What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-01-05 compared with 2023-10-06 · 288 added, 161 removed, 328 unchanged (58% of the section changed)

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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.

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

QUARTERLY FINANCIAL HIGHLIGHTS

Revenues for the second quarter of fiscal 2024 were $13.4 billion, an increase of 1% on a reported basis and a decrease of 1% on a currency-neutral basis, compared to the second quarter of fiscal 2023

• NIKE Direct revenues grew 6% from $5.4 billion for the second quarter of fiscal 2023 to $5.7 billion for the second quarter of fiscal 2024, and represented approximately 45% of total NIKE Brand revenues for the second quarter of fiscal 2024

• Gross margin for the second quarter of fiscal 2024 increased 170 basis points to 44.6%, primarily driven by strategic pricing actions and lower ocean freight rates, partially offset by unfavorable changes in net foreign currency exchange rates and higher product input costs

• Inventories as of November 30, 2023, were $8.0 billion, a decrease of 6% compared to May 31, 2023, primarily driven by a decrease in units

• We returned approximately $1.7 billion to our shareholders in the second 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.

During the second quarter of fiscal 2024, we saw shifts in consumer behavior as the global economy remains uncertain.

Across our industry, consumers are spending more cautiously and promotional activity remains high.

In this environment, we experienced lower digital traffic and moderation in our revenue growth.

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

• Cost Inflationary Pressures:

Inflationary pressures, including higher product input costs, continued to negatively impact our gross margin.

These negative impacts on gross margin were more than offset by strategic pricing actions we have taken through the second quarter of fiscal 2024 as well as improvements in ocean freight rates we started to realize at the beginning of the second 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.

During the first six months of fiscal 2024 and as of November 30, 2023, our inventory levels were healthy and reflected our proactive actions taken to manage our inventory supply.

In addition, we continued to experience normalized inventory transit times and flow of seasonal product.

• Foreign Currency Impacts:

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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.

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

We continue to be confident in our brand strength and deep consumer connections.

We are committed to accelerating our pace of innovation, elevating our marketplace experiences and maximizing the impact of our storytelling.

We will also continue to focus on driving gross margin expansion and disciplined cost control.

RECENT DEVELOPMENTS

In December 2023, we announced an enterprise initiative designed to accelerate our future growth.

As part of this initiative, we are taking steps to streamline the organization which are expected to result in pre-tax restructuring charges of approximately $400 million to $450 million, primarily associated with employee severance costs largely expected to be recognized in the third quarter of fiscal 2024 within Operating overhead expense.

The expected pre-tax charges are estimates and subject to a number of assumptions.

Actual results may differ from the estimates provided above.

USE OF NON-GAAP FINANCIAL MEASURES

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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.

Calculated as Net income before Interest expense (income), net and Income tax expense in the Unaudited Condensed 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,

EBIT for the three and six months ended November 30, 2023 and 2022 are as follows:

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions) 2023 2022 2023 2022

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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,

Our EBIT margin calculation for the three and six months ended November 30, 2023 and 2022 are as follows:

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions) 2023 2022 2023 2022

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Revenues $ 13,388 $ 13,315 $ 26,327 $ 26,002

12.5 % 14.5 %

EBIT margin 14.2 % 12.5 % 13.3 % 13.5 %

Currency-neutral revenues:

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RESULTS OF OPERATIONS

THREE MONTHS ENDED AUGUST 31,

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

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

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

Revenues $ 13,388 $ 13,315 1 % $ 26,327 $ 26,002 1 %

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CONSOLIDATED OPERATING RESULTS

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

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

NIKE Brand Revenues by:

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Corporate (3)

(3) 5 — — (5) 1 — —

TOTAL NIKE, INC.

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(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.

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.

SECOND QUARTER OF FISCAL 2024 COMPARED TO SECOND QUARTER OF FISCAL 2023

Revenues were $13.4 billion for the second quarter of fiscal 2024, which increased 1% on a reported basis and decreased 1% on a currency-neutral basis, compared to the second quarter of fiscal 2023.

