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Item 2. Management’s Discussion and Analysis

2024-04-04 compared with 2024-01-05 · 300 added, 274 removed, 342 unchanged (63% of the section changed)

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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 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.

The Consumer Direct Acceleration strategy, which launched in July 2020, has driven revenue growth and millions of new connections with our consumers, and shifted the mix of our business toward our owned stores and digital platforms.

To holistically serve all of our consumers across the marketplace, we expect to continue to invest in our NIKE Direct operations while also increasing investment to elevate and differentiate our brand experience within our 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.

We also remain focused on accelerating our pace of innovation and maximizing the impact of our storytelling.

We continue to invest in a global Enterprise Resource Planning Platform, data and analytics, demand sensing, insight gathering and other areas to create an end-to-end technology foundation.

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

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

Revenues for the third quarter of fiscal 2024 were $12.43 billion compared to $12.39 billion for the third quarter of fiscal 2023

• NIKE Direct revenues were $5.4 billion for the third quarter of fiscal 2024 compared to $5.3 billion for the third quarter of fiscal 2023, and represented approximately 45% of total NIKE Brand revenues

• Gross margin for the third quarter of fiscal 2024 increased 150 basis points to 44.8%, primarily driven by strategic pricing actions and lower ocean freight rates and logistics costs, partially offset by higher product input costs and restructuring charges

• Inventories as of February 29, 2024, were $7.7 billion, a decrease of 9% compared to May 31, 2023, primarily driven by a decrease in units

• We returned approximately $1.4 billion to our shareholders in the third quarter of fiscal 2024 through share repurchases and dividends

ECONOMIC CONDITIONS AND MARKET DYNAMICS

• Consumer Spending:

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.

During the third quarter of fiscal 2024, consumers continued to spend more cautiously and promotional activity remained high across our industry.

In this environment, we continue to experience 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.

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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.

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

• Supply Chain Conditions:

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.

During the first nine months of fiscal 2024 and as of February 29, 2024, 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.

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

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.

The operating environment could remain volatile in the fourth quarter of fiscal 2024, and the risk exists that the worsening of macroeconomic conditions could have a material adverse impact on our 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.

We will also continue to focus on driving gross margin expansion and disciplined cost control while managing the health of our most iconic franchises.

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.

As part of this initiative, we are taking steps to streamline the organization.

These changes will result in a net reduction of our global workforce.

We expect a majority of the future annual wage savings from these actions will be reinvested in consumer facing activities to drive greater impact for our consumers, sports dimensions and the total marketplace.

As of February 29, 2024, we expect to recognize pre-tax charges of approximately $450 million, primarily associated with employee severance costs and accelerated stock-based compensation expense, the majority of which will be recognized by the end of fiscal 2024.

The related cash payments are expected to take place through the first half of fiscal 2025.

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

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 Unaudited Condensed Consolidated Statements of Income.

Total NIKE, Inc.

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

Net income $ 1,578 $ 1,331 $ 3,028 $ 2,799

Interest expense (income), net (22) 16 (56) 29

Income tax expense 344 319 542 679

Earnings before interest and taxes $ 1,900 $ 1,666 $ 3,514 $ 3,507

Calculated as total NIKE, Inc.

EBIT divided by total NIKE, Inc.

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

Earnings before interest and taxes $ 1,900 $ 1,666 $ 3,514 $ 3,507

Total NIKE, Inc.

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

EBIT margin 14.2 % 12.5 % 13.3 % 13.5 %

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.

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.

Actual results may differ from current estimates.

During the third quarter of fiscal 2024, we incurred pre-tax charges of $403 million, primarily associated with employee severance costs and accelerated stock-based compensation expense.

For more information, refer to Note 14 — Restructuring within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

RESULTS OF OPERATIONS

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

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions, except per share data) FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE

Revenues $ 12,429 $ 12,390 0 % $ 38,756 $ 38,392 1 %

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CONSOLIDATED OPERATING RESULTS

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

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

FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)

NIKE Brand Revenues by:

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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.

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.

THIRD QUARTER OF FISCAL 2024 COMPARED TO THIRD QUARTER OF FISCAL 2023

Revenues for the third quarter of fiscal 2024 were $12.43 billion compared to $12.39 billion for the third quarter of fiscal 2023.

On a currency-neutral basis, NIKE, Inc.

revenues were flat, as higher revenues in North America and Greater China, which each increased NIKE, Inc.

