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Item 2. Management’s Discussion and Analysis

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We are the largest seller of athletic footwear and apparel in the world.

We sell our products through NIKE Direct operations, which is comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital"), to retail accounts and to a mix of independent distributors, licensees and sales representatives in virtually all countries around the world.

We sell our products through NIKE Direct operations, which is comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital"), to wholesale accounts and to 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 businesses.

Our strategy is to achieve long-term revenue growth by creating innovative, "must-have" products, building deep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms and at retail.

Through the Consumer Direct Acceleration, we are focusing on creating the marketplace of the future through more premium, consistent and seamless consumer experiences, leading with digital and our owned stores, as well as select wholesale partners that share our marketplace vision.

Over the last several years, as we have executed against the Consumer Direct Acceleration, we have grown our NIKE Direct revenues, on a reported basis, to be approximately 45% and 43% of total NIKE Brand revenues for the third quarter and first nine months of fiscal 2023, respectively.

We have also reduced the number of wholesale accounts globally.

Additionally, we have aligned our product creation and category organizations around a new consumer construct focused on Men’s, Women’s and Kids’ and continue to invest in data and analytics, demand sensing, insight gathering, inventory management and other areas to create an end-to-end technology foundation, which we expect will further accelerate our digital transformation.

Through the Consumer Direct Acceleration strategy, we are focused on creating the marketplace of the future with more premium, consistent and seamless consumer experiences, leading with digital and our owned stores, as well as select wholesale partners.

In addition, our product creation and marketing organizations are aligned to a consumer construct focused on sports dimensions through Men's, Women's and Kids', which allows us to better serve consumer needs.

We continue to invest in a new Enterprise Resource Planning Platform, data and analytics, demand sensing, insight gathering and other areas to create an end-to-end technology foundation, which we believe will further accelerate our digital transformation.

We believe this unified approach will accelerate growth and unlock more efficiency for our business, while driving speed and responsiveness as we serve consumers globally.

CURRENT ECONOMIC CONDITIONS AND MARKET DYNAMICS

Revenues for the third quarter and first nine months of fiscal 2023 grew 14% and 11%, respectively, compared to the prior year, reflecting strong demand for our product, despite ongoing macroeconomic volatility and ongoing supply chain challenges.

In the first quarter of fiscal 2022, government mandated shutdowns in Vietnam and Indonesia due to COVID-19 impacted our contract manufacturers’ operations and our supply of available product.

This, coupled with elevated inventory transit times due to port congestion, transportation delays and labor and container shortages, caused seasonal product to arrive later than planned.

We expected these elevated inventory transit times to continue and as a result we purchased product for fiscal 2023 earlier than normal.

However, during the first quarter of fiscal 2023, inventory transit times improved ahead of plan resulting in seasonal product arriving early.

This disruption in the flow of seasonal inventory led to elevated inventory levels at the end of the first quarter of fiscal 2023.

Starting in the first quarter of fiscal 2023, we took action to reduce excess inventory by decreasing inventory purchases and increasing promotional activity.

These actions led to Inventories decreasing sequentially in the second and third quarters of fiscal 2023.

As inventory transit and product purchase timelines continue to converge towards pre-pandemic levels, we expect that the flow of seasonal product, and our inventory levels will normalize by the end of fiscal 2023.

During the first nine months of fiscal 2023, we experienced higher product input, freight and logistics costs primarily due to inflationary pressures.

These costs, combined with higher promotional activity, contributed to gross margin contraction of 330 basis points and 280 basis points in the third quarter and first nine months of fiscal 2023, respectively.

These impacts were partially offset by strategic pricing actions taken in prior quarters.

Fluctuations in currency exchange rates also create volatility in our reported results as we translate the balance sheets, operational results and cash flows of our subsidiaries into U.S.

Dollars for consolidated reporting.

During the third quarter of fiscal 2023, foreign currency headwinds increased significantly as the U.S.

Dollar strengthened in relation to most foreign currencies, reducing reported Revenues by $549 million and $2.5 billion for the third quarter and first nine months of fiscal 2023, respectively.

We expect unfavorable changes in foreign currency exchange rates, net of hedges, will negatively impact our results of operations in the fourth quarter of fiscal 2023, which could result in continued gross margin contraction.

Most of our geographies operated with little to no COVID-19 related disruptions during the third quarter of fiscal 2023.

In Greater China, however, the shifting of the local government’s COVID-19 policies in December 2022 led to temporary store closures as well as lower physical traffic during the month.

Since January 2023, nearly all stores in Greater China have remained open and are operating on normal hours with improved physical traffic.

Across our geographies and Converse, the operating environment remains dynamic, and we expect promotional activity to continue in the fourth quarter of fiscal 2023.

In addition, we expect product costs to remain elevated due to higher input, freight and logistics costs, which could result in continued gross margin contraction.

We also continue to closely monitor macroeconomic conditions, including potential impacts inflation and rising interest rates could have on consumer behavior.

While we believe our Consumer Direct Acceleration Strategy continues to drive our business toward our long-term financial goals, worsening macroeconomic conditions could affect our business, including, among other things, higher inventory levels in various markets, higher inventory obsolescence reserves, higher promotional activity, reduced demand for our products, reduced orders from our wholesale customers for our products and order cancellations.

There could also be new or prolonged COVID-19 related restrictions or disruptions across our geographies.

Any of these factors, among others, could have material adverse impacts on our revenue growth as well as overall profitability in future periods.

THIRD QUARTER OVERVIEW

For the third quarter of fiscal 2023, NIKE, Inc.

Revenues increased 14% to $12.4 billion compared to the third quarter of fiscal 2022 and increased 19% on a currency-neutral basis.

Net income was $1,240 million and diluted earnings per common share was $0.79 for the third quarter of fiscal 2023, compared to Net income of $1,396 million and diluted earnings per common share of $0.87 for the third quarter of fiscal 2022.

Income before income taxes decreased 12% compared to the third quarter of fiscal 2022 due to higher Selling and administrative expense and gross margin contraction, partially offset by higher revenues.

NIKE Brand revenues, which represent over 90% of NIKE, Inc.

Revenues, increased 14% compared to the third quarter of fiscal 2022.

On a currency-neutral basis, NIKE Brand revenues increased 19%, driven by higher revenues across all geographies, led by increases in North America and Europe, Middle East & Africa (EMEA).

Additionally, NIKE Brand currency-neutral revenues were higher across footwear and apparel, as well as across Men's, the Jordan Brand, Women's and Kids'.

Revenues for Converse increased 8% and 12% compared to the third quarter of fiscal 2022, on a reported and currency-neutral basis, respectively, as revenue growth in North America, Western Europe and licensee markets was partially offset by declines in Asia.

Our effective tax rate was 16.0% for the third quarter of fiscal 2023 and substantially consistent compared to 16.4% for the third quarter of fiscal 2022.

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act of 2022 that includes, among other provisions, changes to the U.S.

corporate income tax system, including a fifteen percent minimum tax based on "adjusted financial statement income," which is effective for NIKE beginning June 1, 2023.

Based on our current analysis of the provisions, we do not expect these tax law changes to have a material impact on our financial statements;

however, we will continue to evaluate their impact as further information becomes available.

During the second quarter of fiscal 2023, we completed the sale of our entities in Argentina and Uruguay to a third party distributor.

For more information see Note 14 — Acquisitions and Divestitures within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

Now that we have completed the shift from a wholesale and direct to consumer operating model to a distributor model within our Central and South America (CASA) territory, we expect consolidated NIKE, Inc.

and Asia Pacific & Latin America (APLA) revenue growth will be reduced due to different commercial terms.

However, over time we expect the future operating model to have a favorable impact on our overall profitability as we reduce selling and administrative expenses, as well as reduce exposure to foreign exchange rate volatility.

FINANCIAL HIGHLIGHTS

Revenues for the first quarter of fiscal 2024 were $12.9 billion, an increase of 2% on both a reported and currency-neutral basis, compared to the first quarter of fiscal 2023

• NIKE Direct revenues grew 6% from $5.1 billion for the first quarter of fiscal 2023 to $5.4 billion for the first quarter of fiscal 2024, and represented approximately 43% of total NIKE Brand revenues for the first quarter of fiscal 2024

• Gross margin for the first quarter of fiscal 2024 decreased 10 basis points to 44.2%, primarily driven by higher product costs and unfavorable changes in foreign currency exchange rates, largely offset by strategic pricing actions

• Inventories as of August 31, 2023, were $8.7 billion, an increase of 3% compared to May 31, 2023, primarily driven by product mix and lower inventory obsolescence reserves

• We returned $1.7 billion to our shareholders in the first quarter of fiscal 2024 through share repurchases and dividends

ECONOMIC CONDITIONS AND MARKET DYNAMICS

• Consumer Spending:

Our growth in Revenues for the first quarter of fiscal 2024 reflects ongoing demand for our products despite ongoing uncertainty in the global economy.

We will continue to closely monitor macroeconomic conditions, including the potential impacts of inflation and rising interest rates on consumer behavior.