The decrease, on a currency-neutral basis, was driven by lower revenues in North America, Europe, Middle East & Africa ("EMEA") and Converse, which each reduced NIKE, Inc.

Revenues by approximately 1 percentage point.

Higher revenues in Asia Pacific & Latin America ("APLA") and Greater China each increased NIKE, Inc.

Revenues by approximately 1 percentage point.

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

Revenues, increased 1% on a reported basis and were flat on a currency-neutral basis.

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

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

Unit sales of footwear decreased 6%, while higher average selling price ("ASP") per pair contributed approximately 6 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.

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

Unit sales of apparel decreased 15%, while higher ASP per unit contributed approximately 13 percentage points of apparel revenue growth.

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

• NIKE Brand wholesale revenues decreased 2% and 3% compared to the second quarter of fiscal 2023, on a reported and currency-neutral basis, respectively, primarily due to decreases in North America and EMEA, reflecting our proactive decisions to prioritize marketplace health in the current year coupled with our liquidation of excess inventory in the prior year.

• NIKE Direct revenues increased 6%, on a reported basis, from $5.4 billion in the second quarter of fiscal 2023 to $5.7 billion in the second quarter of fiscal 2024.

On a currency-neutral basis, NIKE Direct revenues increased 4%, driven by comparable store sales growth of 5%, the addition of new stores and NIKE Brand Digital sales growth of 1%.

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

NIKE Brand Digital sales were $3.5 billion for the second quarter of fiscal 2024 compared to $3.4 billion for the second 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.

FIRST SIX MONTHS OF FISCAL 2024 COMPARED TO FIRST SIX MONTHS OF FISCAL 2023

Revenues were $26.3 billion for the first six months of fiscal 2024, which increased 1% compared to the first six months of fiscal 2023 on a reported and currency-neutral basis.

The increase, on a currency-neutral basis, was driven by higher revenues in Greater China and APLA, which both contributed approximately 1 percentage point to NIKE, Inc.

Lower revenues in North America reduced NIKE, Inc.

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Revenues, increased 2% 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.

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

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

Unit sales of footwear decreased 5%, while higher ASP per pair contributed approximately 7 percentage points of footwear revenue growth.

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

• 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.

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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.

• NIKE Direct revenues increased 6%, on a reported basis, from $10.5 billion for the first six months of fiscal 2023 to $11.1 billion for the first six months of fiscal 2024.

On a currency-neutral basis, NIKE Direct revenues increased 5%, driven by comparable store sales growth of 7%, 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.

NIKE Brand Digital sales were $6.4 billion for the first six months of fiscal 2024 compared to $6.2 billion for the first six months 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,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

2023 2022 % CHANGE

2023 2022 % CHANGE 2023 2022 % CHANGE

Gross profit $ 5,971 $ 5,711 5 % $ 11,691 $ 11,326 3 %

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);

Gross margin 44.6 % 42.9 % 170 bps 44.4 % 43.6 % 80 bps

SECOND QUARTER OF FISCAL 2024 COMPARED TO SECOND QUARTER OF FISCAL 2023

For the second quarter of fiscal 2024, our consolidated gross margin was 170 basis points higher than the prior year primarily due to:

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

This was partially offset by:

• Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 60 basis points);

• Higher NIKE Brand product costs, on a wholesale equivalent basis (decreasing gross margin approximately 50 basis points), primarily due to increased product input costs largely offset by lower ocean freight rates;

• Lower off-price margin, on a wholesale equivalent basis (decreasing gross margin approximately 20 basis points);

• Lower margin in our NIKE Direct business (decreasing gross margin approximately 20 basis points).

FIRST SIX MONTHS OF FISCAL 2024 COMPARED TO FIRST SIX MONTHS OF FISCAL 2023

For the first six months of fiscal 2024, our consolidated gross margin was 80 basis points higher than the prior year primarily due to:

• Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis (increasing gross margin approximately 310 basis points) primarily due to strategic pricing actions.

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).

