Nike Inc.

07/17/2025 | Press release | Distributed by Public on 07/17/2025 14:26

Annual Report for Fiscal Year Ending MAY 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
NIKE designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and services worldwide. We are the largest seller of athletic footwear and apparel in the world. We sell our products through two distribution channels: NIKE Direct operations, which are comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital"), and to wholesale accounts, which include a mix of independent distributors, licensees and sales representatives in nearly all countries around the world. Our goal is to deliver value to our shareholders by building a profitable global portfolio of branded footwear, apparel, equipment and accessories.
Our strategy is to achieve sustainable, profitable long-term revenue growth by leading with sport, creating innovative, "must-have" products, building deep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms and at retail.
FISCAL 2025 FINANCIAL HIGHLIGHTS
•NIKE, Inc. Revenues for fiscal 2025 were $46.3 billion compared to $51.4 billion for fiscal 2024
•NIKE Direct revenues declined 13% from $21.5 billion in fiscal 2024 to $18.8 billion in fiscal 2025, and represented approximately 42% of total NIKE Brand revenues for fiscal 2025
•NIKE Brand wholesale revenues decreased 7% on a reported basis and 6% on a currency-neutral basis
•Gross margin decreased 190 basis points to 42.7%, primarily due to higher discounts, changes in channel mix and higher inventory obsolescence reserves, partially offset by lower product costs
•Inventories as of May 31, 2025 were $7.5 billion, flat compared to the prior year
•We returned $5.3 billion to our shareholders in fiscal 2025 through share repurchases and dividends
•Return on Invested Capital ("ROIC") was 20.2% as of May 31, 2025, compared to 34.9% as of May 31, 2024. ROIC is considered a non-GAAP financial measure, see "Use of Non-GAAP Financial Measures" for additional information.
Our results for fiscal 2025 reflected a decrease in traffic across NIKE Direct and our actions to reduce supply of certain footwear products in the marketplace through increased markdowns across NIKE Direct and discounts and higher sales returns with our wholesale partners, which negatively impacted our Revenues and gross margin.
For discussion related to the results of operations and changes in financial condition for fiscal 2024 compared to fiscal 2023 refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2024 Form 10-K, which was filed with the United States Securities and Exchange Commission on July 25, 2024.
2025 FORM 10-K 29
FACTORS IMPACTING OUR BUSINESS
We are navigating through several external factors that create uncertainty and volatility in the operating environment including, but not limited to, geopolitical dynamics, tax regulation, fluctuating foreign exchange rates and new tariffs. As a result of the new tariffs, we expect to incur a material gross incremental increase to Cost of sales. Over the next several quarters, we are taking actions to mitigate the impact of the new tariffs, however for fiscal 2026, we expect a negative impact on gross margin. We will continue to monitor changes to the import and export policies of the U.S. and other countries that could require us to change the way in which we do business. These factors, and any changes to these factors, among others, could have a material adverse impact on consumer behavior and on our future Revenues and overall profitability.
Despite these factors, we are focused on driving distinction within key sports, building a complete product portfolio, creating stories to inspire and emotionally connect with consumers, and elevating and growing the entire marketplace as we continue to take actions across the following areas:
•Product Management:Reducing the supply of certain footwear products in the marketplace as we shift to new and innovative products and rebalance the mix of our footwear portfolio.
•Marketplace Management: Repositioning NIKE Brand Digital as a full-price platform and reinvesting in wholesale distribution. This includes liquidating inventory through increased markdowns across NIKE Direct, and higher sales returns and discounts with our wholesale partners to reduce inventory and create capacity for new product.
•Brand Management: Increasing investment in demand creation including brand marketing and sports marketing to support key product launches and sports moments.
These actions have had, and in the future could have, a negative impact on our Revenues and gross margin as well as higher Demand creation expense. However, we believe these actions will reignite brand momentum and reposition our business to drive long-term shareholder value.
For more information refer to Item 1A Risk Factors, within Part 1, Item 1, Business.
USE OF NON-GAAP FINANCIAL MEASURES
Throughout this Annual Report on Form 10-K, we discuss non-GAAP financial measures, which should be considered in addition to, and not in lieu of, the financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). References to these measures should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Management uses these non-GAAP measures when evaluating the Company's performance, including when making financial and operating decisions. Additionally, management believes these non-GAAP financial measures provide investors with additional financial information that should be considered when assessing our underlying business performance and trends.
Earnings Before Interest and Taxes ("EBIT"): Calculated as Net income before Interest expense (income), net and Income tax expense in the Consolidated Statements of Income. Total NIKE, Inc. EBIT for fiscal 2025, 2024 and 2023 are as follows:
YEAR ENDED MAY 31,
(Dollars in millions)
2025 2024 2023
Net income $ 3,219 $ 5,700 $ 5,070
Add: Interest expense (income), net (107) (161) (6)
Add: Income tax expense 666 1,000 1,131
EARNINGS BEFORE INTEREST AND TAXES
$ 3,778 $ 6,539 $ 6,195
EBIT Margin: Calculated as total NIKE, Inc. EBIT divided by total NIKE, Inc. Revenues. Our EBIT Margin calculation for fiscal 2025, 2024 and 2023 are as follows:
YEAR ENDED MAY 31,
(Dollars in millions)
2025 2024 2023
Numerator
Earnings before interest and taxes $ 3,778 $ 6,539 $ 6,195
Denominator
Total NIKE, Inc. Revenues $ 46,309 $ 51,362 $ 51,217
EBIT MARGIN
8.2% 12.7% 12.1%
2025 FORM 10-K 30
Return on Invested Capital ("ROIC"): Represents a performance measure that management believes is useful information in understanding the Company's ability to effectively manage invested capital. Our ROIC calculation as of May 31, 2025 and 2024 is as follows:
FOR THE TRAILING FOUR QUARTERS ENDED
(Dollars in millions) MAY 31, 2025 MAY 31, 2024
Numerator
Net income $ 3,219 $ 5,700
Add: Interest expense (income), net (107) (161)
Add: Income tax expense 666 1,000
Earnings before interest and taxes 3,778 6,539
Income tax adjustment(1)
(645) (976)
Earnings before interest and after taxes $ 3,133 $ 5,563
AVERAGE FOR THE TRAILING FIVE QUARTERS ENDED
MAY 31, 2025 MAY 31, 2024
Denominator
Total debt(2)
$ 11,814 $ 12,110
Add: Shareholders' equity 13,926 14,155
Less: Cash and equivalents and Short-term investments 10,236 10,309
Total invested capital $ 15,504 $ 15,956
RETURN ON INVESTED CAPITAL 20.2% 34.9%
(1)Equals Earnings before interest and taxes multiplied by the effective tax rate as of each of the respective quarter ends.
(2)Total debt includes the following: 1) Current portion of long-term debt, 2) Notes Payable, 3) Current portion of operating lease liabilities, 4) Long-term debt and 5) Operating lease liabilities.
Currency-neutral revenues: Currency-neutral revenues enhance visibility to underlying business trends, excluding the impact of translation arising from foreign currency exchange rate fluctuations. Currency-neutral revenues are calculated using actual exchange rates in use during the comparative prior year period in place of the exchange rates in use during the current period.
COMPARABLE STORE SALES
Comparable store sales: This key metric, which excludes NIKE Brand Digital sales, comprises revenues from NIKE-owned in-line and factory stores for which all three of the following requirements have been met: (1) the store has been open at least one year, (2) square footage has not changed by more than 15% within the past year and (3) the store has not been permanently repositioned within the past year. Comparable store sales represents a performance metric that we believe is useful information for management and investors in understanding the performance of our established NIKE-owned in-line and factory stores. Management considers this metric when making financial and operating decisions. The method of calculating comparable store sales varies across the retail industry. As a result, our calculation of this metric may not be comparable to similarly titled metrics used by other companies.