• Inflationary Pressures:

Inflationary pressures, including higher product costs, negatively impacted gross margin for the first quarter of fiscal 2024.

The strategic pricing actions we have taken more than offset the impact of these higher product costs on gross margin in the first quarter of fiscal 2024.

• Supply Chain Conditions:

During the first quarter of fiscal 2024 and as of August 31, 2023, our inventory levels were healthy as we continue to experience normalized inventory transit times and flow of seasonal product.

• Foreign Currency Impacts:

As a global company with significant operations outside the United States, we are exposed to risk arising from changes in foreign currency exchange rates.

For additional information, refer to "Foreign Currency Exposures and Hedging Practices".

We continue to be confident in our brand strength.

We are focused on scaling a deep, diverse and distinct product portfolio as well as deepening our consumer connections, while carefully managing the health of our most iconic product franchises.

However, the operating environment could remain volatile in fiscal 2024 as the risk exists that worsening macroeconomic conditions could have a material adverse impact on our future revenue growth as well as overall profitability.

USE OF NON-GAAP FINANCIAL MEASURES

Throughout this Quarterly Report on Form 10-Q, we discuss non-GAAP financial measures, including references to wholesale equivalent revenues, currency-neutral revenues, as well as Total NIKE Brand earnings before interest and taxes (EBIT), Total NIKE, Inc.

EBIT and EBIT Margin, which should be considered in addition to, and not in lieu of, the financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“U.S.

Throughout this Quarterly Report on Form 10-Q, 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 U.S.

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 the three months ended August 31, 2023 and 2022 are as follows:

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions) 2023 2022

Net income $ 1,450 $ 1,468

Interest expense (income), net (34) 13

Income tax expense 198 360

Earnings before interest and taxes $ 1,614 $ 1,841

Calculated as total NIKE, Inc.

EBIT divided by total NIKE, Inc.

Our EBIT margin calculation for the three months ended August 31, 2023 and 2022 are as follows:

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions) 2023 2022

Earnings before interest and taxes $ 1,614 $ 1,841

Total NIKE, Inc.

Revenues $ 12,939 $ 12,687

12.5 % 14.5 %

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.

Wholesale equivalent revenues:

References to wholesale equivalent revenues are intended to provide context as to the total size of our NIKE Brand market footprint if we had no NIKE Direct operations.

NIKE Brand wholesale equivalent revenues consist of (1) sales to external wholesale customers and (2) internal sales from our wholesale operations to our NIKE Direct operations, which are charged at prices comparable to those charged to external wholesale customers.

Additionally, currency-neutral revenues are calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends excluding the impact of translation arising from foreign currency exchange rate fluctuations.

EBIT is calculated as Net income before Interest expense (income), net and Income tax expense in the Unaudited Condensed Consolidated Statements of Income.

EBIT Margin is calculated as EBIT divided by total NIKE, Inc.

Management uses these non-GAAP financial measures when evaluating the Company's performance, including when making financial and operating decisions.

However, references to wholesale equivalent revenues, currency-neutral revenues, EBIT and EBIT margin 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 non-GAAP measures used by other companies.

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 includes revenues from stores that were temporarily closed during the period as a result of COVID-19.

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.

RESULTS OF OPERATIONS

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

(Dollars in millions, except per share data) 2023 2022 % CHANGE 2023 2022 % CHANGE

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions, except per share data) 2023 2022 % CHANGE

Revenues $ 12,939 $ 12,687 2 %

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CONSOLIDATED OPERATING RESULTS

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)

NIKE Brand Revenues by:

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Corporate (3)

12 (19) — — 13 (56) — —

TOTAL NIKE, INC.

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(1) The percent change excluding currency changes represents a non-GAAP financial measure.

See "Use of Non-GAAP Financial Measures" for further information.

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.

THIRD QUARTER OF FISCAL 2023 COMPARED TO THIRD QUARTER OF FISCAL 2022

On a currency-neutral basis, NIKE, Inc.

Revenues increased 19% the third quarter of fiscal 2023, driven by higher revenues in both the NIKE Brand and Converse.

Higher revenues in North America, EMEA, APLA and Converse contributed approximately 9, 7, 2 and 1 percentage points to NIKE, Inc.

Revenues, respectively.

On a currency-neutral basis, NIKE Brand footwear revenues increased 25% in the third quarter of fiscal 2023, driven by higher revenues in Men's, the Jordan Brand and Women's.

Unit sales of footwear increased 19%, while higher average selling price (ASP) per pair contributed approximately 6 percentage points of footwear revenue growth, primarily due to higher full-price ASP, net of discounts, on a wholesale equivalent basis, and growth in NIKE Direct.

This was partially offset by lower NIKE Direct ASP.

Currency-neutral NIKE Brand apparel revenues for the third quarter of fiscal 2023 increased 10%, driven by higher revenues in Men's.

Unit sales of apparel increased 5% and higher ASP per unit contributed approximately 5 percentage points of apparel revenue growth, primarily due to higher full-price ASP and growth in NIKE Direct, partially offset by lower NIKE Direct ASP.

NIKE Brand wholesale revenues increased 12% and 18% compared to the third quarter of fiscal 2022, on a reported and currency-neutral basis, respectively.

On a reported basis, NIKE Direct revenues represented approximately 45% of our total NIKE Brand revenues for the third quarter of fiscal 2023 compared to 44% for the third quarter of fiscal 2022.

NIKE Brand Digital sales were $3.1 billion for the third quarter of fiscal 2023 compared to $2.7 billion for the third quarter of fiscal 2022.

On a currency-neutral basis, NIKE Direct revenues increased 22%, primarily driven by NIKE Brand Digital sales growth of 24% and comparable store sales growth of 20%.

Comparable store sales, which exclude 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 includes revenues from stores that were temporarily closed during the period as a result of COVID-19.

Comparable store sales represents a performance measure 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 measures used by other companies.

FIRST NINE MONTHS OF FISCAL 2023 COMPARED TO FIRST NINE MONTHS OF FISCAL 2022

On a currency-neutral basis, NIKE, Inc.

Revenues increased 19% for the first nine months of fiscal 2023, driven by higher revenues in North America, EMEA, APLA and Converse, which contributed approximately 9, 7, 3 and 1 percentage points to NIKE, Inc.

FIRST QUARTER OF FISCAL 2024 COMPARED TO FIRST QUARTER OF FISCAL 2023

Revenues were $12.9 billion for the first quarter of fiscal 2024, which increased 2% compared to the first quarter of fiscal 2023 on a reported and currency-neutral basis.

The increase, on a currency-neutral basis, was driven by higher revenues in Europe, Middle East & Africa ("EMEA") and Greater China, which contributed approximately 2 and 1 percentage points to NIKE, Inc.

Revenues, respectively.

Lower revenues in Greater China reduced NIKE, Inc.

Lower revenues in North America reduced NIKE, Inc.

Revenues by approximately 1 percentage point.

On a currency-neutral basis, NIKE Brand footwear revenues increased 24%, driven by growth in Men's and the Jordan Brand.

Unit sales of footwear increased 15%, while higher ASP per pair contributed approximately 9 percentage points of footwear revenue growth, primarily due to higher full-price ASP and growth in NIKE Direct.

Currency-neutral NIKE Brand apparel revenues increased 10%, driven by growth in Men's.

Unit sales of apparel increased 7% and higher ASP per unit contributed approximately 3 percentage points of apparel revenue growth.

Higher ASP per unit was primarily due to higher full-price ASP and growth in NIKE Direct, partially offset by lower NIKE Direct ASP.

NIKE Brand wholesale revenues increased 10% and 18% compared to the first nine months of fiscal 2022, on a reported and currency-neutral basis, respectively.

On a reported basis, NIKE Direct revenues represented approximately 43% of our total NIKE Brand revenues for the first nine months of fiscal 2023 and the first nine months of fiscal 2022.

NIKE Brand Digital sales were $9.4 billion for the first nine months of fiscal 2023 compared to $7.9 billion for the first nine months of fiscal 2022.

On a currency-neutral basis, NIKE Direct revenues increased 20%, primarily driven by NIKE Brand Digital sales growth of 27% and comparable store sales growth of 11%.

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

• NIKE Brand revenues, which represented over 90% of NIKE, Inc.

Revenues, increased 3% on a reported and currency-neutral basis.

This increase was primarily due to higher revenues in the Jordan Brand and Women's, partially offset by lower revenues in Men's and Kids'.

• NIKE Brand footwear revenues increased 4% on a currency-neutral basis due to higher revenues in the Jordan Brand, Women's and Men's, partially offset by lower revenues in Kids'.

Unit sales of footwear decreased 1%, while higher average selling price ("ASP") per pair contributed approximately 5 percentage points of footwear revenue growth.

Higher ASP per pair was primarily due to higher full-price ASP, net of discounts, on a wholesale equivalent basis, and growth in the size of our NIKE Direct business, partially offset by lower NIKE Direct ASP.

