Grow and then Matt a follow up on your comments on gross margins you talked about Holdco liquidations that H. One you know I know youre not giving margin guidance for next year, but are you generally expecting a gradual progression in gross margins through the year at some of those liquidations roll off and then you get a stronger order book in the second half.
Alicia Sherman: Yes.
Alicia Sherman: Let me here's where.
Alicia Sherman: We're absolutely gaining confidence in the product pipeline.
Alicia Sherman: In the fall you know Matt already touched on some of the order book on fall in North America.
Alicia Sherman: And EMEA is definitely gaining confidence around the order book fall holiday and then like I said, the sneak peek into 'twenty six.
Alicia Sherman: The key here, though is how quickly we can clean up the marketplace. That's why you see some of the.
Alicia Sherman: The results that we have in Q4, and then resetting both the digital and physical marketplaces to receive this innovation, making certain that we presented.
Alicia Sherman: The way that we believe we need to present the product at point of sale digital physical so that we drive the sell through and so that's where we have the teams focus right now the brand I believe we've already started to invest and we did that early I see product coming now and that excites me and so I feel good about that now we've got to reset the <unk>.
Place and make sure that we get the <unk>.
Alicia Sherman: The sell through and it's that sell through that's going to continue to drive the order book and get us back to profitable sustainable growth.
Speaker Change: Yeah, and I, just would add that last quarter, we said that the fourth quarter was going to have.
Speaker Change: The largest the greatest impact from the window actions that Elliott outlined and.
Speaker Change: We continue to believe this is true and it's on our plan.
Speaker Change: But we can also tell you that we now expect Q4 to reflect the largest impact from these win now actions and that the headwinds to revenue and margin, we expect to moderate from there and so what I. How I think you translate that nishu as you start to look forward as we've tried to lay out each of these actions.
Speaker Change: And the implications that they have as we start to think about heading into 'twenty six and we expect that these headwinds will continue in 'twenty six.
Speaker Change: And.
Speaker Change: As Elliot referenced while we're going to have positive things beginning vis vis greater full price selling and digital and we're going to have.
Speaker Change: Our clean and full price order book with our wholesale partners.
Speaker Change: We are going to continue to be liquidating inventory and we expect that that's going to take us several quarters to work through but the reason why we're confident is because we know we will be liquidating it through the channels, where we're used to liquidating that inventory.
Speaker Change: We will continue to be transparent as we've got greater visibility as we.
Speaker Change: As we get into fiscal 'twenty six.
Speaker Change: But we're still in the early days of executing against these partnerships and.
Speaker Change: I'm sorry, we're still in the early days of executing against these priorities.
Speaker Change: And we remain committed to providing guidance and financial updates every 90 days.
Speaker Change: And your next question comes from the line of Simeon Siegel with BMO. Your line is open.
Simeon Siegel: Thanks, Hi, everyone. Good afternoon.
Simeon Siegel: Elliot I'm curious how are you going to balance the promotional display as you think about the presentation and to bring up promotions at the same time that its clear you could give your excitement around the new product and Youre amplifying storytelling just from a consumer's perspective, how do you tell them. This exciting story, while still clearing the product. So how are you going to protect that and maybe segment that.
Matt Friend: And then Matt.
Speaker Change: It seems operating overhead versus demand creation trajectory flipped in recent years. So as you re embracing all celgene reimbursing elevating any thoughts as to just the right level long term overhead versus demand creation is the rate of sales. Thanks guys.
Matt Friend: Yeah.
Speaker Change: I think I'd be fairly brief here.
Speaker Change: Matt touched on some of the headwinds to the P&L and one of them is us.
Speaker Change: Taking product returns, we're returning product from our wholesale partners. So we're bringing the product that's not selling out of the market.
Speaker Change: And then we will liquidate that through our value stores Nike value stores to make room for the new innovation and so and it's already starting to and by the way. We're doing the same thing not only in the physical space, but we're also doing it or excuse me, we're doing it in a digital space as well.
Speaker Change: Touched on.
Speaker Change: How we've already moved Nike direct digital to a full price.
Speaker Change: Presentation really elevating the assortment the presentation to user experience and so we're moving the the.
Speaker Change: Both digital and physical owned and partnered.
Speaker Change: Retail floor sets to full price as quickly as possible and then we will use the value channels to move through the excess inventory I think the last I'll just kind of finish here. The best example of that is how we're going to reset running we've had some great examples of peg premium this quarter.