2025 FORM 10-K 31
RESULTS OF OPERATIONS
(Dollars in millions, except per share data)
FISCAL 2025 FISCAL 2024 % CHANGE FISCAL 2023 % CHANGE
Revenues $ 46,309 $ 51,362 -10 % $ 51,217 0 %
Cost of sales 26,519 28,475 -7 % 28,925 -2 %
Gross profit 19,790 22,887 -14 % 22,292 3 %
Gross margin 42.7 % 44.6 % 43.5 %
Demand creation expense 4,689 4,285 9 % 4,060 6 %
Operating overhead expense 11,399 12,291 -7 % 12,317 0 %
Total selling and administrative expense 16,088 16,576 -3 % 16,377 1 %
% of revenues 34.7 % 32.3 % 32.0 %
Interest expense (income), net (107) (161) - (6) -
Other (income) expense, net (76) (228) - (280) -
Income before income taxes 3,885 6,700 -42 % 6,201 8 %
Income tax expense 666 1,000 -33 % 1,131 -12 %
Effective tax rate 17.1 % 14.9 % 18.2 %
NET INCOME $ 3,219 $ 5,700 -44 % $ 5,070 12 %
Diluted earnings per common share $ 2.16 $ 3.73 -42 % $ 3.23 15 %
2025 FORM 10-K 32
CONSOLIDATED OPERATING RESULTS
REVENUES
(Dollars in millions)
FISCAL 2025 FISCAL 2024 % CHANGE
% CHANGE EXCLUDING CURRENCY CHANGES(1)
FISCAL 2023 % CHANGE
% CHANGE EXCLUDING CURRENCY CHANGES(1)
NIKE, Inc. Revenues:
NIKE Brand Revenues by:
Footwear $ 29,510 $ 33,427 -12 % -11 % $ 33,135 1 % 1 %
Apparel 12,965 13,775 -6 % -5 % 13,843 0 % 0 %
Equipment 2,191 2,075 6 % 6 % 1,727 20 % 20 %
Global Brand Divisions(2)
48 45 7 % 10 % 58 -22 % -25 %
TOTAL NIKE BRAND REVENUES
$ 44,714 $ 49,322 -9 % -9 % $ 48,763 1 % 1 %
Converse 1,692 2,082 -19 % -18 % 2,427 -14 % -15 %
Corporate(3)
(97) (42) - - 27 - -
TOTAL NIKE, INC. REVENUES $ 46,309 $ 51,362 -10 % -9 % $ 51,217 0 % 1 %
Supplemental NIKE Brand Revenues Details:
NIKE Brand Revenues by:
Sales to Wholesale Customers $ 25,883 $ 27,758 -7 % -6 % $ 27,397 1 % 2 %
Sales through NIKE Direct 18,783 21,519 -13 % -12 % 21,308 1 % 1 %
Global Brand Divisions(2)
48 45 7 % 10 % 58 -22 % -25 %
TOTAL NIKE BRAND REVENUES $ 44,714 $ 49,322 -9 % -9 % $ 48,763 1 % 1 %
Supplemental NIKE Brand Revenue Details:
NIKE Brand Revenues by:(4)
Men's $ 23,216 $ 24,785 -6 % -6 % $ 24,445 1 % 2 %
Women's 9,719 10,366 -6 % -5 % 10,274 1 % 2 %
Kids'
5,695 6,019 -5 % -5 % 5,889 2 % 2 %
Jordan Brand 7,270 8,701 -16 % -16 % 8,460 3 % 3 %
Others(5)
(1,234) (594) -108 % -106 % (363) -64 % -67 %
Global Brand Divisions(2)
48 45 7 % 10 % 58 -22 % -25 %
TOTAL NIKE BRAND REVENUES
$ 44,714 $ 49,322 -9 % -9 % $ 48,763 1 % 1 %
(1)The percent change excluding currency changes represents a non-GAAP financial measure. For additional information, see "Use of Non-GAAP Financial Measures".
(2)Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
(3)Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
(4)Beginning in fiscal 2025, with the continued rollout of a new Enterprise Resource Planning Platform, we have removed the non-GAAP financial measure of wholesale equivalent revenues. There is no change to our reported revenues or gross margin. Prior year amounts have been recast to conform to fiscal 2025 presentation.
(5)Others include products not allocated to Men's, Women's, Kids' and Jordan Brand, as well as certain adjustments that are not allocated to products designated by consumer.
2025 FORM 10-K 33
FISCAL 2025 NIKE BRAND REVENUE HIGHLIGHTS
The following tables present NIKE Brand revenues disaggregated by reportable operating segment, distribution channel and major product line:
FISCAL 2025 COMPARED TO FISCAL 2024
•NIKE, Inc. Revenues were $46.3 billion in fiscal 2025 compared to $51.4 billion for fiscal 2024, which decreased 10% and 9% on a reported and currency-neutral basis, respectively. On a currency-neutral basis, the decrease was primarily due to lower revenues in North America, Europe, Middle East & Africa ("EMEA") and Greater China which each decreased NIKE, Inc. Revenues by 4, 3 and 2 percentage points, respectively.
•NIKE Brand revenues, which represented over 90% of NIKE, Inc. Revenues, decreased 9% on both a reported and currency-neutral basis. The decrease, on a currency-neutral basis, was due to lower revenues in Men's, the Jordan Brand, Women's and Kids'.
•NIKE Brand footwear revenues decreased 11% on a currency-neutral basis. Unit sales of footwear decreased 8%, while lower average selling price ("ASP") per pair reduced footwear revenues by approximately 3 percentage points. Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by strategic pricing actions.
•NIKE Brand apparel revenues decreased 5% on a currency-neutral basis. Unit sales of apparel decreased 5%, while ASP per unit was flat as strategic pricing actions were offset by changes in channel mix and higher discounts.
•NIKE Brand wholesale revenues decreased 7% on a reported basis and 6% on a currency-neutral basis, compared to fiscal 2024. The decrease, on a currency-neutral basis, was driven by lower revenues across all geographies.
•NIKE Direct revenues were $18.8 billion in fiscal 2025 compared to $21.5 billion in fiscal 2024. On a currency-neutral basis, NIKE Direct revenues decreased 12% due to declines in NIKE Brand Digital sales of 20% from $12.1 billion in fiscal 2024 to $9.6 billion in fiscal 2025, while NIKE store sales were flat. Comparable store sales decreased 1%. For additional information regarding comparable store sales, including the definition, see "Comparable Store Sales".
2025 FORM 10-K 34
GROSS MARGIN
FISCAL 2025 COMPARED TO FISCAL 2024
For fiscal 2025, our consolidated gross profit decreased 14% to $19,790 million compared to $22,887 million for fiscal 2024. Gross margin decreased 190 basis points to 42.7% for fiscal 2025 compared to 44.6% for fiscal 2024 due to the following:
•Lower NIKE Brand ASP (decreasing gross margin approximately 180 basis points), primarily due to higher discounts and changes in channel mix, partially offset by strategic pricing actions;
•Higher other costs (decreasing gross margin approximately 90 basis points), including higher inventory obsolescence reserves;
•Lower gross margin from Converse (decreasing gross margin approximately 20 basis points); and
•Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 10 basis points).