• NIKE Brand apparel revenues decreased 1% on a currency-neutral basis, primarily due to lower revenues in Men's, Women's and the Jordan Brand.

Unit sales of apparel decreased 12%, while higher ASP per unit contributed approximately 11 percentage points of apparel revenue growth.

Higher ASP per unit was primarily due to higher full-price and NIKE Direct ASPs.

• NIKE Direct revenues increased 6% from $5.1 billion in the first quarter of fiscal 2023 to $5.4 billion in the first quarter of fiscal 2024.

On a currency-neutral basis, NIKE Direct revenues increased 6%, driven by comparable store sales growth of 8%, the addition of new stores and NIKE Brand Digital sales growth of 2%.

For additional information regarding comparable store sales, including the definition, see "Comparable Store Sales".

NIKE Brand Digital sales were $2.9 billion for the first quarter of fiscal 2024 compared to $2.8 billion for the first quarter of fiscal 2023.

Within NIKE Direct revenues, there were certain reclassifications made between NIKE-owned retail stores and NIKE Brand Digital in the prior period to conform to current period presentation.

The reclassifications did not have a material impact on our Unaudited Condensed Consolidated Financial Statements.

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

2023 2022 % CHANGE 2023 2022 % CHANGE

2023 2022 % CHANGE

Gross profit $ 5,720 $ 5,615 2 %

Gross margin 43.3 % 46.6 % (330) bps 43.5 % 46.3 % (280) bps

For the third quarter of fiscal 2023, our consolidated gross margin was 330 basis points lower than the prior year and primarily reflected the following factors:

• Higher NIKE Brand product costs, on a wholesale equivalent basis, (decreasing gross margin approximately 360 basis points) primarily due to higher input costs and elevated inbound freight and logistics costs as well as product mix;

• Lower margin in NIKE Direct, driven by higher promotional activity to liquidate inventory in the current period compared to lower promotional activity in the prior period resulting from lower available inventory supply (decreasing gross margin approximately 140 basis points);

Gross margin 44.2 % 44.3 % (10) bps

For the first quarter of fiscal 2024, our consolidated gross margin was 10 basis points lower than the prior year primarily due to:

• Higher NIKE Brand product costs, on a wholesale equivalent basis (decreasing gross margin approximately 180 basis points);

• Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 90 basis points);

• Lower off-price margin, on a wholesale equivalent basis (decreasing gross margin approximately 30 basis points).

• Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis, (increasing gross margin approximately 370 basis points) due primarily to strategic pricing actions and product mix.

For the first nine months of fiscal 2023, our consolidated gross margin was 280 basis points lower than the prior year and primarily reflected the following factors:

• Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 100 basis points);

• Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis, (increasing gross margin approximately 320 basis points) due primarily to strategic pricing actions and product mix.

This was partially offset by:

• Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis (increasing gross margin approximately 300 basis points) due primarily to strategic pricing actions;

• Higher margin in our NIKE Direct business (increasing gross margin approximately 10 basis points).

TOTAL SELLING AND ADMINISTRATIVE EXPENSE

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

2023 2022 % CHANGE 2023 2022 % CHANGE

2023 2022 % CHANGE

Demand creation expense (1)

2 unchanged sentences

Total selling and administrative expense $ 4,116 $ 3,920 5 %

% of revenues 32.0 % 31.6 % 40 bps 31.3 % 31.2 % 10 bps

% of revenues 31.8 % 30.9 % 90 bps

(1) Demand creation expense consists of advertising and promotion costs, including costs of endorsement contracts, complimentary products, television, digital and print advertising and media costs, brand events and retail brand presentation.

THIRD QUARTER OF FISCAL 2023 COMPARED TO THIRD QUARTER OF FISCAL 2022

Demand creation expense increased 8% for the third quarter of fiscal 2023 primarily due to an increase in advertising and marketing expense.

Changes in foreign currency exchange rates decreased Demand creation expense by approximately 3 percentage points.

Operating overhead expense increased 17% primarily due to higher wage-related expenses, higher strategic technology enterprise investments and NIKE Direct variable costs.

Changes in foreign currency exchange rates decreased Operating overhead expense by approximately 3 percentage points.

Foreign exchange rate fluctuations had a similar impact on the translation of our consolidated Revenues, resulting in an unfavorable impact of approximately 5 percentage points.

FIRST NINE MONTHS OF FISCAL 2023 COMPARED TO FIRST NINE MONTHS OF FISCAL 2022

Demand creation expense increased 6% for the first nine months of fiscal 2023 primarily due to higher advertising and marketing expense and higher sports marketing expense.

Changes in foreign currency exchange rates decreased Demand creation expense by approximately 5 percentage points.

Operating overhead expense increased 13% primarily due to an increase in wage-related expenses, higher strategic technology enterprise investments and NIKE Direct variable costs.

Changes in foreign currency exchange rates decreased Operating overhead expense by approximately 4 percentage points.

Foreign exchange rate fluctuations had a similar impact on the translation of our consolidated Revenues, resulting in an unfavorable impact of approximately 8 percentage points.

FIRST QUARTER OF FISCAL 2024 COMPARED TO FIRST QUARTER OF FISCAL 2023

Demand creation expense increased 13% primarily due to an increase in advertising and marketing expense.

Changes in foreign currency exchange rates did not have a material impact on Demand creation expense.

Operating overhead expense increased 2% primarily due to higher wage-related expenses and NIKE Direct variable costs, partially offset by lower technology spend.

Changes in foreign currency exchange rates did not have a material impact on Operating overhead expense.

OTHER (INCOME) EXPENSE, NET

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

2023 2022 2023 2022

Other (income) expense, net $ (10) $ (146)

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.

For the third quarter of fiscal 2023, Other (income) expense, net decreased from $94 million of other income, net to $58 million in the current year, largely due to net favorable settlements of legal and insurance matters in the prior year and favorable activity in the prior year related to our strategic distributor partnership transition within APLA, partially offset by a net favorable change in foreign currency conversion gains and losses, including hedges.

For the first nine months of fiscal 2023, Other (income) expense, net increased from $235 million of other income, net to $283 million in the current year, primarily due to a net favorable change in foreign currency conversion gains and losses, including hedges, and settlements of legal matters.

This increase was partially offset by net unfavorable activity related to our strategic distributor partnership transition within APLA, including the loss recognized upon the completion of the sale of our entities in Argentina and Uruguay to a third-party distributor in the second quarter of fiscal 2023.

For more information related to our distributor partnership transition within APLA, see Note 14 — Acquisitions and Divestitures within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

We estimate the combination of the 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 unfavorable impacts of approximately $147 million and $508 million on our Income before income taxes for the third quarter and first nine months of fiscal 2023, respectively.

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

2023 2022 % CHANGE 2023 2022 % CHANGE

Effective tax rate 16.0 % 16.4 % (40) bps 18.5 % 12.7 % 580 bps

Our effective tax rate was 16.0% for the third quarter of fiscal 2023 and substantially consistent compared to 16.4% for the third quarter of fiscal 2022.

Our effective tax rate was 18.5% for the first nine months of fiscal 2023, compared to 12.7% for the first nine months of fiscal 2022, primarily due to decreased benefits from stock-based compensation and a shift in our earnings mix.

Refer to Note 6 — Income Taxes within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.

For the first quarter of fiscal 2024, Other (income) expense, net decreased from $146 million of other income, net, to $10 million of other income, net, in the current year, primarily due to a net unfavorable change in foreign currency conversion gains and losses, including hedges, as well as net favorable settlements of legal matters in the prior year.

We estimate the combination of the 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 unfavorable impacts of approximately $65 million on our Income before income taxes for the first quarter of fiscal 2024.

THREE MONTHS ENDED AUGUST 31,

2023 2022 % CHANGE

Effective tax rate 12.0 % 19.7 % (770) bps

Our effective tax rate was 12.0% for the first quarter of fiscal 2024 compared to 19.7% for the first quarter of fiscal 2023, primarily due to a one-time benefit provided by the recent delay of the effective date of certain U.S.

foreign tax credit regulations.

For additional information, refer to Note 4 — Income Taxes within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

OPERATING SEGMENTS

Our operating segments are evidence of the structure of the Company's internal organization.

As discussed in Note 10 — Operating Segments in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements, our operating segments are evidence of the structure of the Company's internal organization.

The NIKE Brand segments are defined by geographic regions for operations participating in NIKE Brand sales activity.

Each NIKE Brand geographic segment operates predominantly in one industry:

the design, development, marketing and selling of athletic footwear, apparel and equipment.

The Company's reportable operating segments for the NIKE Brand are:

North America;

Europe, Middle East & Africa (EMEA);

Greater China;

and Asia Pacific & Latin America (APLA), and include results for the NIKE and Jordan brands.

The Company's NIKE Direct operations are managed within each geographic operating segment.

Converse is also a reportable operating segment for the Company and operates predominately in one industry:

the design, marketing, licensing and selling of athletic lifestyle sneakers, apparel and accessories.