• Higher NIKE Brand product costs, on a wholesale equivalent basis (decreasing gross margin approximately 110 basis points), primarily due to increased product input costs largely offset by lower ocean freight rates;

• Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 80 basis points);

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

TOTAL SELLING AND ADMINISTRATIVE EXPENSE

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

2023 2022 % CHANGE

2023 2022 % CHANGE 2023 2022 % CHANGE

Demand creation expense (1)

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Total selling and administrative expense $ 4,146 $ 4,124 1 % $ 8,262 $ 8,044 3 %

% of revenues 31.8 % 30.9 % 90 bps

% of revenues 31.0 % 31.0 % — bps 31.4 % 30.9 % 50 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.

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.

SECOND QUARTER OF FISCAL 2024 COMPARED TO SECOND QUARTER OF FISCAL 2023

Demand creation expense increased 1% reflecting an increase in marketing expense.

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

Operating overhead expense was flat as increases in NIKE Direct variable costs were offset by lower technology spend and wage-related expenses.

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

FIRST SIX MONTHS OF FISCAL 2024 COMPARED TO FIRST SIX MONTHS OF FISCAL 2023

Demand creation expense increased 7% reflecting an increase in marketing expense.

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

Operating overhead expense increased 1% primarily due to higher wage-related expenses and NIKE Direct variable costs, partially offset by lower technology spend.

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OTHER (INCOME) EXPENSE, NET

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

2023 2022 2023 2022

Other (income) expense, net $ (75) $ (79) $ (85) $ (225)

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 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 the second quarter of fiscal 2024, Other (income) expense, net decreased from $79 million of other income, net, to $75 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, partially offset by the loss recognized in the prior year upon completion of the sale of our entities in Argentina and Uruguay to a third-party distributor.

For the first six months of fiscal 2024, Other (income) expense, net decreased from $225 million of other income, net, to $85 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, partially offset by the loss recognized in the prior year upon completion of the sale of our entities in Argentina and Uruguay to a third-party distributor.

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 $37 million and $102 million on our Income before income taxes for the second quarter and first six months of fiscal 2024.

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

2023 2022 % CHANGE 2023 2022 % CHANGE

Effective tax rate 17.9 % 19.3 % (140) bps 15.2 % 19.5 % (430) bps

Our effective tax rate was 17.9% for the second quarter of fiscal 2024 compared to 19.3% for the second quarter of fiscal 2023, primarily due to a one-time benefit provided by the reduction in accrued withholding taxes on undistributed foreign earnings.

Our effective tax rate was 15.2% for the first six months of fiscal 2024, compared to 19.5% for the first six months of fiscal 2023, primarily due to one-time benefits provided by the delay of the effective date of certain U.S.

foreign tax credit regulations and a reduction in accrued withholding taxes on undistributed foreign earnings.

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

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The breakdown of Revenues is as follows:

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

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

North America $ 5,625 $ 5,830 -4 % -3 % $ 11,048 $ 11,340 -3 % -2 %

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Corporate (3)

(3) 5 — — (5) 1 — —

TOTAL NIKE, INC.

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The primary financial measure used by the Company to evaluate performance of individual operating segments is EBIT, which represents Net income before Interest expense (income), net and Income tax expense in the Unaudited Condensed Consolidated Statements of Income.

The primary financial measure used by the Company to evaluate performance of individual operating segments is EBIT.

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 EBIT is as follows:

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

2023 2022 % CHANGE

2023 2022 % CHANGE 2023 2022 % CHANGE

North America $ 1,526 $ 1,497 2 % $ 2,960 $ 2,874 3 %

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EBIT and EBIT margin represent non-GAAP financial measures.

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

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

NORTH AMERICA

THREE MONTHS ENDED AUGUST 31,

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

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

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

Footwear $ 3,757 $ 3,963 -5 % -5 % $ 7,490 $ 7,768 -4 % -3 %

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EARNINGS BEFORE INTEREST AND TAXES $ 1,526 $ 1,497 2 % $ 2,960 $ 2,874 3 %

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.

SECOND QUARTER OF FISCAL 2024 COMPARED TO SECOND QUARTER OF FISCAL 2023

• North America revenues decreased 3% on a currency-neutral basis due to lower revenues in Men's, Kids' and Women's, partially offset by higher revenues in the Jordan Brand.