This was partially offset by:
•Lower NIKE Brand product costs (increasing gross margin approximately 80 basis points);
•Lower warehousing and logistics costs (increasing gross margin approximately 20 basis points); and
•Restructuring charges in the prior year (increasing gross margin approximately 10 basis points).
TOTAL SELLING AND ADMINISTRATIVE EXPENSE
(Dollars in millions)
FISCAL 2025 FISCAL 2024 % CHANGE FISCAL 2023 % CHANGE
Demand creation expense(1)
$ 4,689 $ 4,285 9 % $ 4,060 6 %
Operating overhead expense(2)
11,399 12,291 -7 % 12,317 0 %
Total selling and administrative expense $ 16,088 $ 16,576 -3 % $ 16,377 1 %
% of revenues 34.7 % 32.3 % 240 bps 32.0 % 30 bps
(1)Demand creation expense consists of brand marketing expense and sports marketing expense. Brand marketing expense includes advertising and promotion costs such as production and media costs, digital marketing expense, brand events and retail brand presentation costs. Sports marketing expense includes expenses related to endorsement contracts, complimentary product and sports marketing events.
(2)Operating overhead expense consists primarily of wage and benefit-related expenses and other administrative expenses, such as research and development costs, bad debt expense, rent, depreciation and amortization and costs related to professional services, certain technology investments, meetings and travel.
FISCAL 2025 COMPARED TO FISCAL 2024
Demand creation expense increased 9%, due to higher brand marketing expense, reflecting investment in key sports events, and higher sports marketing expense. Changes in foreign currency exchange rates did not have a material impact on Demand creation expense.
Operating overhead expense decreased 7%, due to restructuring charges in the prior year, lower wage-related expenses and lower other administrative costs. Changes in foreign currency exchange rates did not have a material impact on Operating overhead expense.
2025 FORM 10-K 35
OTHER (INCOME) EXPENSE, NET
(Dollars in millions)
FISCAL 2025 FISCAL 2024 FISCAL 2023
Other (income) expense, net $ (76) $ (228) $ (280)
Other (income) expense, net comprises foreign currency conversion gains and losses from the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, as well as unusual or non-operating transactions that are outside the normal course of business.
FISCAL 2025 COMPARED TO FISCAL 2024
Other (income) expense, net decreased from $228 million of other income, net, to $76 million of other income, net, primarily due to a net unfavorable change in foreign currency conversion gains and losses, including hedges.
INCOME TAXES
FISCAL 2025 FISCAL 2024 % CHANGE FISCAL 2023 % CHANGE
Effective tax rate 17.1 % 14.9 % 220 bps 18.2 % (330) bps
FISCAL 2025 COMPARED TO FISCAL 2024
Our effective tax rate was 17.1% for fiscal 2025, compared to 14.9% for fiscal 2024, primarily due to changes in earnings mix, decreased benefits from stock-based compensation and non-recurring one-time benefits in fiscal 2024 including the impact of the delay of the effective date of certain U.S. foreign tax credit regulations. These impacts were partially offset by a one-time, non-cash deferred tax benefit in fiscal 2025 provided by US tax regulations related to foreign currency gains and losses.
On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for NIKE beginning fiscal 2026. We are evaluating the future impact of these tax law changes on our financial statements.
2025 FORM 10-K 36
SEGMENT INFORMATION
See Note 15 - Segment Information in the accompanying Notes to the Consolidated Financial Statements for a description of our segments and related information.
The breakdown of Revenues is as follows:
(Dollars in millions)
FISCAL 2025 FISCAL 2024 % CHANGE
% CHANGE EXCLUDING CURRENCY CHANGES(1)
FISCAL 2023 % CHANGE
% CHANGE EXCLUDING CURRENCY CHANGES(1)
North America $ 19,572 $ 21,396 -9 % -8 % $ 21,608 -1 % -1 %
Europe, Middle East & Africa 12,257 13,607 -10 % -10 % 13,418 1 % 0 %
Greater China 6,586 7,545 -13 % -12 % 7,248 4 % 8 %
Asia Pacific & Latin America
6,251 6,729 -7 % -3 % 6,431 5 % 5 %
Global Brand Divisions(2)
48 45 7 % 10 % 58 -22 % -25 %
TOTAL NIKE BRAND $ 44,714 $ 49,322 -9 % -9 % $ 48,763 1 % 1 %
Converse 1,692 2,082 -19 % -18 % 2,427 -14 % -15 %
Corporate(3)
(97) (42) - - 27 - -
TOTAL NIKE, INC. REVENUES $ 46,309 $ 51,362 -10 % -9 % $ 51,217 0 % 1 %
(1) The percent change excluding currency changes represents a non-GAAP financial measure. For additional information, see "Use of Non-GAAP Financial Measures".
(2) Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
(3) Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
The primary financial measure used by the Company to evaluate performance of its segments is EBIT. For additional information on our segments, refer to Note 15 - Segment Information in the accompanying Notes to the Consolidated Financial Statements.
The breakdown of EBIT is as follows:
(Dollars in millions)
FISCAL 2025 FISCAL 2024 % CHANGE FISCAL 2023 % CHANGE
North America $ 4,735 $ 5,822 -19 % $ 5,454 7 %
Europe, Middle East & Africa 2,575 3,388 -24 % 3,531 -4 %
Greater China 1,602 2,309 -31 % 2,283 1 %
Asia Pacific & Latin America 1,527 1,885 -19 % 1,932 -2 %
Global Brand Divisions (4,699) (4,720) 0 % (4,841) 2 %
TOTAL NIKE BRAND(1)
$ 5,740 $ 8,684 -34 % $ 8,359 4 %
Converse 240 474 -49 % 676 -30 %
Corporate
(2,202) (2,619) 16 % (2,840) 8 %
TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES(1)
$ 3,778 $ 6,539 -42 % $ 6,195 6 %
EBIT margin(1)
8.2 % 12.7 % 12.1 %
Interest expense (income), net (107) (161) - (6) -
TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES $ 3,885 $ 6,700 -42 % $ 6,201 8 %
(1) Total NIKE Brand EBIT, Total NIKE, Inc. EBIT and EBIT Margin represent non-GAAP financial measures. See "Use of Non-GAAP Financial Measures" for additional information.
2025 FORM 10-K 37
NORTH AMERICA
(Dollars in millions)
FISCAL 2025 FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 12,684 $ 14,537 -13 % -13 % $ 14,897 -2 % -2 %
Apparel 5,837 5,953 -2 % -2 % 5,947 0 % 0 %
Equipment 1,051 906 16 % 16 % 764 19 % 19 %
TOTAL REVENUES $ 19,572 $ 21,396 -9 % -8 % $ 21,608 -1 % -1 %
Revenues by:
Sales to Wholesale Customers $ 10,484 $ 11,004 -5 % -5 % $ 11,273 -2 % -2 %
Sales through NIKE Direct 9,088 10,392 -13 % -12 % 10,335 1 % 1 %
TOTAL REVENUES $ 19,572 $ 21,396 -9 % -8 % $ 21,608 -1 % -1 %
Cost of Sales
11,056 11,899 -7 % 12,497 -5 %
Gross profit
8,516 9,497 -10 % 9,111 4 %
Gross margin
43.5% 44.4% -90 bps 42.2% 220 bps
Demand creation expense
1,633 1,495 9 % 1,455 3 %
Operating overhead expense
2,150 2,189 -2 % 2,207 -1 %
Total selling and administrative expense
3,783 3,684 3 % 3,662 1 %
Other segment items
(2) (9) - (5) -
EARNINGS BEFORE INTEREST AND TAXES $ 4,735 $ 5,822 -19 % $ 5,454 7 %
FISCAL 2025 COMPARED TO FISCAL 2024
•North America revenues decreased 8% on a currency-neutral basis primarily due to lower revenues in the Jordan Brand, Men's and Women's. Wholesale revenues decreased 5%. NIKE Direct revenues decreased 12% due to declines in digital sales of 19% and store sales of 1%. Comparable store sales decreased 1%.