Revenues by approximately 1 percentage point, were offset by lower revenues in Europe, Middle East & Africa ("EMEA") and Converse, which each reduced 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.

Revenues, increased 2% on a reported and currency-neutral basis.

The increase, on a currency-neutral basis, was due to higher revenues in Men's, Kids', Women's and the Jordan Brand.

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

Unit sales of footwear increased 2%, while higher average selling price ("ASP") per pair contributed approximately 1 percentage point of footwear revenue growth.

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

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

Unit sales of apparel decreased 8%, while higher ASP per unit contributed approximately 5 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%.

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

• NIKE Brand wholesale revenues increased 3% compared to the third quarter 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, North America and Asia Pacific & Latin America ("APLA"), partially offset by lower revenues in EMEA.

• NIKE Direct revenues were $5.4 billion in the third quarter of fiscal 2024, compared to $5.3 billion for the third quarter of fiscal 2023.

On a currency-neutral basis, NIKE Direct revenues were flat, driven by comparable store sales growth of 3% and the addition of new stores, offset by NIKE Brand Digital sales declines of 4%.

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.

NIKE Brand Digital sales were $3.0 billion for the third quarter of fiscal 2024 compared to $3.1 billion for the third 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.

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

Revenues were $38.8 billion for the first nine months of fiscal 2024, which increased 1% compared to the first nine 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 each contributed approximately 1 percentage point to NIKE, Inc.

Lower revenues for Converse reduced NIKE, Inc.

Revenues by approximately 1 percentage point.

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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, 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.

The increase, on a currency-neutral basis, 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, primarily due to higher revenues in the Jordan Brand and Women's, partially offset by lower revenues in Kids'.

Unit sales of footwear decreased 2%, while higher ASP per pair contributed approximately 4 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.

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

• NIKE Brand 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 12%, while higher ASP per unit contributed approximately 10 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%, 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%.

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.

• NIKE Brand wholesale revenues were flat compared to the first nine months of fiscal 2023, on a reported and currency-neutral basis, as higher revenues in Greater China and APLA were offset by lower revenues in North America and EMEA.

• NIKE Direct revenues increased 4%, on a reported basis, from $15.8 billion for the first nine months of fiscal 2023 to $16.5 billion for the first nine months of fiscal 2024.

On a currency-neutral basis, NIKE Direct revenues increased 4%, primarily driven by comparable store sales growth of 6% and the addition of new stores.

NIKE Brand Digital sales were $9.4 billion for the first nine months of fiscal 2024 compared to $9.3 billion for the first nine 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 NOVEMBER 30, SIX MONTHS ENDED NOVEMBER 30,

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

2023 2022 % CHANGE 2023 2022 % CHANGE

FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE

Gross profit $ 5,562 $ 5,371 4 % $ 17,253 $ 16,697 3 %

Gross margin 44.8 % 43.3 % 150 bps 44.5 % 43.5 % 100 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.

THIRD QUARTER OF FISCAL 2024 COMPARED TO THIRD QUARTER OF FISCAL 2023

For the third quarter of fiscal 2024, our consolidated gross margin was 150 basis points higher than the prior year due to:

• Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis (increasing gross margin approximately 180 basis points), primarily due to strategic pricing actions;

• Lower NIKE Brand product costs, on a wholesale equivalent basis (increasing gross margin approximately 50 basis points), primarily due to lower ocean freight rates and logistics costs, partially offset by higher product input costs;

• Lower other costs, including warehousing costs (increasing gross margin approximately 50 basis points);

• Favorable changes in net foreign currency exchange rates, including hedges (increasing gross margin approximately 10 basis points).

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 50 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:

• Lower off-price margin, on a wholesale equivalent basis (decreasing gross margin approximately 40 basis points);

• Restructuring charges (decreasing gross margin approximately 50 basis points).

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

For the first nine months of fiscal 2024, our consolidated gross margin was 100 basis points higher than the prior year due to:

• Higher NIKE Brand full-price ASP, net of discounts, on a wholesale equivalent basis (increasing gross margin approximately 270 basis points), primarily due to strategic pricing actions;

• Lower other costs (increasing gross margin approximately 10 basis points).