Wholesale revenues decreased 9%, reflecting our proactive decisions to prioritize marketplace health in the current year coupled with our liquidation of excess inventory in the prior year.

NIKE Direct revenues increased 3%, driven by digital sales growth of 2%, comparable store sales growth of 1% and the addition of new stores.

• Footwear revenues decreased 5% on a currency-neutral basis due to lower revenues in Men's, Kids' and Women's, partially offset by higher revenues in the Jordan Brand.

Unit sales of footwear decreased 17%, while higher ASP per pair contributed approximately 12 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.

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

• Apparel revenues decreased 1% on a currency-neutral basis, primarily due to lower revenues in Men's, partially offset by higher revenues in Kids' and Women's.

Unit sales of apparel decreased 16%, while higher ASP per unit contributed 15 percentage points of apparel revenue growth.

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

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

Reported EBIT increased 2% 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.

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

This was partially offset by higher product costs, reflecting higher product input costs partially offset by lower ocean freight rates, and lower margin in NIKE Direct.

• Selling and administrative expense increase of 2% 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.

The increase in operating overhead expense was primarily due to an increase in NIKE Direct variable costs, partially offset by lower wage-related expenses.

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

FIRST SIX MONTHS OF FISCAL 2024 COMPARED TO FIRST SIX MONTHS OF FISCAL 2023

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

Wholesale revenues decreased 9%, reflecting our proactive decisions to prioritize marketplace health in the current year coupled with our liquidation of excess inventory in the prior year.

NIKE Direct revenues increased 5%, driven by comparable sales growth of 4%, the addition of new stores and digital sales growth of 3%.

• Footwear revenues decreased 3% on a currency-neutral basis due to lower revenues in Men's, Kids' and Women's, partially offset by higher revenues in the Jordan Brand.

Unit sales of footwear decreased 15%, while higher ASP per pair contributed approximately 12 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.

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

Unit sales of apparel decreased 17%, while higher ASP per unit contributed 16 percentage points of apparel revenue growth.

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

Reported EBIT increased 3% 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 lower discounts.

This was partially offset by higher product costs, reflecting higher product input costs partially offset by lower ocean freight rates.

• Selling and administrative expense increase of 3% driven by higher operating overhead expense.

The increase in operating overhead expense was primarily due to higher NIKE Direct variable costs.

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

EUROPE, MIDDLE EAST & AFRICA

THREE MONTHS ENDED AUGUST 31,

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

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

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

Footwear $ 2,186 $ 2,063 6 % 1 % $ 4,446 $ 4,075 9 % 6 %

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EARNINGS BEFORE INTEREST AND TAXES $ 927 $ 990 -6 % $ 1,857 $ 1,965 -5 %

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.

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

SECOND QUARTER OF FISCAL 2024 COMPARED TO SECOND QUARTER OF FISCAL 2023

• EMEA revenues decreased 3% on a currency-neutral basis due to lower revenues in Women's, Kids' and Men's, partially offset by higher revenues in the Jordan Brand.

Wholesale revenues decreased 8%, reflecting our proactive decisions to prioritize marketplace health in the current year coupled with our liquidation of excess inventory in the prior year.

NIKE Direct revenues increased 7%, driven by digital sales growth of 7%, comparable store sales growth of 8% and the addition of new stores.

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

Unit sales of footwear decreased 5%, while higher ASP per pair contributed approximately 6 percentage points of footwear revenue growth.

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

• Apparel revenues decreased 10% on a currency-neutral basis primarily due to lower revenues in Men's, Women's and Kids'.

Unit sales of apparel decreased 21%, 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, as well as growth in NIKE Direct.

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

Reported EBIT decreased 6% 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.

• Gross margin contraction of 140 basis points largely due to unfavorable changes in standard foreign currency exchange rates, partially offset by lower product costs, reflecting lower ocean freight rates, higher full-price ASP, net of discounts, primarily due to strategic pricing actions, and higher margin in NIKE Direct.

• Selling and administrative expense increase of 8% due to higher demand creation and operating overhead expense.

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

Operating overhead expense increased primarily due to unfavorable changes in foreign currency exchange rates.