•Footwear revenues decreased 13% on a currency-neutral basis. Unit sales of footwear decreased 10%, while lower ASP per pair reduced footwear revenues by approximately 3 percentage points. Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by product mix.
•Apparel revenues decreased 2% on a currency-neutral basis. Unit sales of apparel decreased 1%, while lower ASP per unit reduced apparel revenues by approximately 1 percentage point. Lower ASP per unit was primarily due to higher discounts and changes in channel mix, partially offset by product mix.
Reported EBIT decreased 19% reflecting lower revenues and the following:
•Gross margin contraction of 90 basis points primarily due to lower ASP and higher inventory obsolescence reserves, partially offset by lower product costs. Lower ASP primarily reflects higher discounts and changes in channel mix.
•Demand creation expense increased 9% primarily due to higher brand marketing expense, reflecting investment in key sports events.
•Operating overhead expense decreased 2% due to lower wage-related expenses and lower other administrative costs.
2025 FORM 10-K 38
EUROPE, MIDDLE EAST & AFRICA
(Dollars in millions)
FISCAL 2025 FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 7,569 $ 8,473 -11 % -10 % $ 8,260 3 % 1 %
Apparel 3,971 4,380 -9 % -9 % 4,566 -4 % -6 %
Equipment 717 754 -5 % -5 % 592 27 % 24 %
TOTAL REVENUES $ 12,257 $ 13,607 -10 % -10 % $ 13,418 1 % 0 %
Revenues by:
Sales to Wholesale Customers $ 8,022 $ 8,562 -6 % -6 % $ 8,522 0 % 0 %
Sales through NIKE Direct 4,235 5,045 -16 % -16 % 4,896 3 % 0 %
TOTAL REVENUES $ 12,257 $ 13,607 -10 % -10 % $ 13,418 1 % 0 %
Cost of Sales 6,967 7,589 -8 % 7,340 3 %
Gross profit
5,290 6,018 -12 % 6,078 -1 %
Gross margin 43.2% 44.2% -100 bps 45.3% -110 bps
Demand creation expense 1,222 1,114 10 % 1,050 6 %
Operating overhead expense 1,479 1,517 -3 % 1,500 1 %
Total selling and administrative expense 2,701 2,631 3 % 2,550 3 %
Other segment items
14 (1) - (3) -
EARNINGS BEFORE INTEREST AND TAXES $ 2,575 $ 3,388 -24 % $ 3,531 -4 %
FISCAL 2025 COMPARED TO FISCAL 2024
•EMEA revenues decreased 10% on a currency-neutral basis due to lower revenues in Men's, the Jordan Brand, Kids' and Women's. Wholesale revenues decreased 6%. NIKE Direct revenues decreased 16% due to a decline in digital sales of 30%, partially offset by an increase in store sales of 5%. Comparable store sales increased 5%.
•Footwear revenues decreased 10% on a currency-neutral basis. Unit sales of footwear decreased 8%, while lower ASP per pair reduced footwear revenues by approximately 2 percentage points. Lower ASP per pair was primarily due to changes in channel mix and higher discounts, partially offset by strategic pricing actions and product mix.
•Apparel revenues decreased 9% on a currency-neutral basis. Unit sales of apparel decreased 6%, while lower ASP per unit reduced apparel revenues by approximately 3 percentage points. Lower ASP per unit was primarily due to changes in channel mix, product mix and higher discounts.
Reported EBIT decreased 24% reflecting lower revenues and the following:
•Gross margin contraction of 100 basis points primarily due to lower ASP, partially offset by lower warehousing, logistics and product costs. Lower ASP primarily reflects changes in channel mix and higher discounts, partially offset by strategic pricing actions.
•Demand creation expense increased 10% primarily due to higher brand marketing expense, reflecting investment in key sports events, and higher sports marketing expense.
•Operating overhead expense decreased 3% primarily due to lower wage-related expenses.
2025 FORM 10-K 39
GREATER CHINA
(Dollars in millions)
FISCAL 2025 FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 4,805 $ 5,552 -13 % -13 % $ 5,435 2 % 6 %
Apparel 1,616 1,828 -12 % -12 % 1,666 10 % 14 %
Equipment 165 165 0 % 1 % 147 12 % 17 %
TOTAL REVENUES $ 6,586 $ 7,545 -13 % -12 % $ 7,248 4 % 8 %
Revenues by:
Sales to Wholesale Customers $ 3,699 $ 4,262 -13 % -13 % $ 3,866 10 % 15 %
Sales through NIKE Direct 2,887 3,283 -12 % -12 % 3,382 -3 % 1 %
TOTAL REVENUES $ 6,586 $ 7,545 -13 % -12 % $ 7,248 4 % 8 %
Cost of Sales 3,558 3,761 -5 % 3,552 6 %
Gross profit
3,028 3,784 -20 % 3,696 2 %
Gross margin 46.0% 50.2% -420 bps 51.0% -80 bps
Demand creation expense 529 519 2 % 499 4 %
Operating overhead expense 973 1,019 -5 % 1,012 1 %
Total selling and administrative expense 1,502 1,538 -2 % 1,511 2 %
Other segment items
(76) (63) - (98) -
EARNINGS BEFORE INTEREST AND TAXES $ 1,602 $ 2,309 -31 % $ 2,283 1 %
FISCAL 2025 COMPARED TO FISCAL 2024
•Greater China revenues decreased 12% on a currency-neutral basis due to lower revenues in Men's, the Jordan Brand, Women's and Kids'. Wholesale revenues decreased 13%. NIKE Direct revenues decreased 12% due to declines in digital sales of 22% and store sales of 6%. Comparable store sales decreased 7%.
•Footwear revenues decreased 13% on a currency-neutral basis. Unit sales of footwear decreased 11%, while lower ASP per pair reduced footwear revenues by approximately 2 percentage points. Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by strategic pricing actions.
•Apparel revenues decreased 12% on a currency-neutral basis. Unit sales of apparel decreased 17%, while higher ASP per unit contributed approximately 5 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to strategic pricing actions, partially offset by higher discounts.
Reported EBIT decreased 31% reflecting lower revenues and the following:
•Gross margin contraction of approximately 420 basis points, primarily due to unfavorable changes in standard foreign currency exchange rates and higher inventory obsolescence reserves, partially offset by higher ASP. Higher ASP primarily reflects strategic pricing actions, partially offset by higher discounts.
•Demand creation expense increased 2% primarily due to higher sports marketing expense and higher brand marketing expense.
•Operating overhead expense decreased 5% primarily due to lower wage-related expenses and lower other administrative costs.