This was partially offset by:

• 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;

• Higher NIKE Brand product costs, on a wholesale equivalent basis (decreasing gross margin approximately 60 basis points), primarily due to higher product input costs largely offset by lower ocean freight rates and logistics costs;

• Unfavorable changes in net foreign currency exchange rates, including hedges (decreasing gross margin approximately 50 basis points);

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

• Restructuring charges (decreasing gross margin approximately 20 basis points);

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

TOTAL SELLING AND ADMINISTRATIVE EXPENSE

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

2023 2022 % CHANGE 2023 2022 % CHANGE

FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE

Demand creation expense (1)

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(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.

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

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

THIRD QUARTER OF FISCAL 2024 COMPARED TO THIRD QUARTER OF FISCAL 2023

Demand creation expense increased 10% reflecting an increase in marketing expense, primarily due to higher advertising and marketing expense and higher sports 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.

Operating overhead expense increased 6% primarily due to restructuring charges, partially offset by lower wage-related expenses and technology spend.

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.

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

Demand creation expense increased 8% reflecting an increase in marketing expense, primarily due to higher advertising and marketing expense, higher sports marketing expense and higher digital marketing.

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.

Operating overhead expense increased 3% primarily due to restructuring charges, partially 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.

For more information related to our organizational realignment and related costs, refer to Note 14 — Restructuring within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

OTHER (INCOME) EXPENSE, NET

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

2023 2022 2023 2022

FEBRUARY 29, 2024 FEBRUARY 28, 2023 FEBRUARY 29, 2024 FEBRUARY 28, 2023

Other (income) expense, net $ (16) $ (58) $ (101) $ (283)

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 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

For the third quarter of fiscal 2024, Other (income) expense, net decreased from $58 million of other income, net, to $16 million of other income, net, primarily due to goodwill impairment in the current year and a net unfavorable change in foreign currency conversion gains and losses, including hedges.

For the first nine months of fiscal 2024, Other (income) expense, net decreased from $283 million of other income, net, to $101 million of other income, net, 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 and goodwill impairment in the current year.

These items were 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 a favorable impact of $16 million and an unfavorable impact of $86 million on our Income before income taxes for the third quarter and first nine months of fiscal 2024.

THREE MONTHS ENDED NINE MONTHS ENDED

FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE

Effective tax rate 16.5 % 16.0 % 50 bps 15.6 % 18.5 % (290) 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.

Our effective tax rate was 16.5% for the third quarter of fiscal 2024, substantially consistent with 16.0% for the third quarter of fiscal 2023.

Our effective tax rate was 15.6% for the first nine months of fiscal 2024, compared to 18.5% for the first nine 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 5 — Income Taxes within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

USE OF NON-GAAP FINANCIAL MEASURES

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.

Earnings Before Interest and Taxes ("EBIT"):

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 and nine months ended February 29, 2024 and February 28, 2023 are as follows:

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions) FEBRUARY 29, 2024 FEBRUARY 28, 2023 FEBRUARY 29, 2024 FEBRUARY 28, 2023

Net income $ 1,172 $ 1,240 $ 4,200 $ 4,039

Interest expense (income), net (52) (7) (108) 22

Income tax expense 232 237 774 916

Earnings before interest and taxes $ 1,352 $ 1,470 $ 4,866 $ 4,977

Calculated as total NIKE, Inc.

EBIT divided by total NIKE, Inc.

Our EBIT margin calculation for the three and nine months ended February 29, 2024 and February 28, 2023 are as follows:

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions) FEBRUARY 29, 2024 FEBRUARY 28, 2023 FEBRUARY 29, 2024 FEBRUARY 28, 2023

Earnings before interest and taxes $ 1,352 $ 1,470 $ 4,866 $ 4,977

Total NIKE, Inc.

Revenues $ 12,429 $ 12,390 $ 38,756 $ 38,392

EBIT margin 10.9 % 11.9 % 12.6 % 13.0 %

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.

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.

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.

OPERATING SEGMENTS

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The breakdown of Revenues is as follows:

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

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

FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)

North America $ 5,070 $ 4,913 3 % 3 % $ 16,118 $ 16,253 -1 % -1 %

17 unchanged sentences

The breakdown of EBIT is as follows:

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

2023 2022 % CHANGE 2023 2022 % CHANGE

FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE

North America $ 1,400 $ 1,190 18 % $ 4,360 $ 4,064 7 %

19 unchanged sentences

NORTH AMERICA

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions) FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 3,460 $ 3,322 4 % 4 % $ 10,950 $ 11,090 -1 % -1 %

6 unchanged sentences

EARNINGS BEFORE INTEREST AND TAXES $ 1,400 $ 1,190 18 % $ 4,360 $ 4,064 7 %

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 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 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 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 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

THIRD QUARTER OF FISCAL 2024 COMPARED TO THIRD QUARTER OF FISCAL 2023

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

Wholesale revenues increased 5%.