As part of our centrally managed foreign exchange risk management program, standard foreign currency exchange rates are assigned twice per year to each NIKE Brand entity in our geographic operating segments and Converse.

These rates are set approximately nine and twelve months in advance of the future selling seasons to which they relate (specifically, for each currency, one standard rate applies to the fall and holiday selling seasons and one standard rate applies to the spring and summer selling seasons) based on average market spot rates in the calendar month preceding the date they are established.

Inventories and Cost of sales for geographic operating segments and Converse reflect the use of these standard rates to record non-functional currency product purchases into the entity's functional currency.

Differences between assigned standard foreign currency exchange rates and actual market rates are included in Corporate, together with foreign currency hedge gains and losses generated from our centrally managed foreign exchange risk management program and other conversion gains and losses.

The breakdown of Revenues is as follows:

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)

North America $ 5,423 $ 5,510 -2 % -1 %

7 unchanged sentences

Corporate (3)

12 (19) — — 13 (56) — —

TOTAL NIKE, INC.

1 unchanged sentence

(1) The percent change excluding currency changes represents a non-GAAP financial measure.

See "Use of Non-GAAP Financial Measures" for further information.

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.

2 unchanged sentences

As discussed in Note 10 — Operating Segments in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements, certain corporate costs are not included in EBIT of our operating segments.

The breakdown of earnings before interest and taxes is as follows:

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

The breakdown of EBIT is as follows:

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

2023 2022 % CHANGE 2023 2022 % CHANGE

2023 2022 % CHANGE

North America $ 1,434 $ 1,377 4 %

17 unchanged sentences

EBIT and EBIT margin represent non-GAAP financial measures.

See "Use of Non-GAAP Financial Measures" for further information.

For further information, see "Use of Non-GAAP Financial Measures".

NORTH AMERICA

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

(Dollars in millions) 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions) 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 3,733 $ 3,805 -2 % -2 %

6 unchanged sentences

EARNINGS BEFORE INTEREST AND TAXES $ 1,434 $ 1,377 4 %

THIRD QUARTER OF FISCAL 2023 COMPARED TO THIRD QUARTER OF FISCAL 2022

On a currency-neutral basis, North America revenues for the third quarter of fiscal 2023 increased 27%, due primarily to higher revenues in Men's and the Jordan Brand.

NIKE Direct revenues increased 23%, primarily driven by strong digital sales growth of 25%, comparable store sales growth of 17% and the addition of new stores.

Currency-neutral footwear revenues increased 31%, primarily driven by higher revenues in the Jordan Brand and Men's.

Unit sales of footwear increased 26%, while higher ASP per pair contributed approximately 5 percentage points of footwear revenue growth.

Higher ASP per pair was primarily due to higher full-price ASP and growth in NIKE Direct, partially offset by lower NIKE Direct ASP, reflecting higher promotional activity.

Currency-neutral apparel revenues increased 18%, primarily driven by higher revenues in Men's.

Unit sales of apparel increased 20%, while lower ASP per unit reduced apparel revenues by approximately 2 percentage points.

Lower ASP was primarily due to lower NIKE Direct ASP, reflecting higher promotional activity, and a lower mix of full-price sales.

This activity was partially offset by higher ASP in both full and off-price.

Reported EBIT increased 23% primarily due to higher revenues, partially offset by higher selling and administrative expense and gross margin contraction.

Gross margin decreased approximately 200 basis points largely driven by lower margin in NIKE Direct in part due to higher promotional activity, higher product costs reflecting higher input costs and inbound freight and logistics costs, including supply chain network costs, and a lower mix of full-price sales.

This was partially offset by higher full-price ASP, net of discounts, driven by strategic pricing actions and product mix.

Selling and administrative expense increased due to higher operating overhead and demand creation expense.

Operating overhead expense increased primarily due to higher wage-related expenses and NIKE Direct variable costs, in part due to new store additions.

The increase in demand creation expense was primarily due to an increase in digital marketing.

FIRST NINE MONTHS OF FISCAL 2023 COMPARED TO FIRST NINE MONTHS OF FISCAL 2022

On a currency-neutral basis, North America revenues for the first nine months of fiscal 2023 increased 23%, due primarily to higher revenues in Men's and the Jordan Brand.

NIKE Direct revenues increased 20%, primarily driven by strong digital sales growth of 25%, comparable store sales growth of 9% and the addition of new stores.

Currency-neutral footwear revenues increased 28%, largely driven by higher revenues in Men's and the Jordan Brand.

Unit sales of footwear increased 23%, while higher ASP per pair contributed approximately 5 percentage points of footwear revenue growth.

Higher ASP per pair was primarily due to higher full-price ASP and growth in NIKE Direct, partially offset by lower NIKE Direct ASP, reflecting higher promotional activity.

Currency-neutral apparel revenues increased 12%, driven primarily by higher revenues in Men's.

Unit sales of apparel increased 12%, while ASP per unit remained flat, as lower NIKE Direct ASP, reflecting higher promotional activity, was offset by higher full-price ASP and growth in NIKE Direct.

Reported EBIT increased 12% primarily due to higher revenues, partially offset by gross margin contraction and higher selling and administrative expense.

Gross margin decreased approximately 340 basis points primarily due to higher product costs, reflecting higher input costs and inbound freight and logistics costs, lower margins in NIKE Direct due to higher promotional activity and a lower mix of full-price sales.

This was partially offset by higher full-price ASP, net of discounts, largely due to product mix and strategic pricing actions.

Selling and administrative expense increased due to higher operating overhead and demand creation expense.

Operating overhead expense increased primarily as a result of higher wage-related costs and NIKE Direct variable costs.

The increase in demand creation expense reflected higher sports marketing expenses and an increase in digital marketing.

FIRST QUARTER OF FISCAL 2024 COMPARED TO FIRST QUARTER OF FISCAL 2023

• North America revenues decreased 1% on a currency-neutral basis, due to lower revenues in Men's, Women's and Kids', largely offset by higher revenues in the Jordan Brand.

Wholesale revenues decreased 8%, reflecting our proactive decisions to manage inventory supply and prioritize marketplace health.

NIKE Direct revenues increased 7%, driven by comparable store sales growth of 6%, the addition of new stores and digital sales growth of 4%.

• Footwear revenues decreased 2% on a currency-neutral basis, due to lower revenues in Men's, Kids' and Women's, largely offset by higher revenues in the Jordan Brand.

Unit sales of footwear decreased 10%, while higher ASP per pair contributed approximately 8 percentage points of footwear revenue growth.

Higher ASP per pair was primarily due to higher full-price ASP and growth in NIKE Direct.

• Apparel revenues decreased 1% on a currency-neutral basis, primarily due to lower revenues in Women's, Men's and the Jordan Brand.

Unit sales of apparel decreased 11%, while higher ASP per unit contributed 10 percentage points of apparel revenue growth.

Higher ASP per unit was primarily due to higher full-price and NIKE Direct ASP.

Reported EBIT increased 4% reflecting lower revenues and the following:

• Gross margin expansion of 240 basis points primarily due to higher full-price ASP, net of discounts, largely due to strategic pricing actions and higher margin in NIKE Direct.

This was partially offset by higher product costs and a lower mix of full-price sales.

• Selling and administrative expense increase of 4% driven by higher operating overhead expense.

The increase in operating overhead expense was primarily due to higher wage-related expenses and NIKE Direct variable costs.

Demand creation expense was flat as lower advertising and marketing expense was offset by higher digital marketing.

EUROPE, MIDDLE EAST & AFRICA

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

(Dollars in millions) 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions) 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 2,260 $ 2,012 12 % 10 %

6 unchanged sentences

EARNINGS BEFORE INTEREST AND TAXES $ 930 $ 975 -5 %

THIRD QUARTER OF FISCAL 2023 COMPARED TO THIRD QUARTER OF FISCAL 2022

On a currency-neutral basis, EMEA revenues for the third quarter of fiscal 2023 increased 26%, primarily driven by growth in Men's.

NIKE Direct revenues increased 39%, driven by strong digital sales growth of 43% and comparable store sales growth of 36%.

Currency-neutral footwear revenues increased 39%, driven by higher revenues in Men's and Women's.

Unit sales of footwear increased 24%, while higher ASP per pair contributed approximately 15 percentage points of footwear revenue growth.

Higher ASP per pair was primarily due to higher full-price ASP, growth in NIKE Direct and higher NIKE Direct ASP.

Currency-neutral apparel revenues increased 10% due primarily to higher revenues in Men's.

Unit sales of apparel decreased 2%, while higher ASP per unit contributed approximately 12 percentage points of apparel revenue growth, primarily due to growth in NIKE Direct and higher full-price ASP, partially offset by lower NIKE Direct ASP, reflecting higher promotional activity.

Reported EBIT increased 10% primarily due to higher revenues, partially offset by gross margin contraction and higher selling and administrative expenses.

Gross margin decreased approximately 250 basis points primarily due to higher product costs reflecting higher input costs and inbound freight and logistics costs as well as product mix and unfavorable changes in standard foreign currency exchange rates.