FIRST SIX MONTHS OF FISCAL 2024 COMPARED TO FIRST SIX MONTHS OF FISCAL 2023

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

NIKE Direct revenues increased 7%, driven by comparable store sales growth of 11%, the addition of new stores and digital sales growth of 3%.

• Footwear revenues increased 6% on a currency-neutral basis, primarily due to higher revenues in Men's and Women's, partially offset by lower revenues in Kids'.

Unit sales of footwear decreased 1%, while higher ASP per pair contributed approximately 7 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 7% on a currency-neutral basis due to lower revenues in Men's, Women's, the Jordan Brand and Kids'.

Unit sales of apparel decreased 18%, 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.

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

• Gross margin contraction of 220 basis points largely 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 and higher margin in NIKE Direct.

• Selling and administrative expense increase of 9% due to higher operating overhead and demand creation expense.

2 unchanged sentences

GREATER CHINA

THREE MONTHS ENDED AUGUST 31,

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

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

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

Footwear $ 1,361 $ 1,370 -1 % 3 % $ 2,648 $ 2,603 2 % 7 %

6 unchanged sentences

EARNINGS BEFORE INTEREST AND TAXES $ 514 $ 511 1 % $ 1,039 $ 1,052 -1 %

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.

SECOND QUARTER OF FISCAL 2024 COMPARED TO SECOND QUARTER OF FISCAL 2023

• Greater China revenues increased 8% on a currency-neutral basis due to higher revenues in Men's, the Jordan Brand, Women's and Kids'.

NIKE Direct revenues decreased 4% due to digital sales declines of 22%, reflecting reduced digital traffic, partially offset by comparable store sales growth of 7% and growth in non-comparable store sales.

• Footwear revenues increased 3% on a currency-neutral basis due to higher revenues in Men's, the Jordan Brand, Kids' and Women's.

Unit sales of footwear increased 3% and ASP per pair was flat, as lower NIKE Direct ASP and a lower mix of NIKE Direct sales were offset by higher full-price and off-price ASPs.

• Apparel revenues increased 24% on a currency-neutral basis due to higher revenues in Men's, the Jordan Brand, Women's and Kids'.

Unit sales of apparel increased 16%, while higher ASP per unit contributed approximately 8 percentage points of apparel revenue growth.

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

Reported EBIT increased 1% reflecting higher revenues and the following:

• Gross margin expansion of approximately 80 basis points, primarily due to lower product costs, reflecting product mix, partially offset by unfavorable changes in standard foreign currency exchange rates and lower ASP, net of discounts, reflecting product mix partially offset by lower discounts.

• Selling and administrative expense increase of 7% primarily due to higher operating overhead expense.

Operating overhead expense increased due to higher NIKE Direct costs, partially offset by favorable changes in foreign currency exchange rates.

FIRST SIX MONTHS OF FISCAL 2024 COMPARED TO FIRST SIX MONTHS OF FISCAL 2023

• Greater China revenues increased 10% on a currency-neutral basis due to higher revenues in Men's, the Jordan Brand, Women's and Kids'.

NIKE Direct revenues increased 3% due to comparable store sales growth of 7% and growth in non-comparable store sales, partially offset by digital sales declines of 10%, reflecting reduced digital traffic.

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

Unit sales of footwear increased 6%, while higher ASP per pair contributed approximately 1 percentage point 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.

• Apparel revenues increased 19% on a currency-neutral basis, primarily due to higher revenues in Men's, Women's, and Kids'.

Unit sales of apparel increased 5%, while higher ASP per unit contributed approximately 14 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.

Reported EBIT decreased 1% 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.

• Flat gross margin, primarily due to unfavorable changes in standard foreign currency exchange rates offset by higher full-price ASP, net of discounts, largely due to lower discounts.

• Selling and administrative expense increase of 7% primarily due to higher operating overhead and demand creation expense.

Operating overhead expense increased primarily due to higher NIKE Direct costs, partially offset by favorable changes in foreign currency exchange rates.