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

• Footwear revenues increased 4% on a currency-neutral basis, primarily due to higher revenues in Kids', Women's and Men's.

Unit sales of footwear increased 7%, while lower ASP per pair reduced footwear revenues by approximately 3 percentage points.

Lower ASP per pair was primarily due to a lower mix of NIKE Direct sales and lower NIKE Direct ASP.

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

Unit sales of apparel decreased 5%, while higher ASP per unit contributed approximately 4 percentage points of apparel revenue growth.

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

Reported EBIT increased 18% reflecting higher revenues and the following:

• Gross margin expansion of 290 basis points primarily due to higher full-price ASP, net of discounts, largely due to strategic pricing actions and lower discounts, as well as lower product costs, reflecting lower ocean freight rates and logistics costs, partially offset by higher product input costs.

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

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

The decrease in operating overhead expense was primarily due to lower wage-related expenses.

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

• North America revenues decreased 1% 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 5%, 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%.

NIKE Direct revenues increased 4%, driven by comparable sales growth of 3% and the addition of new stores, as well as digital sales growth of 2%.

• Footwear revenues decreased 1% 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 8%, 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 and NIKE Direct ASPs as well as growth in NIKE Direct.

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

• 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.

Unit sales of apparel decreased 10%, while higher ASP per unit contributed approximately 9 percentage points of apparel revenue growth.

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

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• Gross margin expansion of 250 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.

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

• Selling and administrative expense increase of 2% driven by higher operating overhead expense and demand creation expense.

The increase in operating overhead expense was primarily due to higher other administrative costs, partially offset by lower wage-related expenses.

Demand creation expense increased primarily due to higher digital marketing.

EUROPE, MIDDLE EAST & AFRICA

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions) FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 1,960 $ 2,011 -3 % -3 % $ 6,406 $ 6,086 5 % 3 %

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EARNINGS BEFORE INTEREST AND TAXES $ 734 $ 785 -6 % $ 2,591 $ 2,750 -6 %

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.

THIRD QUARTER OF FISCAL 2024 COMPARED TO THIRD QUARTER OF FISCAL 2023

• EMEA revenues decreased 4% on a currency-neutral basis, primarily due to lower revenues in Women's, Men's and Kids'.

Wholesale revenues decreased 5%.

NIKE Direct revenues decreased 4%, driven by digital sales declines of 10%, reflecting reduced digital traffic, partially offset by comparable store sales growth of 6% and the addition of new stores.

• Footwear revenues decreased 3% on a currency-neutral basis, primarily due to lower revenues in Kids' and Women's.

Unit sales of footwear decreased 9%, 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'.

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

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

Unit sales of apparel decreased 19%, while higher ASP per unit contributed approximately 9 percentage points of apparel revenue growth.

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 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'.

Reported EBIT decreased 6% reflecting lower revenues and the following:

• Gross margin was flat, as lower product costs, reflecting lower ocean freight rates and logistics costs, and higher full-price ASP, net of discounts, primarily due to strategic pricing actions, were offset by unfavorable changes in standard foreign currency exchange rates, lower margin in NIKE Direct and lower off-price margins.

• Selling and administrative expense increase of 1% driven by higher demand creation expense, partially offset by lower operating overhead expense.

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

The decrease in operating overhead expense was primarily due to lower other administrative costs and wage-related expenses, largely offset by unfavorable changes in foreign currency exchange rates.

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

• EMEA revenues were flat on a currency-neutral basis, primarily due to lower revenues in Kids' and Women's, partially offset by higher revenues in Men's.

Wholesale revenues decreased 2%.

NIKE Direct revenues increased 3%, driven by comparable store sales growth of 10% and the addition of new stores, partially offset by digital sales declines of 1%.

• Footwear revenues increased 3% on a currency-neutral basis, primarily due to higher revenues in Men's, partially offset by Kids'.

Unit sales of footwear decreased 4%, 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'.