This activity was partially offset by higher full-price ASP, net of discounts, in part due to strategic pricing actions and product mix.

Selling and administrative expense increased due to higher operating overhead and demand creation expense.

Operating overhead expense increased primarily due to wage-related expenses and other administrative costs, partially offset by favorable changes in foreign currency exchange rates.

Higher demand creation expense was driven by higher advertising and marketing expense, partially offset by favorable changes in foreign currency exchange rates.

FIRST NINE MONTHS OF FISCAL 2023 COMPARED TO FIRST NINE MONTHS OF FISCAL 2022

On a currency-neutral basis, EMEA revenues for the first nine months of fiscal 2023 increased 25%, due primarily to higher revenues in Men’s.

NIKE Direct revenues increased 34% primarily due to strong digital sales growth of 51% and comparable store sales growth of 18%.

Currency-neutral footwear revenues increased 30%, driven by higher revenues led by Men's, the Jordan Brand and Women's.

FIRST QUARTER OF FISCAL 2024 COMPARED TO FIRST QUARTER OF FISCAL 2023

• EMEA revenues increased 6% on a currency-neutral basis due to higher revenues in Men's and Women's, partially offset by lower revenues in the Jordan Brand.

NIKE Direct revenues increased 6% due to comparable store sales growth of 14% and the addition of new stores, partially offset by digital sales declines of 2%.

• Footwear revenues increased 10% on a currency-neutral basis, primarily due to higher revenues in Men's and Women's.

Unit sales of footwear increased 2%, while higher ASP per pair contributed approximately 8 percentage points of footwear revenue growth.

Higher ASP per pair was primarily due to higher full-price and NIKE Direct ASPs, as well as growth in NIKE Direct.

Currency-neutral apparel revenues increased 18% due primarily to higher revenues in Men's.

Unit sales of apparel increased 5%, while higher ASP per unit contributed approximately 13 percentage points of apparel revenue growth, primarily due to higher full-price ASP and growth in NIKE Direct, partially offset by lower NIKE Direct ASP, reflecting higher promotional activity.

Reported EBIT increased 15% due to higher revenues and gross margin expansion, partially offset by higher selling and administrative expense.

Gross margin increased approximately 30 basis points primarily due to higher full-price ASP, net of discounts, in part due to strategic pricing actions and product mix.

This activity was partially offset by higher product costs reflecting higher input costs, inbound freight and logistics costs as well as product mix.

Selling and administrative expense increased due to higher demand creation and operating overhead expense.

Higher demand creation expense was primarily due to higher advertising and marketing expense, partially offset by favorable changes in foreign currency exchange rates.

Operating overhead expense increased primarily due to other administrative costs and higher wage-related expenses, partially offset by favorable changes in foreign currency exchange rates.

Higher ASP per pair was primarily due to higher full-price and NIKE Direct ASPs.

• Apparel revenues decreased 3% on a currency-neutral basis due to lower revenues in Men's, the Jordan Brand and Women's.

Unit sales of apparel decreased 15%, while higher ASP per unit contributed approximately 12 percentage points of apparel revenue growth.

Higher ASP per unit was primarily due to higher full-price and NIKE Direct ASPs, as well as growth in NIKE Direct.

Reported EBIT decreased 5% reflecting higher revenues and the following:

• Gross margin contraction of 310 basis points primarily due to unfavorable changes in standard foreign currency exchange rates, partially offset by higher full-price ASP, net of discounts, primarily due to strategic pricing actions.

• Selling and administrative expense increase of 11% due to higher operating overhead and demand creation expense.

Operating overhead expense increased primarily due to higher wage-related expenses, other administrative costs and unfavorable changes in foreign currency exchange rates.

Demand creation expense increased primarily due to higher sports marketing expense and unfavorable changes in foreign currency exchange rates.

GREATER CHINA

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

(Dollars in millions) 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions) 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 1,287 $ 1,233 4 % 11 %

6 unchanged sentences

EARNINGS BEFORE INTEREST AND TAXES $ 525 $ 541 -3 %

THIRD QUARTER OF FISCAL 2023 COMPARED TO THIRD QUARTER OF FISCAL 2022

On a currency-neutral basis, Greater China revenues for the third quarter of fiscal 2023 increased 1%.

The increase in revenues was primarily due to higher revenues in Men's, the Jordan Brand and Kid's, largely offset by lower revenues in Women's.

NIKE Direct revenues increased 3% due to comparable store sales growth of 9%, in part due to improved physical traffic, and growth in non-comparable store sales, partially offset by digital sales declines of 11%.

Currency-neutral footwear revenues increased 5%, driven primarily by higher revenues in Men's.

Unit sales of footwear increased 6%, while lower ASP per unit reduced footwear revenues by approximately 1 percentage point.

Currency-neutral apparel revenues decreased 8%, due primarily to lower revenues in Men's and Women's.

Unit sales of apparel decreased 16%, partially offset by approximately 8 percentage points of growth due to higher ASP per unit.

Higher ASP was primarily due to higher full-price, NIKE Direct and off-price ASPs as well as a higher mix of full-price sales.

Reported EBIT decreased 10% as lower revenues and gross margin contraction were partially offset by lower selling and administrative expense.

Gross margin decreased approximately 80 basis points, primarily due to higher product costs reflecting higher input costs and product mix.

This activity was partially offset by favorable changes in standard foreign currency exchange rates and higher full-price ASP, net of discounts, in part due to product mix.

Selling and administrative expense decreased due to lower demand creation and operating overhead expense.

The decrease in demand creation expense was primarily due to lower retail brand presentation expense, favorable changes in foreign currency exchange rates and lower digital marketing, partially offset by higher advertising and marketing expense.

Operating overhead expense decreased primarily due to favorable changes in foreign currency exchange rates, partially offset by higher wage-related expense and other administrative costs.

FIRST NINE MONTHS OF FISCAL 2023 COMPARED TO FIRST NINE MONTHS OF FISCAL 2022

On a currency-neutral basis, Greater China revenues for the first nine months of fiscal 2023 decreased 2%, reflecting impacts from COVID-19 related disruptions.

The decrease in revenues was primarily due to lower revenues in Men’s and Women's, largely offset by higher revenues in the Jordan Brand.

NIKE Direct revenues increased 2% due to growth in non-comparable store sales and a 1% increase in comparable store sales, partially offset by a decline in digital sales of 1%.

Currency-neutral footwear revenues increased 4%, driven primarily by higher revenues in the Jordan Brand.

Unit sales of footwear increased 3%, while higher ASP per pair contributed approximately 1 percentage point of footwear revenue growth, primarily due to higher NIKE Direct ASP and a higher mix of full-price sales, partially offset by a lower mix of NIKE Direct sales.

Currency-neutral apparel revenues decreased 17%, due primarily to lower revenues in Men's and Women's.

Unit sales of apparel decreased 16%, while lower ASP per unit reduced apparel revenues by approximately 1 percentage point, primarily due to lower NIKE Direct and off-price ASPs, partially offset by higher full-price ASP and growth in NIKE Direct.

Reported EBIT decreased 15% as lower revenues and gross margin contraction more than offset lower selling and administrative expense.

Gross margin decreased approximately 80 basis points, primarily due to higher product costs reflecting product mix and higher input costs.

This activity was partially offset by favorable changes in standard foreign currency exchange rates and higher full-price ASP, net of discounts, in part due to product mix.

Selling and administrative expense decreased due to lower demand creation expense, partially offset by higher operating overhead expense.

The decrease in demand creation expense was primarily due to lower retail brand presentation costs, lower digital marketing and favorable changes in foreign currency exchange rates, partially offset by higher advertising and marketing expense.

Operating overhead expense increased due to higher wage-related expenses and other administrative costs, partially offset by favorable changes in foreign currency exchange rates.

FIRST QUARTER OF FISCAL 2024 COMPARED TO FIRST QUARTER OF FISCAL 2023

• Greater China revenues increased 12% on a currency-neutral basis due to higher revenues in Women's, the Jordan Brand, Men's and Kids'.

NIKE Direct revenues increased 10% due to comparable store sales growth of 7% benefiting from improved physical retail traffic post COVID-19 related disruptions, the addition of new stores and digital sales growth of 6%.

• Footwear revenues increased 11% on a currency-neutral basis due to higher revenues in the Jordan Brand, Women's, Men's and Kids'.

Unit sales of footwear increased 9%, while higher ASP per pair contributed approximately 2 percentage points of footwear revenue growth.

Higher ASP per pair was primarily due to higher full-price ASP, partially offset by lower NIKE Direct ASP.

• Apparel revenues increased 14% on a currency-neutral basis, primarily due to higher revenues in Women's.

Unit sales of apparel decreased 2%, while higher ASP per unit contributed approximately 16 percentage points of apparel revenue growth.

Higher ASP per unit was primarily due to higher NIKE Direct and full-price ASPs, as well as a higher mix of full-price sales, partially offset by lower off-price ASP.