2025 FORM 10-K 40
ASIA PACIFIC & LATIN AMERICA
(Dollars in millions)
FISCAL 2025 FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 4,452 $ 4,865 -8 % -4 % $ 4,543 7 % 7 %
Apparel 1,541 1,614 -5 % -1 % 1,664 -3 % -2 %
Equipment 258 250 3 % 7 % 224 12 % 12 %
TOTAL REVENUES $ 6,251 $ 6,729 -7 % -3 % $ 6,431 5 % 5 %
Revenues by:
Sales to Wholesale Customers $ 3,678 $ 3,930 -6 % -3 % $ 3,736 5 % 6 %
Sales through NIKE Direct 2,573 2,799 -8 % -3 % 2,695 4 % 4 %
TOTAL REVENUES $ 6,251 $ 6,729 -7 % -3 % $ 6,431 5 % 5 %
Cost of Sales 3,502 3,639 -4 % 3,337 9 %
Gross profit
2,749 3,090 -11 % 3,094 0 %
Gross margin 44.0% 45.9% -190 bps 48.1% -220 bps
Demand creation expense 421 407 3 % 373 9 %
Operating overhead expense 804 801 0 % 789 2 %
Total selling and administrative expense 1,225 1,208 1 % 1,162 4 %
Other segment items
(3) (3) - - -
EARNINGS BEFORE INTEREST AND TAXES $ 1,527 $ 1,885 -19 % $ 1,932 -2 %
FISCAL 2025 COMPARED TO FISCAL 2024
•Asia Pacific & Latin America ("APLA") revenues decreased 3% on a currency-neutral basis primarily due to lower revenues in Southeast Asia & India and Korea, partially offset by higher revenues in Mexico. Revenues decreased primarily due to lower revenues in the Jordan Brand and Men's. Wholesale revenues decreased 3%. NIKE Direct revenues decreased 3% due to a decline in digital sales of 9%, partially offset by an increase in store sales of 4%. Comparable store sales increased 1%.
•Footwear revenues decreased 4% on a currency-neutral basis. Unit sales of footwear decreased 2%, while lower ASP per pair reduced footwear revenues by approximately 2 percentage points. Lower ASP per pair was primarily due to higher discounts and changes in channel mix.
•Apparel revenues decreased 1% on a currency-neutral basis. Unit sales of apparel decreased 3%, while higher ASP per unit contributed approximately 2 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to strategic pricing actions, partially offset by higher discounts.
Reported EBIT decreased 19% reflecting lower revenues and the following:
•Gross margin contraction of approximately 190 basis points primarily due to unfavorable changes in standard foreign currency exchange rates, lower ASP and higher warehousing and logistics costs. Lower ASP reflects product mix, higher discounts and changes in channel mix, partially offset by strategic pricing actions.
•Demand creation expense increased 3%, due to higher brand marketing expense and higher sports marketing expense, partially offset by favorable changes in foreign currency exchange rates.
•Operating overhead expense was flat due to higher wage-related expenses and higher other administrative costs, offset by favorable changes in foreign currency exchange rates.
2025 FORM 10-K 41
GLOBAL BRAND DIVISIONS
(Dollars in millions)
FISCAL 2025 FISCAL 2024 % CHANGE FISCAL 2023 % CHANGE
Revenues
$ 48 $ 45 7 % $ 58 -22 %
Cost of Sales 634 602 5 % 516 17 %
Gross profit
(586) (557) -5 % (458) -22 %
Demand creation expense 716 596 20 % 511 17 %
Operating overhead expense 3,401 3,534 -4 % 3,881 -9 %
Total selling and administrative expense 4,117 4,130 0 % 4,392 -6 %
Other segment items
(4) 33 - (9) -
EARNINGS (LOSS) BEFORE INTEREST AND TAXES
$ (4,699) $ (4,720) 0 % $ (4,841) 2 %
Global Brand Divisions primarily represents costs, including product creation and design expenses, that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
FISCAL 2025 COMPARED TO FISCAL 2024
Global Brand Divisions' loss before interest and taxes was flat primarily due to lower Operating overhead expense, offset by higher Demand creation expense. Lower Operating overhead expense was primarily due to lower wage-related expenses. Higher Demand creation expense was primarily due to higher brand marketing expense and higher sports marketing expense.
CONVERSE
(Dollars in millions) FISCAL 2025 FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 1,457 $ 1,800 -19 % -19 % $ 2,155 -16 % -17 %
Apparel 80 93 -14 % -14 % 90 3 % 4 %
Equipment 32 37 -14 % -14 % 28 32 % 34 %
Other
123 152 -19 % -20 % 154 -1 % -2 %
TOTAL REVENUES
$ 1,692 $ 2,082 -19 % -18 % $ 2,427 -14 % -15 %
Revenues by:
Sales to Wholesale Customers
$ 875 $ 1,098 -20 % -20 % $ 1,299 -15 % -16 %
Sales through Direct to Consumer 694 832 -17 % -17 % 974 -15 % -14 %
Other(1)
123 152 -19 % -19 % 154 -1 % -2 %
TOTAL REVENUES
$ 1,692 $ 2,082 -19 % -18 % $ 2,427 -14 % -15 %
Cost of sales
868 989 -12 % 1,121 -12 %
Gross profit
824 1,093 -25 % 1,306 -16 %
Gross margin
48.7% 52.5% -380 bps 53.8% -130 bps
Demand Creation Expense
156 140 11 % 138 1 %
Operating overhead expense
430 485 -11 % 499 -3 %
Total selling and administrative expense
586 625 -6 % 637 -2 %
Other segment items
(2) (6) - (7) -
EARNINGS BEFORE INTEREST AND TAXES $ 240 $ 474 -49 % $ 676 -30 %
(1) Other revenues consist of territories serviced by third-party licensees who pay royalties to Converse for the use of its registered trademarks and other intellectual property rights. We do not own the Converse trademarks in Japan and accordingly do not earn revenues in Japan.
2025 FORM 10-K 42
FISCAL 2025 COMPARED TO FISCAL 2024
•Converse revenues decreased 18% on a currency-neutral basis driven by revenue declines across all territories. Unit sales decreased 12%, while lower ASP reduced revenues by approximately 6 percentage points. Lower ASP per unit primarily reflects higher discounts in direct to consumer.
•Wholesale revenues decreased 20% on a currency-neutral basis, as declines in Western Europe and Asia were partially offset by growth in North America.
•Direct to consumer revenues decreased 17% on a currency-neutral basis due to reduced traffic in all territories and lower ASP due to higher discounts.
Reported EBIT decreased 49% reflecting lower revenues and the following:
•Gross margin contraction of approximately 380 basis points due to lower ASP and higher warehousing and logistics costs, partially offset by lower product costs. Lower ASP primarily reflects higher discounts.
•Demand creation expense increased 11% primarily due to higher brand marketing expense.
•Operating overhead expense decreased 11% primarily due to lower wage-related expenses and lower other administrative costs.
CORPORATE
(Dollars in millions)
FISCAL 2025 FISCAL 2024 % CHANGE FISCAL 2023 % CHANGE
Revenues
$ (97) $ (42) - $ 27 -
Cost of Sales (66) (4) - 562 -
Gross profit
(31) (38) - (535) -
Demand creation expense 12 14 -14 % 34 -59 %
Operating overhead expense 2,162 2,746 -21 % 2,429 13 %
Total selling and administrative expense 2,174 2,760 -21 % 2,463 12 %
Other segment items
(3) (179) - (158) -
EARNINGS (LOSS) BEFORE INTEREST AND TAXES
$ (2,202) $ (2,619) 16 % $ (2,840) 8 %
Corporate primarily consists of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to our corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses.
Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
In addition to the foreign currency gains and losses recognized in Corporate revenues, foreign currency results in Corporate include gains and losses resulting from the difference between actual foreign currency exchange rates and standard rates used to record non-functional currency denominated product purchases within the NIKE Brand geographic operating segments and Converse; related foreign currency hedge results; conversion gains and losses arising from remeasurement of monetary assets and liabilities in non-functional currencies; and certain other foreign currency derivative instruments.