Higher ASP per pair was primarily due to higher full-price ASP and a higher mix of NIKE Direct sales.

• Apparel revenues decreased 8% on a currency-neutral basis, primarily due to lower revenues in Men's and Women's.

Unit sales of apparel decreased 19%, while higher ASP per unit contributed approximately 11 percentage points of apparel revenue growth.

1 unchanged sentence

Reported EBIT decreased 6% 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.

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

• Gross margin contraction of 150 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 lower product costs, reflecting ocean freight rates and logistics costs.

• Selling and administrative expense increase of 6% driven by higher operating overhead expense and demand creation expense.

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

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

GREATER CHINA

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions) FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 1,547 $ 1,496 3 % 5 % $ 4,195 $ 4,099 2 % 6 %

6 unchanged sentences

EARNINGS BEFORE INTEREST AND TAXES $ 722 $ 702 3 % $ 1,761 $ 1,754 0 %

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'.

THIRD QUARTER OF FISCAL 2024 COMPARED TO THIRD QUARTER OF FISCAL 2023

• Greater China revenues increased 6% on a currency-neutral basis due to higher revenues in Men's, Women's, Kids' and the Jordan Brand.

Wholesale revenues increased 12%.

NIKE Direct revenues decreased 1% due to digital sales declines of 13%, reflecting reduced digital traffic, partially offset by comparable store sales growth of 1% 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.

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

Unit sales of footwear increased 9%, while lower ASP per pair reduced footwear revenues by approximately 4 percentage points.

Lower ASP per pair was primarily due to lower NIKE Direct ASP.

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

Unit sales of apparel increased 10%, while ASP per unit was flat, as higher NIKE Direct ASP was offset by lower off-price and full-price ASPs.

Reported EBIT increased 3% 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'.

• Gross margin contraction of approximately 180 basis points, largely due to unfavorable changes in standard foreign currency exchange rates, lower off-price margins and higher product costs.

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

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

Operating overhead expense decreased due to lower other administrative costs, favorable changes in foreign currency exchange rates and lower wage-related expenses.

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

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

Wholesale revenues increased 15%.

NIKE Direct revenues increased 1% due to comparable store sales growth of 5% and growth in non-comparable store sales, partially offset by digital sales declines of 11%, 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 19% on a currency-neutral basis, primarily due to higher revenues in Men's, Women's, and Kids'.

• Footwear revenues increased 6% on a currency-neutral basis due to higher revenues in Men's, the Jordan Brand, Women's and Kids'.

Unit sales of footwear increased 7%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point.

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

• Apparel revenues increased 16% on a currency-neutral basis, primarily due to higher revenues in Men's and Women's.

Unit sales of apparel increased 6%, while higher ASP per unit contributed approximately 10 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:

• 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.

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

Reported EBIT was flat reflecting higher revenues and the following:

• Gross margin contraction of approximately 70 basis points, primarily due to unfavorable changes in standard foreign currency exchange rates and lower off-price margins, partially offset by higher full-price ASP, net of discounts, largely due to strategic pricing actions, partially offset by product mix.

• Selling and administrative expense increase of 3% 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.

Operating overhead expense increased primarily due to higher other administrative 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.

ASIA PACIFIC & LATIN AMERICA

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions) FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 1,195 $ 1,141 5 % 5 % $ 3,639 $ 3,313 10 % 9 %

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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.

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 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.

THIRD QUARTER OF FISCAL 2024 COMPARED TO THIRD QUARTER OF FISCAL 2023

• APLA revenues increased 4% on a currency-neutral basis due to higher revenues across most territories, led by CASA, Mexico, Japan and Southeast Asia & India, partially offset by lower revenues in the Pacific territory.

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

Wholesale revenues increased 3%.

NIKE Direct revenues increased 4%, driven by comparable store sales growth of 12% and the addition of new stores, partially offset by digital sales declines of 6%, reflecting reduced digital traffic.

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

Unit sales of footwear increased 4%, 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, a higher mix of NIKE Direct sales and higher off-price ASP, partially offset by lower NIKE Direct ASP.

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

Unit sales of apparel decreased 6%, while 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, 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:

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

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

• Gross margin contraction of approximately 190 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.

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

• Selling and administrative expense increase of 2% 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.

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

Operating overhead expense increased primarily due to other administrative costs, partially offset by lower wage-related expenses.