Reported EBIT decreased 3% reflecting higher revenues and the following:

• Gross margin contraction of approximately 80 basis points, primarily due to higher product costs and unfavorable changes in standard foreign currency exchange rates.

This was partially offset by higher full-price ASP, net of discounts, and a higher mix of full-price sales.

• Selling and administrative expense increase of 6% primarily due to higher demand creation expense.

Demand creation expense increased primarily due to higher advertising and marketing expense, partially offset by favorable changes in foreign currency exchange rates.

Operating overhead expense was flat as favorable changes in foreign currency exchanges rates were offset by higher wage-related expenses and NIKE Direct variable costs.

ASIA PACIFIC & LATIN AMERICA

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

(Dollars in millions) 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions) 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 1,141 $ 1,064 7 % 7 %

6 unchanged sentences

EARNINGS BEFORE INTEREST AND TAXES $ 414 $ 500 -17 %

As discussed previously, our NIKE Brand business in Brazil transitioned to a distributor operating model during fiscal 2021.

We completed the sale of our entity in Chile and our entities in Argentina and Uruguay to third-party distributors in the first and second quarters of fiscal 2023, respectively.

The impacts from closing these transactions are included within Corporate and are not reflected in the APLA operating segment results.

This completed the transition of our NIKE Brand businesses within our CASA marketplace, which now reflects a full distributor operating model.

For more information, see Note 14 — Acquisitions and Divestitures within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

THIRD QUARTER OF FISCAL 2023 COMPARED TO THIRD QUARTER OF FISCAL 2022

On a currency-neutral basis, APLA revenues increased 15% for the third quarter of fiscal 2023 driven by higher revenues across nearly all territories, led by Southeast Asia & India and Japan.

This increase was partially offset by a decline in our CASA territory.

Within our CASA territory, the transition of our Chile, Argentina and Uruguay entities to a third-party distributor operating model reduced APLA revenue growth by approximately 8 percentage points.

Revenues increased primarily due to growth in Men's, the Jordan Brand and Women's.

NIKE Direct revenues increased 22%, primarily due to digital sales growth of 23% and comparable store sales growth of 36% in part due to improved physical retail traffic, partially offset by stores included in the sale of our Chile, Argentina and Uruguay entities.

Currency-neutral footwear revenues increased 20%, due primarily to higher revenues in Men's, the Jordan Brand and Women's.

Unit sales of footwear increased 14%, while higher ASP per pair contributed approximately 6 percentage points of footwear revenue growth.

Higher ASP per pair was driven by higher full-price ASP and growth in NIKE Direct, partially offset by lower NIKE Direct ASP.

Currency-neutral apparel revenues increased 9%, due primarily to higher revenues in Men's.

Unit sales of apparel decreased 1%, while higher ASP per unit contributed approximately 10 percentage points of apparel revenue growth, driven by higher full-price and off-price ASPs and growth in NIKE Direct, partially offset by lower NIKE Direct ASP.

Reported EBIT increased 1% for the third quarter of fiscal 2023, as higher revenues more than offset higher selling and administrative expense and gross margin contraction.

Gross margin decreased approximately 190 basis points due to higher product costs reflecting product mix and higher input costs and unfavorable changes in standard foreign currency exchange rates.

This was partially offset by higher full-price ASP, net of discounts, in part due to product mix and strategic pricing actions.

Selling and administrative expense increased due to higher demand creation and operating overhead expense.

The increase in demand creation expense was primarily due to higher advertising and marketing expense and an increase in digital marketing.

Operating overhead expense increased largely due to higher wage-related costs and NIKE Direct variable costs, partially offset by favorable changes in foreign currency exchange rates.

FIRST NINE MONTHS OF FISCAL 2023 COMPARED TO FIRST NINE MONTHS OF FISCAL 2022

On a currency-neutral basis, APLA revenues increased 22% for the first nine months of fiscal 2023 driven by higher revenues across nearly all territories, led by Southeast Asia & India, Korea and Japan.

This increase was partially offset by a decline in our CASA territory.

The impacts from closing these transactions are included within Corporate and are not reflected in the Asia Pacific & Latin America ("APLA") operating segment results.

This completed the transition of our NIKE Brand businesses within our Central and South America ("CASA") marketplace, which now reflects a full distributor operating model.

FIRST QUARTER OF FISCAL 2024 COMPARED TO FIRST QUARTER OF FISCAL 2023

• APLA revenues increased 3% on a currency-neutral basis due to higher revenues across most territories, led by Japan, Southeast Asia & India and Mexico, partially offset by lower revenues in CASA and Korea.

Within our CASA territory, the transition of our Chile, Argentina and Uruguay entities to a third-party distributor operating model reduced APLA revenue growth by approximately 3 percentage points.

Revenues increased primarily due to higher revenues in Men’s, Women's and the Jordan Brand.

NIKE Direct revenues increased 27%, primarily due to digital sales growth of 29% and comparable store sales growth of 31%, in part due to improved physical retail traffic.

Currency-neutral footwear revenues increased 24%, due primarily to higher revenues in Men's, Women's and the Jordan Brand.

Unit sales of footwear increased 17%, while higher ASP per pair contributed approximately 7 percentage points of footwear revenue growth.

Higher ASP per pair was driven by higher full-price ASP and growth in NIKE Direct.

Currency-neutral apparel revenues increased 18%, due primarily to higher revenues in Men's.

Unit sales of apparel increased 13%, while higher ASP per unit contributed approximately 5 percentage points of apparel revenue growth, driven by higher full-price and off-price ASPs, partially offset by lower NIKE Direct ASP.

Reported EBIT increased 9% for the third quarter of fiscal 2023 as a result of higher revenues, partially offset by higher selling and administrative expense and gross margin contraction.

Gross margin decreased approximately 100 basis points primarily due to higher product costs, reflecting product mix, increased inbound freight and logistics costs and input costs, partially offset by higher full-price ASP, net of discounts, in part due to product mix and strategic pricing actions.

Selling and administrative expense increased due to higher operating overhead and demand creation expense.

The increase in operating overhead expense was primarily due to higher wage-related expenses and NIKE Direct variable costs, partially offset by favorable changes in foreign currency exchange rates.

Demand creation expense increased primarily due to increases in advertising and marketing expense and higher sports marketing expense, partially offset by favorable changes in foreign currency exchange rates.

Revenues increased due to overall growth in Women's, the Jordan Brand and Kids'.

NIKE Direct revenues increased 3%, driven by comparable store sales growth of 12% and the addition of new stores, partially offset by digital sales declines of 3%.

• Footwear revenues increased 7% on a currency-neutral basis due to higher revenues in Men's, Women's, the Jordan Brand and Kids'.

Unit sales of footwear increased 7% and ASP per pair was slightly up, as higher full-price ASP was largely offset by lower NIKE Direct ASP.

• Apparel revenues decreased 9% on a currency-neutral basis, primarily due to lower revenues in Men's and Women's.

Unit sales of apparel decreased 17%, while higher ASP per unit contributed approximately 8 percentage points of apparel revenue growth.

Higher ASP per unit was primarily due to higher full-price ASP, growth in NIKE Direct and higher off-price ASP.

Reported EBIT decreased 17% reflecting higher revenues and the following:

• Gross margin contraction of approximately 410 basis points primarily due to higher product costs, as well as unfavorable changes in standard foreign currency exchange rates and lower margin in NIKE Direct.

This was partially offset by higher full-price ASP, net of discounts.

• Selling and administrative expense increase of 14% due to higher demand creation and operating overhead expense.

Demand creation expense increased primarily due to higher advertising and marketing expense as well as higher digital marketing expense.

Operating overhead expense increased primarily due to higher wage-related expenses.

GLOBAL BRAND DIVISIONS

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Revenues $ 13 $ 14 -7 % 1 %

2 unchanged sentences

Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.

THIRD QUARTER OF FISCAL 2023 COMPARED TO THIRD QUARTER OF FISCAL 2022

Global Brand Divisions' loss before interest and taxes increased 19% for the third quarter of fiscal 2023 driven primarily by higher operating overhead and demand creation expense.

Higher operating overhead expense was primarily due to an increase in wage-related costs and strategic technology enterprise investments.

Higher demand creation expense was primarily due to an increase in digital marketing and higher advertising and marketing expense.

FIRST NINE MONTHS OF FISCAL 2023 COMPARED TO FIRST NINE MONTHS OF FISCAL 2022

Global Brand Divisions' loss before interest and taxes increased 18% for the first nine months of fiscal 2023 driven by higher operating overhead and higher demand creation expense.

The increase in operating overhead expense was primarily due to higher wage-related costs and strategic technology enterprise investments.

The increase in demand creation expense reflected higher sports marketing expenses and an increase in digital marketing.

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

FIRST QUARTER OF FISCAL 2024 COMPARED TO FIRST QUARTER OF FISCAL 2023

Global Brand Divisions' loss before interest and taxes increased 2% primarily due to higher demand creation partially offset by lower operating overhead expense.

Higher demand creation expense was primarily due to higher advertising and marketing expense.