Speaker Change: Romero 18, this quarter, both new innovations with great storytelling, great presentation, and we've had wonderful sell throughs on those and then Youll see that Simeon continue to flow into fall fall and holiday of Q1 Q2 of 2006 with a full range of products.
Speaker Change: And running.
Speaker Change: Across three different silos of running Romero peg structure, three different price points trail running and then of course, our racing flat.
Speaker Change: That was one of the floor sets that I saw over at the spring 'twenty six and again it looks amazing so we're trying to get our our marketplace to full price as quickly as possible.
Speaker Change: And feel like the teams are moving.
Speaker Change: With a sense of urgency.
Speaker Change: And with on the SG&A side.
Speaker Change: Set for a couple of quarters that we continue to manage our expenses and what I meant by that specifically was overhead tightly.
Speaker Change: While we accelerate investment in demand creation, and so our demand creation being up high single digits, 8%. This quarter is truly a reflection of Elliott coming in and.
Speaker Change: Challenging the team to elevate our storytelling with impact and it's the easiest lever for us to Paul and the team mobilized around the Super Bowl and the all Star weekend and.
Speaker Change: The product launches for peg into Mero, but also the way that they executed on the ground those activities in the cities in which we were we were focused.
Speaker Change: As we look forward I think we're going to continue to manage expenses tightly.
Speaker Change: Think that part of what Youre seeing this quarter in the double digit decline in operating overhead is some of the variable expense from direct coming down flowing through the P&L. You're also seeing the great work. Our teams have done from a productivity perspective and in managing against some of the productivity goals that we had said several quarters ago.
Speaker Change: <unk>.
If you look at our operating overhead growth, excluding the restructuring impact in the prior year it was down 3%.
Speaker Change: And we are focused on ensuring that we invest behind our sales organizations are key city themes on the one end and on the other end, making sure that we've got the right resources in product.
Speaker Change: And in <unk>.
Speaker Change: Innovation and so we will continue to do that.
Speaker Change: And we will continue to try to do it while we manage expenses tightly.
Speaker Change: As we look forward to.
Speaker Change: Returning to growth.
Speaker Change: Okay.
Alex: And your next question comes from the line of Alex <unk> with Morgan Stanley. Your line is open.
Speaker Change: Thanks, so much for taking the question I just wanted to focus on wholesale here and maybe for Elliot as you've kind of returned to that channel and gotten back in the Max I'm. Just curious your biggest learning there any surprises to the upside or downside versus hanging historically operated there with all of your knowledge.
Matt Friend: And maybe then for Matt you just mentioned wholesale discounts as a headwind what should continue our historical wholesale margins still in view.
Matt Friend: Or are those structurally lower just curious for your latest thoughts there. Thanks a lot.
Matt Friend: Thank you.
Matt Friend: Okay.
Matt Friend: Here it.
Matt Friend: It may be a surprise.
Matt Friend: We were probably working private too siloed direct versus wholesale.
Matt Friend: Yeah, and again I think to really drive.
Matt Friend: The potential of our brand and our revenue and to meet consumers' needs. It.
Matt Friend: Gotta be integrated it's got to be an aligned approach to both direct and wholesale digital and physical it all has to work together in a consistent equal ecosystem.
Matt Friend: So I'm really driving hard this idea of an integrated consumer led marketplace, let the consumer decide where they want to choose to shop.
Matt Friend: Made two moves Craig Williams that we've put.
Matt Friend: Put in place two new leaders one in Nike direct Shannon glass and then the other one in sales Erica Bullard, both long term industry veterans and Nike Veterans fact, we can put them sitting next to up on our forward together.
Matt Friend: We have offices right outside of one another and they work hand in hand, and making certain like literally almost physically.
Matt Friend: I told all of those to have got to work together everywhere. They go and make certain that we stay aligned and I think they're doing a tremendous job.
Matt Friend: Really making certain that we have an integrated approach to the overall marketplace. So I'd say thats, probably number one number two.
Matt Friend: We just got out of a rhythm of working closely with our wholesale partners that was a bit of a surprise and we are quickly getting back to we've got cross functional teams were having key account planning meetings now with these with our wholesale partners. We're working through unwind growth plans, we're working on.
Matt Friend: Right Assortments in the right depth, we're working now to elevate the presentation of our brand and you know all too well when we have beautiful innovative product and we elevate the presentation. It really helps.
Matt Friend: Sell through the product and marketing support so again I'm confident in the progress we're making.
Matt Friend: It's going to take time to build back all of the teams around.
Matt Friend: Around the world and Thats why we have the three key countries, where we're trying to focus United States, China and the U K. So that our teams know where we're going to focus our investments and resources. So all in all.