FISCAL 2025 COMPARED TO FISCAL 2024
Corporate's loss before interest and taxes decreased $417 million, primarily due to the following:
•a favorable change of $443 million related to restructuring charges in the prior year, $379 million reported as a component of consolidated Operating overhead expense and $64 million reported as a component of consolidated Gross profit;
•a favorable change of $205 million primarily related to lower wage-related expenses and lower other administrative costs, reported as a component of consolidated Operating overhead expense;
•an unfavorable change of $92 million related to the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, reported as a component of consolidated Other (income) expense, net; and
•an unfavorable change in net foreign currency gains and losses of $88 million related to the difference between actual foreign currency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of hedge gains and losses; these results are reported as a component of consolidated Gross profit.
2025 FORM 10-K 43
FOREIGN CURRENCY EXPOSURES AND HEDGING PRACTICES
OVERVIEW
As a global company with significant operations outside the United States, in the normal course of business we are exposed to risk arising from changes in currency exchange rates. Our primary foreign currency exposures arise from the recording of transactions denominated in non-functional currencies and the translation of foreign currency denominated results of operations, financial position and cash flows into U.S. Dollars.
Our foreign exchange risk management program is intended to lessen both the positive and negative effects of currency fluctuations on our consolidated results of operations, financial position and cash flows. We manage global foreign exchange risk centrally on a portfolio basis to address those risks material to NIKE, Inc. We manage these exposures by taking advantage of natural offsets and currency correlations existing within the portfolio and, where practical and material, by hedging a portion of the remaining exposures using derivative instruments such as forward contracts and options. As described below, the implementation of the NIKE Trading Company ("NTC") and our foreign currency adjustment program enhanced our ability to manage our foreign exchange risk by increasing the natural offsets and currency correlation benefits existing within our portfolio of foreign exchange exposures. Our hedging policy is designed to partially or entirely offset the impact of exchange rate changes on the underlying net exposures being hedged. Where exposures are hedged, our program has the effect of delaying the impact of exchange rate movements on our Consolidated Financial Statements; the length of the delay is dependent upon hedge horizons. We do not hold or issue derivative instruments for trading or speculative purposes.
Refer to Note 4 - Fair Value Measurements and Note 12 - Risk Management and Derivatives in the accompanying Notes to the Consolidated Financial Statements for additional description of outstanding derivatives at each reported period end.
TRANSACTIONAL EXPOSURES
We conduct business in various currencies and have transactions which subject us to foreign currency risk. Our most significant transactional foreign currency exposures are:
•Product Costs - NIKE's product costs are exposed to fluctuations in foreign currencies in the following ways:
1.Product purchases denominated in currencies other than the functional currency of the transacting entity:
a.Certain NIKE entities purchase product from the NTC, a wholly-owned sourcing hub that buys NIKE branded products from third-party factories, predominantly in U.S. Dollars. The NTC, whose functional currency is the U.S. Dollar, then sells the products to NIKE entities in their respective functional currencies. NTC sales to a NIKE entity with a different functional currency results in a foreign currency exposure for the NTC.
b.Other NIKE entities purchase product directly from third-party factories predominantly in U.S. Dollars. These purchases generate a foreign currency exposure for those NIKE entities with a functional currency other than the U.S. Dollar.
In both purchasing scenarios, a weaker U.S. Dollar reduces inventory costs incurred by NIKE whereas a stronger U.S. Dollar increases its cost.
2.Factory input costs: NIKE operates a foreign currency adjustment program with certain factories. The program is designed to more effectively manage foreign currency risk by assuming certain of the factories' foreign currency exposures, some of which are natural offsets to our existing foreign currency exposures. Under this program, our payments to these factories are adjusted for rate fluctuations in the basket of currencies ("factory currency exposure index") in which the labor, materials and overhead costs incurred by the factories in the production of NIKE branded products ("factory input costs") are denominated.
As an offset to the impacts of the fluctuating U.S. Dollar on our non-functional currency denominated product purchases described above, a strengthening U.S. Dollar against the foreign currencies within the factory currency exposure indices reduces NIKE's U.S. Dollar inventory cost. Conversely, a weakening U.S. Dollar against the indexed foreign currencies increases our inventory cost.
•Non-Functional Currency Denominated External Sales - A portion of our NIKE Brand and Converse revenues associated with European operations are earned in currencies other than the Euro (e.g., the British Pound) but are recognized at a subsidiary that uses the Euro as its functional currency. These sales generate a foreign currency exposure.
•Other Costs - Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency risk, though to a lesser extent.
2025 FORM 10-K 44
•Non-Functional Currency Denominated Monetary Assets and Liabilities - Our global subsidiaries have various assets and liabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies other than their functional currencies. These balance sheet items are subject to remeasurement which may create fluctuations in Other (income) expense, net within our Consolidated Statements of Income.
MANAGING TRANSACTIONAL EXPOSURES
Transactional exposures are managed on a portfolio basis within our foreign currency risk management program. We manage these exposures by taking advantage of natural offsets and currency correlations that exist within the portfolio and may also elect to use currency forward and option contracts to hedge the remaining effect of exchange rate fluctuations on probable forecasted future cash flows, including certain product cost exposures, non-functional currency denominated external sales and other costs described above. Generally, these are accounted for as cash flow hedges.
Certain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated monetary assets and liabilities subject to remeasurement are not formally designated as hedging instruments. Accordingly, changes in fair value of these instruments are recognized in Other (income) expense, net and are intended to offset the foreign currency impact of the remeasurement of the related non-functional currency denominated asset or liability being hedged.
TRANSLATIONAL EXPOSURES
Many of our foreign subsidiaries operate in functional currencies other than the U.S. Dollar. Fluctuations in currency exchange rates create volatility in our reported results as we are required to translate the balance sheets, operational results and cash flows of these subsidiaries into U.S. Dollars for consolidated reporting. The translation of foreign subsidiaries' non-U.S. Dollar denominated balance sheets into U.S. Dollars for consolidated reporting results in a cumulative translation adjustment to Accumulated other comprehensive income (loss) within Shareholders' equity. In the translation of our Consolidated Statements of Income, a weaker U.S. Dollar in relation to foreign functional currencies benefits our consolidated earnings whereas a stronger U.S. Dollar reduces our consolidated earnings. The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a detriment of approximately $419 million for the year ended May 31, 2025. The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a detriment of approximately $97 million for the year ended May 31, 2025.
MANAGING TRANSLATIONAL EXPOSURES
To minimize the impact of translating foreign currency denominated revenues and expenses into U.S. Dollars for consolidated reporting, certain foreign subsidiaries use excess cash to purchase U.S. Dollar denominated available-for-sale investments. The variable future cash flows associated with the purchase and subsequent sale of these U.S. Dollar denominated investments at non-U.S. Dollar functional currency subsidiaries creates a foreign currency exposure that qualifies for hedge accounting under U.S. GAAP. We utilize forward contracts and/or options to mitigate the variability of the forecasted future purchases and sales of these U.S. Dollar investments. The combination of the purchase and sale of the U.S. Dollar investment and the hedging instrument has the effect of partially offsetting the year-over-year foreign currency translation impact on net earnings in the period the investments are sold. Hedges of the purchase of U.S. Dollar denominated available-for-sale investments are accounted for as cash flow hedges.
We estimate the combination of translation of foreign currency-denominated profits from our international businesses and the year-over-year change in foreign currency related gains and losses included in Other (income) expense, net had an unfavorable impact of approximately $188 million on our Income before income taxes for the year ended May 31, 2025.