Lower operating overhead expense was primarily due to lower technology spend.

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES 2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

2023 2022 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 522 $ 577 -10 % -10 %

10 unchanged sentences

We do not own the Converse trademarks in Japan and accordingly do not earn revenues in Japan.

THIRD QUARTER OF FISCAL 2023 COMPARED TO THIRD QUARTER OF FISCAL 2022

On a currency-neutral basis, Converse revenues increased 12% for the third quarter of fiscal 2023 as revenue growth in North America, Western Europe, and licensee markets was partially offset by declines in Asia.

Direct to consumer revenues increased 10%, driven by strong digital sales growth in North America.

Combined unit sales within the wholesale and direct to consumer channels increased 4%, primarily driven by growth in North America, while ASP increased 7%, driven by strategic pricing actions.

Reported EBIT decreased 2%, driven by higher selling and administrative expense and gross margin contraction, partially offset by higher revenues.

Gross margin decreased approximately 150 basis points, driven by lower margins in direct to consumer, in part reflecting increased promotional activity, higher product costs and unfavorable changes in standard foreign currency exchange rates, partially offset by higher ASP, net of discounts, and lower other costs.

Selling and administrative expense increased due to higher operating overhead and demand creation expense.

Operating overhead expense increased as a result of higher wage-related expenses and professional services costs.

Demand creation expense increased as a result of increased advertising and marketing expense.

FIRST NINE MONTHS OF FISCAL 2023 COMPARED TO FIRST NINE MONTHS OF FISCAL 2022

On a currency-neutral basis, Converse revenues increased 10% for the first nine months of fiscal 2023 as revenue growth in North America, Western Europe, and licensee markets was partially offset by declines in Asia.

Direct to consumer revenues increased 13%, driven by strong digital sales growth in North America.

Combined unit sales within the wholesale and direct to consumer channels increased 1%, primarily driven by growth in North America, while ASP increased 8%, driven by growth in direct to consumer and strategic pricing actions.

Reported EBIT increased 4%, driven by higher revenues and gross margin expansion, partially offset by higher selling and administrative expense.

Gross margin increased approximately 120 basis points driven by higher ASP, net of discounts, lower other costs, and growth in licensee revenues, partially offset by higher product costs.

Selling and administrative expense increased due to higher operating overhead and demand creation expense.

Operating overhead expense increased as a result of higher wage-related expenses, higher professional services costs and lower bad debt recoveries.

Demand creation expense increased due to higher advertising and marketing expense, partially offset by lower retail brand presentation costs.

THREE MONTHS ENDED FEBRUARY 28, NINE MONTHS ENDED FEBRUARY 28,

FIRST QUARTER OF FISCAL 2024 COMPARED TO FIRST QUARTER OF FISCAL 2023

• Converse revenues decreased 9% on a currency-neutral basis as revenue declines in North America were partially offset by an increase in Asia.

Combined unit sales within the wholesale and direct to consumer channels decreased 6% and ASP decreased 3%, reflecting promotional activity in digital.

• Direct to consumer revenues decreased 14% on a currency-neutral basis due to reduced traffic in North America and Western Europe.

• Wholesale revenues decreased 5% on a currency-neutral basis, as declines in North America were partially offset by growth in Western Europe due to supply chain normalization.

Reported EBIT decreased 20% reflecting lower revenues and the following:

• Gross margin contraction of approximately 200 basis points due to promotional activity and unfavorable changes in standard foreign currency exchange rates.

• Selling and administrative expense was flat as lower operating overhead was offset by higher demand creation expense.

Operating overhead expense decreased primarily as a result of lower professional service and administrative costs.

Demand creation expense increased as a result of higher advertising and marketing as well as brand event expenses.

THREE MONTHS ENDED AUGUST 31,

(Dollars in millions)

2023 2022 % CHANGE 2023 2022 % CHANGE

2023 2022 % CHANGE

Revenues $ (2) $ (4) —

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and certain other foreign currency derivative instruments.

THIRD QUARTER OF FISCAL 2023 COMPARED TO THIRD QUARTER OF FISCAL 2022

Corporate's loss before interest and taxes increased $284 million for the third quarter of fiscal 2023, primarily due to the following:

• an unfavorable change of $164 million primarily related to increased wage-related expenses, reported as a component of consolidated Operating overhead expense;

• an unfavorable change of $77 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 margin;

• an unfavorable change of $44 million related to net favorable settlements of legal and insurance matters in the prior year as well as favorable activity in the prior year related to our strategic distributor partnership transition within APLA;

these results are reported as a component of consolidated Other (income) expense, net;

• a favorable change in net foreign currency gains and losses of $13 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.

FIRST NINE MONTHS OF FISCAL 2023 COMPARED TO FIRST NINE MONTHS OF FISCAL 2022

Corporate's loss before interest and taxes increased $554 million for the first nine months of fiscal 2023, primarily due to the following:

• an unfavorable change of $366 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;

FIRST QUARTER OF FISCAL 2024 COMPARED TO FIRST QUARTER OF FISCAL 2023

Corporate's loss before interest and taxes increased $77 million for the first quarter of fiscal 2024, primarily due to the following:

• an unfavorable change of $117 million related to the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, as well as net favorable settlements of legal matters in the prior year, reported as a component of consolidated Other (income) expense, net;

• an unfavorable change of $59 million primarily related to increased wage-related expenses and other professional services, reported as a component of consolidated Operating overhead expense;

• a favorable change of $105 million relat ed 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 margin.

• an unfavorable change of $247 million primarily related to increased wage and other professional service expenses, reported as a component of consolidated Operating overhead expense;

• an unfavorable change of $150 million primarily due to our strategic distributor partnership transition within APLA, including the loss recognized upon completion of the sale of our entities in Argentina and Uruguay to a third-party distributor in the second quarter of fiscal 2023, partially offset by settlements of legal matters, reported as a component of consolidated Other (income) expense, net;

• a favorable change in net foreign currency gains and losses of $221 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.

FOREIGN CURRENCY EXPOSURES AND HEDGING PRACTICES

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We do not hold or issue derivative instruments for trading or speculative purposes.

As of and for the three and nine months ended February 28, 2023, there have been no material changes to the Company's hedging program or strategy from what was disclosed within the Annual Report on Form 10-K.

As of and for the three months ended August 31, 2023, there have been no material changes to the Company's hedging program or strategy from what was disclosed within the Annual Report on Form 10-K for the fiscal year ended May 31, 2023 (the "Annual Report")"

Refer to Note 3 — Fair Value Measurements and Note 7 — Risk Management and Derivatives in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for additional description of outstanding derivatives at each reported period end.

For additional information about our Foreign Currency Exposures and Hedging Practices, refer to Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended May 31, 2022.

Management's Discussion and Analysis of Financial Condition and Results of Operations within the Annual Report.

TRANSACTIONAL EXPOSURES

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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, except for hedges of the embedded derivative components of the product cost exposures and other contractual agreements.

Certain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated monetary assets and liabilities subject to remeasurement and embedded derivative contracts are not formally designated as hedging instruments and are recognized in Other (income) expense, net.

Generally, these are accounted for as cash flow hedges.

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

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Dollars for consolidated reporting results in a cumulative translation adjustment to Accumulated other comprehensive income (loss) within Shareholders' equity.

The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a detriment of approximately $549 million and $2.5 billion for the three and nine months ended February 28, 2023, respectively, and a detriment of approximately $280 million and a benefit of $165 million for the three and nine months ended February 28, 2022, respectively.

The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a detriment of approximately $160 million and $729 million for the three and nine months ended February 28, 2023, respectively, and a detriment of approximately $84 million and a benefit of $45 million for the three and nine months ended February 28, 2022, respectively.

Management generally identifies hyper-inflationary markets as those markets whose cumulative inflation rate over a three-year period exceeds 100%.

Management has concluded our Turkey subsidiary within our EMEA operating segment is operating in a hyper-inflationary markets.

As a result, beginning in the first quarter of fiscal 2023, the functional currency of our Turkey subsidiary, changed from the local currency to the U.S.

As of and for the three and nine months ended February 28, 2023, this change did not have a material impact on our results of operations or financial condition, and we do not anticipate it will have a material impact in future periods based on current rates.

Prior to the completion of the sale of our Argentina entity within our APLA operating segment during the second quarter of fiscal 2023, Management concluded this subsidiary was operating in a hyper-inflationary market.

As a result, beginning in the second quarter of fiscal 2019, the functional currency of our Argentina subsidiary changed from the local currency to the U.S.

As of and for the three and nine months ended February 28, 2023, this change did not have a material impact on our results of operations or financial condition.

The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a detriment of approximately $57 million and $823 million for the three months ended August 31, 2023 and 2022, respectively.

The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a detriment of approximately $2 million and $253 million for the three months ended August 31, 2023 and 2022, respectively.

MANAGING TRANSLATIONAL EXPOSURES

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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 $147 million and $508 million on our Income before income taxes for the three and nine months ended February 28, 2023.