Matt Friend: The wholesale partners they want it they want and need us to get back to be a Nike.
Matt Friend: And from a margin perspective.
Speaker Change: What I would say is that over the past several years Alex.
Speaker Change: The profit pool in wholesale has been relatively volatile theres been a lot of things that have happened with supply chain disruption ocean freight rates moving the supply demand imbalances and as a result of that we've all navigated through many things in order to be able to.
Speaker Change: To manage the profitability of the channel.
Speaker Change: One of the things that we did a couple of years ago. As we were seeing a significant demand versus supply and balanced meeting an incredible amount of demand and less supply is we actually lowered our wholesale discount rates in order to offset other headwinds that we were dealing with.
Speaker Change: From a freight and transportation perspective, and so we are investing in commercial terms, but we're putting them back to historical levels and so and we believe that by doing that will be competitive it will enable us and our partners to have mutually profitable businesses and also have the capacity that we need in order to.
Speaker Change: Be able to invest in the presentation of our brand at retail which is ultimately what wins at the end of the day.
Speaker Change: And your final question comes from the line of Randy <unk> with Jefferies. Your line is open.
Yeah, Thanks, a lot.
Speaker Change: <unk>.
Speaker Change: Elliot maybe give us some perspective I think you spoke about a lot of things youre doing with urgency in China, but maybe give us a progress report on where you see the different geos.
Speaker Change: From all the strategies, you're undertaking give it some perspective, where you're furthest along we're furthest along but that'd be very helpful. Thanks.
Speaker Change: Yes.
Speaker Change: I think the.
Speaker Change: The key here Randy is as we think about our overall portfolio is that we have 190 countries that all roll up to four different geographies and we're working closely with the leaders of each of the Geos in countries to implement the win now strategy because again the strategy works no matter. If you are in.
Speaker Change: The United States or in Japan. It all goes back to putting the consumer at the center right product storytelling marketplace and so.
Speaker Change: Matt in his prepared remarks touched on EMEA.
Speaker Change: EMEA.
Speaker Change: In North America, being where they are at almost in terms of futures.
Speaker Change: In performance and looks of sportswear offsetting and so we're I think making progress in each of those three geos in terms of China, Here's what I'd say about China.
Speaker Change: <unk>.
Speaker Change: We remain.
Speaker Change: <unk> committed to China, we see.
Speaker Change: The long term opportunity there there's one three.
Speaker Change: And consumers and it's our opportunity and what we've always done there is to invite and inspire those one 3 billion consumers into sport fitness in the lifestyles for and our team is doing a good job there.
Speaker Change: We have also made some significant investments in China, whether it's around some of the.
Speaker Change: Big.
Speaker Change: Teams like the national basketball team, the track and field team and the football team. So we've made big investments there we've got now a product.
Speaker Change: All creation arm that we called Geo Express Lane in China. So overall.
I think we've made the right investments what I will say I spent some time over there in December hadn't been over there in a while.
Speaker Change: The competition is a bit more aggressive aggressive.
Speaker Change: Then I had when I remember four five years ago, and so we've just got to accelerate our pace. Good news is we're starting still is the number one brand there.
Speaker Change: We're working closely with Angela and her team to implement these win now strategies.
Speaker Change: We're cleaning up the promotional marketplace, just like we're doing everywhere to make room for new innovation.
Speaker Change: Getting back to elevating Nike direct and digital and then working closely with our two big partners.
Speaker Change: Make certain that we're invested in consumer led concepts with a focus on performance running training basketball Jordan ACG put the right Assortments that presentation all of the things that I've talked a lot about but in the end I believe we're taking all the right actions in them and were confident in the long term opportunity in China.
Speaker Change: And when you look at the financial performance for China in the quarter.
Speaker Change: What I tried to highlight was the amount of actions that we took in the quarter.
Speaker Change: Between marketplace returns rebates.
Speaker Change: And also some investments that we're making to liquidate inventory.
Speaker Change: And given that it's a mono brand market as Elliot mentioned, it's going to take us time to execute the win now in China. So we weren't aggressive because the faster we can clean up the marketplace and create the capacity and the space to present, the new product stories, the new product Assortments that were excited about that are coming.
Speaker Change: The quicker we're going to create energy with consumers will see that's when we should see traffic start to improve and we should start to build momentum more momentum in that marketplace. So as we look at that we just expect it is going to take us some time to be able to execute this.
Speaker Change: And ladies and gentlemen that concludes our question and answer session as well as today's conference call. We thank you for your participation and you may now disconnect.
Speaker Change: Yeah.
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