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

• APLA revenues increased 6% on a currency-neutral basis due to higher revenues across most territories, led by Southeast Asia & India, Japan and Mexico.

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%.

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

Wholesale revenues increased 4%.

NIKE Direct revenues increased 7%, driven by comparable store sales growth of 12% and the addition of new stores, as well as digital sales growth of 2%.

• Footwear revenues increased 9% 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.

Unit sales of footwear increased 7%, 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, a higher mix of NIKE Direct sales and higher off-price ASP, partially offset by lower NIKE Direct ASP.

• Apparel revenues decreased 4% on a currency-neutral basis, primarily due to lower revenues in Men's and Women's.

Unit sales of apparel decreased 11%, 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, partially offset by lower NIKE Direct ASP.

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

Reported EBIT decreased 4% reflecting higher revenues and the following:

• Gross margin contraction of approximately 270 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.

This was partially offset by higher full-price ASP, net of discounts, primarily due to product mix and 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 marketing expense.

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

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

Operating overhead expense increased primarily due to higher other administrative costs.

GLOBAL BRAND DIVISIONS

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

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

FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Revenues $ 9 $ 12 -25 % -22 % $ 34 $ 44 -23 % -24 %

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

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.

THIRD QUARTER OF FISCAL 2024 COMPARED TO THIRD QUARTER OF FISCAL 2023

Global Brand Divisions' loss before interest and taxes increased 3% in part due to higher demand creation expense, partially offset by lower operating overhead expense.

The increase in demand creation expense was primarily due to increased advertising and marketing 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.

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

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

Global Brand Divisions' loss before interest and taxes was flat primarily as lower operating overhead expense was offset by higher demand creation expense.

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

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

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

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

FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES

Footwear $ 426 $ 540 -21 % -22 % $ 1,390 $ 1,633 -15 % -16 %

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

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.

THIRD QUARTER OF FISCAL 2024 COMPARED TO THIRD QUARTER OF FISCAL 2023

• Converse revenues decreased 20% on a currency-neutral basis driven by revenue declines in North America, Western Europe, and Asia.

Combined unit sales within the wholesale and direct to consumer channels decreased 17%, driven primarily by a decrease in wholesale, while ASP decreased 3% driven by increased promotional activity in direct to consumer.

• Wholesale revenues decreased 22% on a currency-neutral basis, driven by declines in North America, Western Europe and Asia.

• Direct to consumer revenues decreased 20% on a currency-neutral basis driven by declines in North America and Western Europe due to reduced traffic.

Reported EBIT decreased 40% reflecting lower revenues and the following:

• 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

• Gross margin contraction of approximately 140 basis points due to lower margin in direct to consumer, unfavorable changes in standard foreign currency exchange rates, and increased logistics costs, slightly offset by lower product input costs and ocean freight rates.

• Selling and administrative expense decrease of 1% due to lower operating overhead expense, largely offset by higher demand creation expense.

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

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

• Converse revenues decreased 14% on a currency-neutral basis as revenue declines in North America and Western Europe were partially offset by growth in Asia.

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• Wholesale revenues decreased 14% 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.

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

Reported EBIT decreased 28% 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,

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

• Selling and administrative expense decrease of 3% due to lower operating overhead expense.

Operating overhead expense decreased primarily as a result of lower wage-related expenses.

THREE MONTHS ENDED NINE MONTHS ENDED

(Dollars in millions)

2023 2022 % CHANGE 2023 2022 % CHANGE

FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE FEBRUARY 29, 2024 FEBRUARY 28, 2023 % CHANGE

Revenues $ (14) $ 12 — $ (19) $ 13 —

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and certain other foreign currency derivative instruments.

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:

THIRD QUARTER OF FISCAL 2024 COMPARED TO THIRD QUARTER OF FISCAL 2023

Corporate's loss before interest and taxes increased $178 million for the third quarter of fiscal 2024, primarily due to the following:

• an unfavorable change of $403 million related to restructuring charges, $340 million reported as a component of consolidated Operating overhead expense and $63 million reported as a component of consolidated gross margin;

• an unfavorable change of $4 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, reported as a component of consolidated Other (income) expense, net;

• a favorable change of $167 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 $57 million primarily related to lower wage-related expenses, partially offset by increased professional services, reported as a component of consolidated Operating overhead expense.