NET INVESTMENTS IN FOREIGN SUBSIDIARIES
We are also exposed to the impact of foreign exchange fluctuations on our investments in wholly-owned foreign subsidiaries denominated in a currency other than the U.S. Dollar, which could adversely impact the U.S. Dollar value of these investments and therefore the value of future repatriated earnings. We have, in the past, hedged and may, in the future, hedge net investment positions in certain foreign subsidiaries to mitigate the effects of foreign exchange fluctuations on these net investments. These hedges are accounted for as net investment hedges in accordance with U.S. GAAP. There were no outstanding net investment hedges as of May 31, 2025 and 2024. There were no cash flows from net investment hedge settlements for the years ended May 31, 2025, 2024 and 2023.
2025 FORM 10-K 45
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW ACTIVITY
(Dollars in millions)
FISCAL 2025 FISCAL 2024
$ CHANGE
Cash provided (used by):
Operating activities
$ 3,698 $ 7,429 $ (3,731)
Investing activities
(275) 894 (1,169)
Financing activities
(5,820) (5,888) 68
Effect of exchange rate changes on cash and equivalents
1 (16) 17
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS
$ (2,396) $ 2,419 $ (4,815)
Cash provided by operating activities decreased $3,731 million. This was driven by a decrease of $2,228 million in Net income, adjusted for non-cash items, and changes in certain working capital components and other assets and liabilities, which decreased $1,503 million. The change in working capital was impacted by changes to Inventories, primarily due to reduced inventory purchases in the prior year as well as unfavorable changes in standard foreign currency exchange rates in the current year.
Cash used by investing activities increased $1,169 million, from an inflow in fiscal 2024 to an outflow in fiscal 2025, primarily driven by the net change in short-term investments (including sales, maturities and purchases).
Cash used by financing activities decreased $68 million, primarily driven by lower share repurchases, largely offset by a $1.0 billion bond repayment and slightly higher dividend payments.
In fiscal 2025, we purchased a total of 37.6 million shares of NIKE's Class B Common Stock for $3.0 billion (an average price of $78.50 per share) under the four-year, $18 billion share repurchase plan authorized by the Board of Directors in June 2022. As of May 31, 2025, we had repurchased 122.6 million shares at a cost of approximately $12.0 billion (an average price of $98.00 per share) under this program. We have moderated, and intend to continue moderating, share repurchases. The timing and the amount of share repurchases will be dictated by our liquidity, capital needs and operating cash flows. We continue to expect funding of share repurchases from operating cash flows and excess cash.
CAPITAL RESOURCES
On July 21, 2022, we filed a shelf registration statement (the "Shelf") with the U.S. Securities and Exchange Commission (the "SEC") which permits us to issue an unlimited amount of debt securities from time to time. The Shelf expires on July 21, 2025, and we plan to file a new shelf registration with the SEC in July 2025.
On March 7, 2025, we entered into a 364-day committed credit facility agreement with a syndicate of banks which provides for up to $1 billion of borrowings, with the option to increase borrowings up to $1.5 billion in total with lender approval. The facility matures on March 6, 2026, with an option to extend the maturity date an additional 364 days. This facility replaces the prior $1 billion 364-day credit facility agreement entered into on March 8, 2024, which matured on March 7, 2025. Refer to Note 5 - Short-Term Borrowings and Credit Lines for additional information.
On March 7, 2025, we entered into a five-year committed credit facility agreement with a syndicate of banks which provides for up to $2 billion of borrowings, with the option to increase borrowings up to $3 billion in total with lender approval. The facility matures on March 7, 2030, with options to extend the maturity date up to an additional two years. This facility replaces the prior $2 billion five-year credit facility agreement entered into on March 11, 2022, which would have matured on March 11, 2027. Refer to Note 5 - Short-Term Borrowings and Credit Lines for additional information.
We currently have long-term debt ratings of A+ and A1 from Standard and Poor's Corporation and Moody's Investor Services, respectively. As it relates to our committed credit facilities entered into on March 7, 2025, if our long-term debt ratings were to decline, the facility fees and interest rates would increase. Conversely, if our long-term debt ratings were to improve, the facility fees and interest rates would decrease. In July 2025, Standard and Poor's Corporation downgraded our debt rating from AA- to A+, and, as a result, our facility fees and interest rates will increase compared to what they were prior to the downgrade. Refer to Note 5 - Short-Term Borrowings and Credit Lines for additional information. Changes in our long-term debt ratings would not trigger acceleration of maturity of any then-outstanding borrowings or any future borrowings under the committed credit facilities. Under these facilities, we have agreed to various covenants. These covenants include limits on the disposal of assets and the amount of debt secured by liens we may incur. In the event we were to have any borrowings outstanding under these facilities, failed to meet any covenant and were unable to obtain a waiver from a majority of the banks in the applicable syndicate, any borrowings would become immediately due and payable. As of May 31, 2025, we were in full compliance with each of these covenants, and we believe it is unlikely we will fail to meet any of these covenants in the foreseeable future.
2025 FORM 10-K 46
Liquidity is also provided by our $3 billion commercial paper program. As of and for the fiscal years ended May 31, 2025 and 2024, we did not have any borrowings outstanding under our $3 billion program. We may issue commercial paper or other debt securities depending on general corporate needs.
To date, we have not experienced difficulty accessing the capital or credit markets; however, future volatility may increase costs associated with issuing commercial paper or other debt instruments or affect our ability to access those markets.
As of May 31, 2025, we had Cash and equivalents and Short-term investments totaling $9.2 billion, primarily consisting of commercial paper, corporate notes, deposits held at major banks, money market funds, U.S. Treasury obligations and other investment grade fixed-income securities. Our fixed-income investments are exposed to both credit and interest rate risk. All of our investments are investment grade to minimize our credit risk. While individual securities have varying durations, as of May 31, 2025, the weighted-average days to maturity of our cash equivalents and short-term investments portfolio was 96 days.
We believe that existing Cash and equivalents, Short-term investments and cash generated by operations, together with access to external sources of funds as described above, will be sufficient to meet our domestic and foreign capital needs for the next twelve months and beyond.
Our material cash requirements as of May 31, 2025, were as follows:
•Debt Obligations - Refer to Note 5 - Short-Term Borrowings and Credit Lines and Note 6 - Long-Term Debt in the accompanying Notes to the Consolidated Financial Statements for additional information.
•Operating Leases - Refer to Note 17 - Leases in the accompanying Notes to the Consolidated Financial Statements for additional information.
•Endorsement Contracts - As of May 31, 2025, we had endorsement contract obligations, including associated marketing commitments, of $16.2 billion, with $1.6 billion payable within 12 months, primarily representing approximate amounts of base compensation and minimum guaranteed royalty fees we are obligated to pay athlete, public figure, sport team and league endorsers of our products. Actual payments under some contracts may be higher than these amounts as these contracts provide for bonuses to be paid to the endorsers based upon athletic achievements and/or royalties on product sales in future periods. Actual payments under some contracts may also be lower as these contracts include provisions for reduced payments if athletic performance declines in future periods. In addition to the cash payments, we are obligated to furnish our endorsers with NIKE product for their use. It is not possible to determine how much we will spend on this product on an annual basis as the amount of product provided to the endorsers will depend on many factors and the contracts generally do not stipulate a minimum amount of cash to be spent on the product.
•Product Purchase Obligations - As of May 31, 2025, we had product purchase obligations of $7.9 billion, all of which are payable within the next 12 months. Product purchase obligations represent agreements (including open purchase orders) to purchase products in the ordinary course of business that are enforceable and legally binding and specify all significant terms. We generally order product at least four to five months in advance of sale based primarily on advanced orders received from external wholesale customers and internal orders from our direct to consumer operations. In some cases, prices are subject to change throughout the production process.