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 AUGUST 31,

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

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

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

Footwear $ 1,303 $ 1,108 18 % 15 % $ 2,444 $ 2,172 13 % 11 %

7 unchanged sentences

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 Asia Pacific & Latin America ("APLA") operating segment results.

The impacts from closing these transactions are included within Corporate and are not reflected in the Asia Pacific & Latin America 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 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%.

SECOND QUARTER OF FISCAL 2024 COMPARED TO SECOND QUARTER OF FISCAL 2023

• APLA revenues increased 10% on a currency-neutral basis due to higher revenues across most territories, led by Southeast Asia & India, Korea and Mexico.

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

NIKE Direct revenues increased 15%, driven by digital sales growth of 14%, comparable store sales growth of 11% and the addition of new stores.

• Footwear revenues increased 15% 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.

Unit sales of footwear increased 10%, while higher ASP per unit contributed approximately 5 percentage points of footwear revenue growth.

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

• Apparel revenues decreased 2% on a currency-neutral basis, primarily due to lower revenues in Men's and Women's.

Unit sales of apparel decreased 9%, while higher ASP per unit contributed approximately 7 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.

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

Reported EBIT increased 7% reflecting higher revenues and the following:

• Gross margin contraction of approximately 200 basis points primarily due to 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, primarily due to strategic pricing actions.

• Selling and administrative expense increase of 9% due to higher demand creation and operating overhead expense.

Demand creation expense increased primarily due to higher digital marketing and sports marketing expense.

Operating overhead expense increased primarily due to higher wage-related expenses and NIKE Direct variable costs.

FIRST SIX MONTHS OF FISCAL 2024 COMPARED TO FIRST SIX MONTHS OF FISCAL 2023

• APLA revenues increased 7% on a currency-neutral basis due to higher revenues across most territories, led by Southeast Asia & India, Japan, Mexico and Korea, partially offset by lower revenues in CASA.

Within our CASA territory, the transition of our Chile, Argentina and Uruguay entities to a third-party distributor operating model did not have a material impact on APLA revenues.

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

NIKE Direct revenues increased 9%, driven by comparable store sales growth of 11%, 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 Men's, Women's, the Jordan Brand and Kids'.

Unit sales of footwear increased 8%, while higher ASP per unit contributed approximately 3 percentage points of footwear revenue growth.

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

• Apparel revenues decreased 5% on a currency-neutral basis, primarily due to lower revenues in Men's and Women's.

Unit sales of apparel decreased 13%, 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, partially offset by lower NIKE Direct ASP.

Reported EBIT decreased 5% 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.

• Gross margin contraction of approximately 310 basis points primarily due to unfavorable changes in standard foreign currency exchange rates, lower margin in NIKE Direct and higher product costs, reflecting higher product input costs.

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

• Selling and administrative expense increase of 12% 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.

Demand creation expense increased primarily due to higher marketing expense.

Operating overhead expense increased primarily due to higher wage-related expenses and NIKE Direct variable costs.

GLOBAL BRAND DIVISIONS

THREE MONTHS ENDED AUGUST 31,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(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 $ 12 $ 18 -33 % -41 % $ 25 $ 32 -22 % -25 %

2 unchanged sentences

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

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.

SECOND QUARTER OF FISCAL 2024 COMPARED TO SECOND QUARTER OF FISCAL 2023

Global Brand Divisions' loss before interest and taxes decreased 5% primarily due to lower operating overhead and demand creation expense.

Lower operating overhead expense was primarily due to lower technology spend and wage-related costs.

Lower demand creation expense was primarily due to decreased advertising and marketing expense.

FIRST SIX MONTHS OF FISCAL 2024 COMPARED TO FIRST SIX MONTHS OF FISCAL 2023

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

Lower operating overhead expense was primarily due to lower technology spend and lower wage-related costs.

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,

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(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 $ 442 $ 517 -15 % -16 % $ 964 $ 1,093 -12 % -13 %

10 unchanged sentences

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

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.

SECOND QUARTER OF FISCAL 2024 COMPARED TO SECOND QUARTER OF FISCAL 2023

• Converse revenues decreased 13% on a currency-neutral basis as revenue declines in North America and Western Europe were partially offset by growth in Asia.