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

Corporate's loss before interest and taxes increased $46 million for the first nine months of fiscal 2024, primarily due to the following:

• an unfavorable change of $88 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 $25 million primarily related to increased professional services, partially offset by lower wage-related expenses, reported as a component of consolidated Operating overhead expense;

• a favorable change of $484 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

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

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").

As of and for the three and nine months ended February 29, 2024, 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 8 — 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.

23 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 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.

The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a detriment of approximately $16 million and a benefit of approximately $88 million for the three and nine months ended February 29, 2024, respectively, and a detriment of approximately $549 million and $2,504 million for the three and nine months ended February 28, 2023, respectively.

The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a benefit of approximately $20 million and $84 million for the three and nine months ended February 29, 2024, respectively, and a detriment of approximately $160 million and $729 million for the three and nine months ended February 28, 2023, 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 $37 million and $102 million of our Income before income taxes for the three and six months ended November 30, 2023, 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 a favorable impact of approximately $16 million and an unfavorable impact of approximately $86 million on our Income before income taxes for the three and nine months ended February 29, 2024, respectively.

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOW ACTIVITY

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.

Cash provided (used) by operations was an inflow of $4,810 million for the first nine months of fiscal 2024 compared to $3,588 million for the first nine months of fiscal 2023.

Net income, adjusted for non-cash items, generated $5,096 million of operating cash inflow for the first nine months of fiscal 2024, compared to $4,805 million for the first nine 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 $286 million for the first nine months of fiscal 2024 compared to a decrease of $1,217 million for the first nine 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.

Cash provided (used) by investing activities was an inflow of $1,184 million for the first nine months of fiscal 2024, compared to an inflow of $137 million for the first nine months of fiscal 2023, primarily driven by the net change in short-term investments (including sales, maturities and purchases).

For the first nine months of fiscal 2024, the net change in short-term investments resulted in a cash inflow of $1,792 million compared to a cash inflow of $775 million for the first nine months of fiscal 2023.

Cash provided (used) by financing activities was an outflow of $4,468 million for the first nine months of fiscal 2024 compared to $5,266 million for the first nine months of fiscal 2023.

The decreased outflow was driven by lower share repurchases of $3,214 million in the first nine months of fiscal 2024 compared to $4,101 million in the first nine months of fiscal 2023, partially offset by higher dividend payments of $1,609 million in the first nine months of fiscal 2024 compared to $1,488 million in the first nine months of fiscal 2023.

During the first nine months of fiscal 2024, we repurchased a total of 30.3 million shares of NIKE's Class B Common Stock for $3,206 million (an average price of $105.70 per share) under the four-year, $18 billion share repurchase plan authorized by the Board of Directors in June 2022.

As of February 29, 2024, we have repurchased 73.8 million shares at a cost of approximately $8.0 billion (an average price of $108.46 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 November 30, 2023, our committed credit facilities were unchanged from the information previously reported within the Annual Report.

As of February 29, 2024, 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 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.

As of February 29, 2024, 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 29, 2024 and May 31, 2023, no amounts were outstanding under our committed credit facilities.

On March 8, 2024, subsequent to the end of the third quarter of fiscal 2024, 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 an option to increase borrowings up to $1.5 billion in total with lender approval.

The facility matures on March 7, 2025, with an option to extend the maturity date an additional 364 days.

This facility replaces the prior $1 billion 364-day credit facility agreement entered into on March 10, 2023, which matured on March 8, 2024.

Refer to Note 4 – Short-term Borrowings and Credit Lines for more information.

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

As of and for the three months ended November 30, 2023, we did not have any borrowings outstanding under our $3 billion program.

As of and for the three months ended February 29, 2024, we did not have any borrowings outstanding under our $3 billion program.

We may issue commercial paper or other debt securities depending on general corporate needs.

1 unchanged sentence

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 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.

As of February 29, 2024, we had Cash and equivalents and Short-term investments totaling $10.6 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 November 30, 2023, the weighted average days to maturity of our cash equivalents and short-term investments portfolio was 78 days.

While individual securities have varying durations, as of February 29, 2024, the weighted average days to maturity of our cash equivalents and short-term investments portfolio was 69 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.

1 unchanged sentence

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.

Obligations under endorsement contracts as of February 29, 2024, and significant contracts entered into through the date of this report were $9.9 billion, with $1.6 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 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.

As of February 29, 2024, 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