•Other Purchase Obligations - As of May 31, 2025, we had $3.1 billion of other purchase obligations, with $1.9 billion payable within the next 12 months. Other purchase obligations primarily include technology investments, construction, service and marketing commitments made in the ordinary course of business. The amounts represent the minimum payments required by legally binding contracts and agreements that specify all significant terms, and may include open purchase orders for non-product purchases.
As of May 31, 2025, we had approximately $260 million in estimated future income tax obligations payable within 12 months related to expected resolution with the Internal Revenue Service of certain U.S. federal income tax matters for fiscal years 2017 through 2019 related to transfer pricing adjustments, research and development credits and other items.
As a part of the transition tax related to the Tax Cuts and Jobs Act, as of May 31, 2025, we had $268 million in estimated future cash payments payable within the next 12 months. These amounts represent the transition tax on deemed repatriation of undistributed earnings of foreign subsidiaries, which are reflected net of foreign tax credits we utilized.
In addition to the above, we have long-term obligations for uncertain tax positions and various post-retirement benefits for which we are not able to reasonably estimate when cash payments will occur. Refer to Note 7 - Income Taxes and Note 11 - Benefit Plans in the accompanying Notes to the Consolidated Financial Statements for additional information related to uncertain tax positions and post-retirement benefits, respectively.
Refer to Note 16 - Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for additional information related to our off-balance sheet arrangements, bank guarantees and letters of credit.
2025 FORM 10-K 47
OFF-BALANCE SHEET ARRANGEMENTS
As of May 31, 2025, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current and future financial condition, results of operations, liquidity, capital expenditures or capital resources. In connection with various contracts and agreements, we routinely provide indemnification relating to the enforceability of intellectual property rights, coverage for legal issues that arise and other items where we are acting as the guarantor. Currently, we have several such agreements in place. Based on our historical experience and the estimated probability of future loss, we have determined that the fair value of such indemnification is not material to our financial position or results of operations.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 1 - Summary of Significant Accounting Policies within the accompanying Notes to the Consolidated Financial Statements for recently adopted and issued accounting pronouncements.
CRITICAL ACCOUNTING ESTIMATES
The preparation of our Consolidated Financial Statements in accordance with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We believe the assumptions and judgments involved in the accounting estimates described below have the greatest potential impact on our Consolidated Financial Statements, so we consider these to be our critical accounting estimates. Management has reviewed and discussed these critical accounting estimates with the Audit & Finance Committee of the Board of Directors.
Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in the preparation of our Consolidated Financial Statements. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported. During fiscal 2025, we have not made any material changes to the accounting methodologies used to develop the estimates discussed below.
For a description of our significant accounting policies and methods used in the preparation of our Consolidated Financial Statements, refer to Note 1 - Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements.
SALES-RELATED RESERVES
Provisions for anticipated sales returns consist of both contractual return rights and discretionary authorized returns. Provisions for post-invoice sales discounts consist of both contractual programs and discretionary discounts that are expected to be granted at a later date.
Estimates of discretionary authorized returns, discounts and claims are based on (1) historical rates, (2) specific identification of outstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts and claims expected but not yet finalized with customers based on current marketplace needs. Actual returns, discounts and claims in any future period are inherently uncertain and may differ from estimates recorded. If actual or expected future returns, discounts or claims were significantly different than reserves established, a reduction or increase to net revenues would be recorded in the period in which such determination was made. For fiscal 2025, any variances between actual and expected sales-related reserves were not material to reported Revenues.
Refer to Note 14 - Revenues in the accompanying Notes to the Consolidated Financial Statements for additional information.
INVENTORY RESERVES
We make ongoing estimates relating to the net realizable value of inventories based upon our assumptions about future demand, market conditions, existing inventory levels, sales trends and historical experience with similar products. If we estimate the net realizable value of our inventory is less than the cost of the inventory, we record a reserve equal to the difference between the cost of the inventory and the estimated net realizable value. If changes in market conditions result in reductions to the estimated net realizable value of our inventory below our previous estimate, we would increase our reserve in the period in which such a determination is made.
Refer to Inventory Valuation within Note 1 - Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements for additional information.
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HEDGE ACCOUNTING FOR DERIVATIVES
We use derivative contracts to hedge certain anticipated foreign currency and interest rate transactions as well as certain non-functional currency monetary assets and liabilities. When the specific criteria to qualify for hedge accounting has been met, changes in the fair value of contracts hedging probable forecasted future cash flows are recorded in Accumulated other comprehensive income (loss), rather than Net income, until the underlying hedged transaction affects Net income. In most cases, this results in gains and losses on hedge derivatives being released from Accumulated other comprehensive income (loss) into Net income sometime after the maturity of the derivative. One of the criteria for this accounting treatment is that the designated notional value of these derivative contracts should not be in excess of the amount of anticipated transactions. By their very nature, our estimates of anticipated transactions may fluctuate over time and may ultimately vary from actual transactions. When the amount of anticipated or actual transactions decline below designated hedged levels and it is no longer probable the forecasted transaction will occur by the end of the originally specified time period or within an additional two-month period of time thereafter, we reclassify the cumulative change in fair value of the over-hedged portion of the related hedge contract from Accumulated other comprehensive income (loss) to Other (income) expense, net during the quarter in which the decrease occurs. In rare circumstances, the additional period of time may exceed two months due to extenuating circumstances related to the nature of the forecasted transaction that are outside our control or influence.
Refer to Note 12 - Risk Management and Derivatives in the accompanying Notes to the Consolidated Financial Statements for additional information.
INCOME TAXES
We are subject to taxation in the United States, as well as various state and foreign jurisdictions. The determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. On an interim basis, we estimate our effective tax rate for the full fiscal year. This estimated annual effective tax rate is then applied to the year-to-date Income before income taxes excluding infrequently occurring or unusual items, to determine the year-to-date Income tax expense. The income tax effects of infrequent or unusual items are recognized in the interim period in which they occur. As the fiscal year progresses, we continually refine our estimate based upon actual events and earnings by jurisdiction during the year. This continual estimation process periodically results in a change to our expected effective tax rate for the fiscal year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs.
On a quarterly basis, we evaluate the probability a tax position will be effectively sustained and the appropriateness of the amount recognized for uncertain tax positions based on factors including changes in facts or circumstances, changes in tax law, settled audit issues and new audit activity. Changes in our assessment may result in the recognition of a tax benefit or an additional charge to the tax provision in the period our assessment changes. We recognize interest and penalties related to income tax matters in Income tax expense.
Refer to Note 7 - Income Taxes in the accompanying Notes to the Consolidated Financial Statements for additional information.
OTHER CONTINGENCIES
In the ordinary course of business, we are subject to various legal proceedings, claims and government investigations related to our business, products and actions of our employees and representatives, including contractual and employment relationships, product liability, antitrust, customs, tax, intellectual property and other matters. We record contingent liabilities resulting from claims against us when a loss is assessed to be probable and the amount of the loss is reasonably estimable. Assessing probability of loss and estimating probable losses requires analysis of multiple factors, including in some cases judgments about the potential actions of third-party claimants and courts. Recorded contingent liabilities are based on the best information available and actual losses in any future period are inherently uncertain. If future adjustments to estimated probable future losses or actual losses exceed our recorded liability for such claims, we would record additional charges during the period in which the actual loss or change in estimate occurred. In addition to contingent liabilities recorded for probable losses, we disclose contingent liabilities when there is a reasonable possibility the ultimate loss will materially exceed the recorded liability.
Refer to Note 16 - Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for additional information.
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