Combined unit sales within the wholesale and direct to consumer channels decreased 13%, driven primarily by a decrease in wholesale, while ASP was flat.

• Wholesale revenues decreased 17% on a currency-neutral basis, as declines in North America and Western Europe were partially offset by growth in Asia.

• Direct to consumer revenues decreased 9% on a currency-neutral basis primarily due to reduced traffic in North America.

Reported EBIT decreased 25% 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,

• Gross margin contraction of approximately 160 basis points due to lower margin in direct to consumer and unfavorable changes in standard foreign currency exchange rates, offset by lower ocean freight rates.

• Selling and administrative expense decrease of 8% due to lower demand creation and operating overhead expense.

Demand creation expense decreased as a result of lower advertising and marketing costs while operating overhead expense decreased primarily as a result of lower wage-related expenses.

FIRST SIX MONTHS OF FISCAL 2024 COMPARED TO FIRST SIX MONTHS OF FISCAL 2023

• Converse revenues decreased 11% on a currency-neutral basis as revenue declines in North America and Western Europe were partially offset by growth in Asia.

Combined unit sales within the wholesale and direct to consumer channels decreased 9% and ASP decreased 2%, reflecting promotional activity in direct to consumer.

• Wholesale revenues decreased 11% on a currency-neutral basis, as declines in North America and Western Europe were partially offset by growth in Asia.

• Direct to consumer revenues decreased 11% on a currency-neutral basis primarily due to reduced traffic in North America.

Reported EBIT decreased 22% reflecting lower revenues and the following:

• Gross margin contraction of approximately 180 basis points due to unfavorable changes in standard foreign currency exchange rates, lower margin in direct to consumer, and higher other costs, slightly offset by lower product costs and ocean freight rates.

• Selling and administrative expense decrease of 4% due to lower operating overhead and demand creation expense.

Operating overhead expense decreased primarily as a result of lower wage-related expenses while demand creation expense decreased due to lower advertising and marketing costs.

THREE MONTHS ENDED NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

(Dollars in millions)

2023 2022 % CHANGE

2023 2022 % CHANGE 2023 2022 % CHANGE

Revenues $ (3) $ 5 — $ (5) $ 1 —

9 unchanged sentences

and certain other foreign currency derivative instruments.

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;

SECOND QUARTER OF FISCAL 2024 COMPARED TO SECOND QUARTER OF FISCAL 2023

Corporate's loss before interest and taxes decreased $209 million for the second quarter of fiscal 2024, primarily due to the following:

• a favorable change of $213 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;

• a favorable change of $24 million related to the loss recognized in the prior year upon completion of the sale of our entities in Argentina and Uruguay to a third-party distributor, partially offset by 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;

• an unfavorable change of $33 million primarily related to professional services, reported as a component of consolidated Operating overhead expense.

FIRST SIX MONTHS OF FISCAL 2024 COMPARED TO FIRST SIX MONTHS OF FISCAL 2023

Corporate's loss before interest and taxes decreased $132 million for the first six months of fiscal 2024, primarily due to the following:

• a favorable change of $318 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 $92 million primarily 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, partially offset by the loss recognized in the prior year upon completion of the sale of our entities in Argentina and Uruguay to a third-party distributor, reported as a component of consolidated Other (income) expense, net;

• an unfavorable change of $92 million primarily related to increased professional services and wage-related expenses, reported as a component of consolidated Operating overhead expense.

FOREIGN CURRENCY EXPOSURES AND HEDGING PRACTICES

7 unchanged sentences

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

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")"

As of and for the three and six months ended November 30, 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.

9 unchanged sentences

• Non-Functional Currency Denominated Monetary Assets and Liabilities — Our global subsidiaries have various monetary assets and liabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies other than their functional currencies.

These balance sheet items are subject to remeasurement which may create fluctuations in Other (income) expense, net within our consolidated results of operations.

These balance sheet items are subject to remeasurement which may create fluctuations in Other (income) expense, net within our Unaudited Condensed Consolidated Statements of Income.

MANAGING TRANSACTIONAL EXPOSURES

3 unchanged sentences

Certain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated monetary assets and liabilities subject to remeasurement are not formally designated as hedging instruments.

Accordingly, changes in fair value of these instruments are recognized in Other (income) expense, net and are intended to offset the foreign currency impact of the remeasurement of the related non-functional currency denominated asset or liability being hedged.

Accordingly, changes in fair value of these instruments are recognized in Other (income) expense, net within our Unaudited Condensed Consolidated Statements of Income 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

5 unchanged sentences

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 $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.

The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a benefit of approximately $161 million and $104 million for the three and six months ended November 30, 2023, respectively, and a detriment of approximately $1,132 million and $1,955 million for the three and six months ended November 30, 2022, respectively.

The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a benefit of approximately $66 million and $64 million for the three and six months ended November 30, 2023, respectively, and a detriment of approximately $316 million and $569 million for the three and six months ended November 30, 2022, respectively.

MANAGING TRANSLATIONAL EXPOSURES

11 unchanged sentences

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

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 $37 million and $102 million of our Income before income taxes for the three and six months ended November 30, 2023, respectively.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW ACTIVITY

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.

Cash provided (used) by operations was an inflow of $2,751 million for the first six months of fiscal 2024 compared to $1,358 million for the first six months of fiscal 2023.

Net income, adjusted for non-cash items, generated $3,613 million of operating cash inflow for the first six months of fiscal 2024, compared to $3,367 million for the first six 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 $862 million for the first six months of fiscal 2024 compared to a decrease $2,009 million for the first six months of fiscal 2023.

The favorable net change in working capital was primarily impacted by favorable changes to Inventories due to reduced inventory purchases and improved lead times in the current period .

Cash provided (used) by investing activities was an inflow of $875 million for the first six months of fiscal 2024, compared to an outflow of $23 million for the first six months of fiscal 2023, primarily driven by the net change in short-term investments (including sales, maturities and purchases).

For the first six months of fiscal 2024, the net change in short-term investments resulted in a cash inflow of $1,343 million compared to a cash inflow of $423 million for the first six months of fiscal 2023.

Cash provided (used) by financing activities was an outflow of $3,151 million for the first six months of fiscal 2024 compared to $3,321 million for the first six months of fiscal 2023.

The decreased outflow was driven by lower share repurchases of $2,331 million in the first six months of fiscal 2024 compared to $2,550 million in the first six months of fiscal 2023, partially offset by higher dividend payments of $1,047 million in the first six months of fiscal 2024 compared to $960 million in the first six months of fiscal 2023.

During the first six months of fiscal 2024, we repurchased a total of 22.4 million shares of NIKE's Class B Common Stock for $2,341 million (an average price of $104.43 per share) under the four-year, $18 billion share repurchase plan authorized by the Board of Directors in June 2022.

As of November 30, 2023, we have repurchased 65.9 million shares at a cost of approximately $7.1 billion (an average price of $108.36 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.

4 unchanged sentences

The Shelf expires on July 21, 2025.

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

As of November 30, 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 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.

As of November 30, 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 November 30, 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 August 31, 2023, we did not have any borrowings outstanding under our $3 billion program.

As of and for the three months ended November 30, 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.

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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 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.

As of November 30, 2023, we had Cash and equivalents and Short-term investments totaling $9.9 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 August 31, 2023, the weighted average days to maturity of our cash equivalents and short-term investments portfolio was 100 days.

While individual securities have varying durations, as of November 30, 2023, the weighted average days to maturity of our cash equivalents and short-term investments portfolio was 78 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 within the Annual Report.

CONTRACTUAL OBLIGATIONS

As a result of renewals of, and additions to, outstanding endorsement contracts, cash payments due under these contracts have increased from what was reported within our Annual Report.

Obligations under endorsement contracts as of November 30, 2023, and significant contracts entered into through the date of this report were $9.1 billion, with $1.4 billion payable within 12 months.

Other than the changes reported above, there have been no significant changes to the material cash requirements reported within our Annual Report.

OFF-BALANCE SHEET ARRANGEMENTS

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.

As of November 30, 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

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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