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 $65 million and $234 million in our Income before income taxes for the three months ended August 31, 2023 and 2022, respectively.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW ACTIVITY

Cash provided (used) by operations was an inflow of $3,588 million for the first nine months of fiscal 2023, compared to $4,037 million for the first nine months of fiscal 2022.

Net income, adjusted for non-cash items, generated $4,805 million of operating cash inflow for the first nine months of fiscal 2023, compared to $5,387 million for the first nine months of fiscal 2022.

The net change in working capital and other assets and liabilities resulted in a decrease to Cash provided (used) by operations of $1,217 million for the first nine months of fiscal 2023 compared to a decrease of $1,350 million for the first nine months of fiscal 2022.

For the first nine months of fiscal 2023, the net change in working capital compared to the prior year was relatively flat and impacted by unfavorable changes in Accounts payable and Accounts receivable, offset by favorable impacts from Inventories.

These changes were, in part, due to reduced inventory purchases in the current period as we reduce our excess inventory and higher wholesale revenues, which carry a higher level of days sales outstanding.

Further impacting these changes was a lower available supply of inventory in the prior year due to supply chain constraints.

Cash provided (used) by investing activities was an inflow of $137 million for the first nine months of fiscal 2023, compared to an outflow of $1,711 million for the first nine months of fiscal 2022, primarily driven by the net change in short-term investments.

For the first nine months of fiscal 2023, the net change in short-term investments (including sales, maturities and purchases) resulted in a cash inflow of $775 million compared to a cash outflow of $1,156 million for the first nine months of fiscal 2022.

Cash provided (used) by financing activities was an outflow of $5,266 million for the first nine months of fiscal 2023 compared to $3,456 million for the first nine months of fiscal 2022.

The increased outflow in the first nine months of fiscal 2023 was driven by higher share repurchases of $4,101 million for the first nine months of fiscal 2023 compared to $2,923 million in the first nine months of fiscal 2022, as well as lower proceeds from stock option exercises, which resulted in a cash inflow of $413 million in the first nine months of fiscal 2023 compared to $959 million in the first nine months of fiscal 2022.

During the first nine months of fiscal 2023, we repurchased a total of 38.4 million shares of NIKE's Class B Common Stock for $4.1 billion (an average price of $107.16 per share).

In August 2022, we terminated the previous four-year, $15 billion share repurchase program approved by the Board of Directors in June 2018.

Under this program, we repurchased 6.5 million shares for a total approximate cost of $710.0 million (an average price of $109.85 per share) during the first quarter of fiscal 2023 and 83.8 million shares for a total approximate cost of $9.4 billion (an average price of $111.82 per share) during the term of the program.

Upon termination of the four-year, $15 billion program, we began purchasing shares under the new four-year, $18 billion share repurchase plan authorized by the Board of Directors in June 2022.

As of February 28, 2023, we had repurchased 32.0 million shares at a cost of approximately $3.4 billion (an average price of $106.61 per share) under this new program.

Cash provided (used) by operations was an outflow of $66 million for the first three months of fiscal 2024, compared to an inflow of $357 million for the first three months of fiscal 2023.

Net income, adjusted for non-cash items, generated $1,757 million of operating cash inflow for the first three months of fiscal 2024, compared to $1,771 million for the first three months of fiscal 2023.

The net change in working capital and other assets and liabilities resulted in a decrease to Cash provided (used) by operations of $1,823 million for the first three months of fiscal 2024 compared to a decrease of $1,414 million for the first three months of fiscal 2023.

The net change in working capital was primarily impacted by unfavorable changes in Accrued liabilities, primarily due to net unfavorable changes in cash collateral with derivative counterparties as a result of hedging transactions.

The net change in working capital was also impacted by favorable changes to Inventories due to improved lead times and flow of seasonal product in the current period.

Further impacting the net change in working capital was an unfavorable change in Accounts receivable, in part due to the timing of wholesale shipments in the current period.

Cash provided (used) by investing activities was an inflow of $418 million for the first three months of fiscal 2024, compared to an outflow of $214 million for the first three months of fiscal 2023, primarily driven by the net change in short-term investments.

For the first three months of fiscal 2024, the net change in short-term investments (including sales, maturities and purchases) resulted in a cash inflow of $672 million compared to a cash outflow of $89 million for the first three months of fiscal 2023.

Cash provided (used) by financing activities was an outflow of $1,599 million for the first three months of fiscal 2024 compared to $1,404 million for the first three months of fiscal 2023.

The increased outflow in the first three months of fiscal 2024 was driven by higher share repurchases of $1,133 million for the first three months of fiscal 2024 compared to $983 million in the first three months of fiscal 2023, as well as higher dividend payments of $524 million for the first three months of fiscal 2024 compared to $480 million in the first three months of fiscal 2023.

During the first three months of fiscal 2024, we repurchased a total of 10.5 million shares of NIKE's Class B Common Stock for $1,132 million (an average price of $108.12 per share) under the four-year, $18 billion share repurchase plan authorized by the Board of Directors in June 2022.

As of August 31, 2023, we have repurchased 54.0 million shares at a cost of approximately $5.9 billion (an average price of $109.94 per share) under this $18 billion share repurchase program.

We continue to expect funding of share repurchases will come from operating cash flows and excess cash.

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The Shelf expires on July 21, 2025.

As of February 28, 2023, our committed credit facilities were unchanged from the information previously reported in our Form 10-K for the fiscal year ended May 31, 2022.

As of August 31, 2023, our committed credit facilities were unchanged from the information previously reported within the Annual Report.

We currently have long-term debt ratings of AA- and A1 from Standard and Poor's Corporation and Moody's Investor Services, respectively.

Any changes to these ratings could result in interest rate and facility fee changes.

As of February 28, 2023, we were in full compliance with the covenants under our facilities and believe it is unlikely we will fail to meet any of the covenants in the foreseeable future.

As of February 28, 2023 and May 31, 2022, no amounts were outstanding under our committed credit facilities.

On March 10, 2023, subsequent to the end of the third quarter of fiscal 2023, 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 8, 2024, with an option to extend the maturity date by 364 days.

This facility replaces the prior $1 billion 364-day credit facility agreement entered into on March 11, 2022, which matured on March 10, 2023.

Refer to Note 5 — Short-term Borrowings and Credit Lines for additional information.

As of August 31, 2023, we were in full compliance with the covenants under our facilities and believe it is unlikely we will fail to meet any of the covenants in the foreseeable future.

As of August 31, 2023 and May 31, 2023, no amounts were outstanding under our committed credit facilities.

Liquidity is also provided by our $3 billion commercial paper program.

As of and for the three months ended February 28, 2023, we did not have any borrowings outstanding under our $3 billion program.

As of and for the three months ended August 31, 2023, 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.

We currently have short-term debt ratings of A1+ and P1 from Standard and Poor's Corporation and Moody's Investor Services, respectively.

To date, in fiscal 2023, we have not experienced difficulty accessing the capital or bank markets;

To date, in fiscal 2024, 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 February 28, 2023, we had Cash and equivalents and Short-term investments totaling $10.8 billion, primarily consisting of commercial paper, corporate notes, deposits held at major banks, money market funds, U.S.

As of August 31, 2023, we had Cash and equivalents and Short-term investments totaling $8.8 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.

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All of our investments are investment grade to minimize our credit risk.

While individual securities have varying durations, as of February 28, 2023, the weighted average days to maturity of our cash equivalents and short-term investments portfolio was 104 days.

While individual securities have varying durations, as of August 31, 2023, the weighted average days to maturity of our cash equivalents and short-term investments portfolio was 100 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 in the foreseeable future.

There have been no significant changes to the material cash requirements reported in our Annual Report on Form 10-K for the fiscal year ended May 31, 2022.

There have been no significant changes to the material cash requirements reported within the Annual Report.

OFF-BALANCE SHEET ARRANGEMENTS

As of February 28, 2023, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current or future financial condition, results of operations, liquidity, capital expenditures or capital resources.

As of August 31, 2023, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current or future financial condition, results of operations, liquidity, capital expenditures or capital resources.

NEW ACCOUNTING PRONOUNCEMENTS

Refer to Note 1 — Summary of Significant Accounting Policies within the accompanying Notes to the Unaudited Condensed Financial Statements for recently adopted and issued accounting standards.

Refer to Note 1 — Summary of Significant Accounting Policies within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for recently adopted and issued accounting standards.

CRITICAL ACCOUNTING ESTIMATES

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The preparation of these financial statements 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 in the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section of our most recent Annual Report on Form 10-K have the greatest potential impact on our financial statements, so we consider these to be our critical accounting estimates.

We believe the assumptions and judgments involved in the accounting estimates described in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the Annual Report have the greatest potential impact on our financial statements, so we consider these to be our critical accounting estimates.

Actual results could differ from these estimates.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the information previously reported under Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended May 31, 2022.

There have been no material changes from the information previously reported under Part II, Item 7A within our Annual Report on Form 10-K for the fiscal year ended May 31, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis