NIKE, Inc. 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW NIKE designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and services worldwide. We are the largest seller of athletic footwear and apparel in the world. We sell our products through two distribution channels: NIKE Direct operations which are comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital") and to wholesale accounts, which include a mix of independent distributors, licensees and sales representatives in nearly all countries around the world. Our goal is to deliver value to our shareholders by building a profitable global portfolio of branded footwear, apparel, equipment and accessories businesses. Our strategy is to achieve sustainable, profitable long-term revenue growth by leading with sport, creating innovative, "must-have" products, building deep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms and at retail. QUARTERLY FINANCIAL HIGHLIGHTS • NIKE, Inc. Revenues for the third quarter of fiscal 2025 were $11.3 billion compared to $12.4 billion for the third quarter of fiscal 2024 • NIKE Direct revenues were $4.7 billion for the third quarter of fiscal 2025 compared to $5.4 billion for the third quarter of fiscal 2024, and represented approximately 43% of total NIKE Brand revenues • NIKE Brand wholesale revenues were $6.2 billion for the third quarter of fiscal 2025 compared to $6.6 billion for the third quarter of fiscal 2024 • Gross margin for the third quarter of fiscal 2025 decreased 330 basis points to 41.5% • Inventories as of February 28, 2025, were $7.5 billion, flat compared to May 31, 2024 • We returned approximately $1.1 billion to our shareholders in the third quarter of fiscal 2025 through dividends and share repurchases Our results for the third quarter of fiscal 2025 reflected a decrease in traffic across NIKE Direct and our actions to reduce supply of certain footwear products in the marketplace through increased markdowns, higher sales-related reserves and discounts which negatively impacted our Revenues and gross margin. FACTORS IMPACTING OUR BUSINESS We are navigating through several external factors that create uncertainty and volatility in the operating environment, including, but not limited to, geopolitical dynamics, new tariffs, tax regulation and fluctuating foreign exchange rates. These factors, and any changes to these factors, among others, could have a material adverse impact on consumer behavior and on our future Revenues and overall profitability. For a discussion of these factors and other risks, refer to Risk Factors in Item 1A of Part 1 within our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 (the "Annual Report"). Despite these factors, we are focused on building a complete product portfolio, creating stories to inspire and emotionally connect with consumers, and elevating and growing the entire marketplace as we continue to take actions across the following areas: • Product Management: Reducing the supply of certain footwear products in the marketplace as we shift to new and innovative products and rebalance the mix of our footwear portfolio. • Marketplace Management: Repositioning NIKE Brand Digital as a full-price platform and reinvesting in wholesale distribution. This includes liquidating inventory through increased markdowns across NIKE Direct, and higher sales returns and discounts with our wholesale partners to reduce inventory and create capacity for new product. • Brand Management: Increasing investment in demand creation including brand marketing and sports marketing to support key product launches and sports moments. Over the next several quarters, we expect these actions will have a negative impact on our Revenues and gross margin as well as higher Demand creation expense. However, we believe these actions will reignite brand momentum and reposition our business to drive long-term shareholder value. 24 Table of Contents 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. GAAP. References to these measures should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Management uses these non-GAAP measures when evaluating the Company's performance, including when making financial and operating decisions. Additionally, management believes these non-GAAP financial measures provide investors with additional financial information that should be considered when assessing our underlying business performance and trends. Earnings Before Interest and Taxes ("EBIT"): Calculated as Net income before Interest expense (income), net and Income tax expense in the Unaudited Condensed Consolidated Statements of Income. Total NIKE, Inc. EBIT for the three and nine months ended February 28, 2025 and February 29, 2024 are as follows: THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024 Net income $ 794 $ 1,172 $ 3,008 $ 4,200 Add: Interest expense (income), net (18) (52) (85) (108) Add: Income tax expense 50 232 559 774 Earnings before interest and taxes $ 826 $ 1,352 $ 3,482 $ 4,866 EBIT margin: Calculated as total NIKE, Inc. EBIT divided by total NIKE, Inc. Revenues. Our EBIT margin calculation for the three and nine months ended February 28, 2025 and February 29, 2024 are as follows: THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024 Numerator Earnings before interest and taxes $ 826 $ 1,352 $ 3,482 $ 4,866 Denominator Total NIKE, Inc. Revenues $ 11,269 $ 12,429 $ 35,212 $ 38,756 EBIT margin 7.3 % 10.9 % 9.9 % 12.6 % Currency-neutral revenues: Currency-neutral revenues enhance visibility to underlying business trends, excluding the impact of translation arising from foreign currency exchange rate fluctuations. Currency-neutral revenues are calculated using actual exchange rates in use during the comparative prior year period in place of the exchange rates in use during the current period. COMPARABLE STORE SALES Comparable store sales: This key metric, which excludes NIKE Brand Digital sales, comprises revenues from NIKE-owned in-line and factory stores for which all three of the following requirements have been met: (1) the store has been open at least one year, (2) square footage has not changed by more than 15% within the past year and (3) the store has not been permanently repositioned within the past year. Comparable store sales represents a performance metric that we believe is useful information for management and investors in understanding the performance of our established NIKE-owned in-line and factory stores. Management considers this metric when making financial and operating decisions. The method of calculating comparable store sales varies across the retail industry. As a result, our calculation of this metric may not be comparable to similarly titled metrics used by other companies. 25 Table of Contents RESULTS OF OPERATIONS THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions, except per share data) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE Revenues $ 11,269 $ 12,429 -9 % $ 35,212 $ 38,756 -9 % Cost of sales 6,594 6,867 -4 % 19,891 21,503 -7 % Gross profit 4,675 5,562 -16 % 15,321 17,253 -11 % Gross margin 41.5 % 44.8 % 43.5 % 44.5 % Demand creation expense 1,088 1,011 8 % 3,436 3,194 8 % Operating overhead expense 2,799 3,215 -13 % 8,504 9,294 -9 % Total selling and administrative expense 3,887 4,226 -8 % 11,940 12,488 -4 % % of revenues 34.5 % 34.0 % 33.9 % 32.2 % Interest expense (income), net (18) (52) — (85) (108) — Other (income) expense, net (38) (16) — (101) (101) — Income before income taxes 844 1,404 -40 % 3,567 4,974 -28 % Income tax expense 50 232 -78 % 559 774 -28 % Effective tax rate 5.9 % 16.5 % 15.7 % 15.6 % NET INCOME $ 794 $ 1,172 -32 % $ 3,008 $ 4,200 -28 % Diluted earnings per common share $ 0.54 $ 0.77 -30 % $ 2.02 $ 2.74 -26 % 26 Table of Contents CONSOLIDATED OPERATING RESULTS REVENUES THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1) NIKE, Inc. Revenues: NIKE Brand Revenues by: Footwear $ 7,208 $ 8,162 -12 % -9 % $ 22,325 $ 25,190 -11 % -10 % Apparel 3,193 3,290 -3 % -1 % 9,963 10,452 -5 % -4 % Equipment 477 487 -2 % 0 % 1,624 1,497 8 % 9 % Global Brand Divisions (2) 12 9 33 % 21 % 39 34 15 % 13 % Total NIKE Brand Revenues 10,890 11,948 -9 % -6 % 33,951 37,173 -9 % -8 % Converse 405 495 -18 % -16 % 1,335 1,602 -17 % -16 % Corporate (3) (26) (14) — — (74) (19) — — TOTAL NIKE, INC. REVENUES $ 11,269 $ 12,429 -9 % -7 % $ 35,212 $ 38,756 -9 % -8 % Supplemental NIKE Brand Revenues Details: NIKE Brand Revenues by: Sales to Wholesale Customers $ 6,155 $ 6,588 -7 % -4 % $ 19,485 $ 20,689 -6 % -5 % Sales through NIKE Direct 4,723 5,351 -12 % -10 % 14,427 16,450 -12 % -12 % Global Brand Divisions (2) 12 9 33 % 21 % 39 34 15 % 13 % TOTAL NIKE BRAND REVENUES $ 10,890 $ 11,948 -9 % -6 % $ 33,951 $ 37,173 -9 % -8 % (1) The percent change excluding currency changes represents a non-GAAP financial measure. For additional information, see "Use of Non-GAAP Financial Measures". (2) Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. (3) Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program. THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024 • NIKE, Inc. Revenues for the third quarter of fiscal 2025 were $11.3 billion compared to $12.4 billion for the third quarter of fiscal 2024. On a currency-neutral basis, NIKE, Inc. Revenues decreased 7%, primarily due to lower revenues in Greater China, Europe, Middle East & Africa ("EMEA") and North America, which each reduced NIKE, Inc. Revenues by approximately 3, 2 and 2 percentage points, respectively. • NIKE Brand revenues, which represented over 90% of NIKE, Inc. Revenues, decreased 9% on a reported basis and 6% on a currency-neutral basis. The decrease on a currency-neutral basis was due to lower revenues in the Jordan Brand, Men's, Kids' and Women's. • NIKE Brand footwear revenues decreased 9% on a currency-neutral basis. Unit sales of footwear decreased 8%, while lower average selling price ("ASP") per pair reduced footwear revenues by approximately 1 percentage point. Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by product mix. • NIKE Brand apparel revenues decreased 1% on a currency-neutral basis. Unit sales of apparel were flat, while lower ASP per unit reduced apparel revenues by approximately 1 percentage point. Lower ASP per unit was primarily due to changes in channel mix and higher discounts, partially offset by product mix. • NIKE Brand wholesale revenues decreased 7% on a reported basis and 4% on a currency-neutral basis. The decrease on a currency-neutral basis was driven by lower revenues in Greater China, EMEA, Asia Pacific & Latin America ("APLA"), partially offset by an increase in North America. 27 Table of Contents • NIKE Direct revenues were $4.7 billion in the third quarter of fiscal 2025, compared to $5.4 billion for the third quarter of fiscal 2024. NIKE Brand Digital sales were $2.5 billion for the third quarter of fiscal 2025 compared to $3.0 billion for the third quarter of fiscal 2024. On a currency-neutral basis, NIKE Direct revenues decreased 10%, primarily due to NIKE Brand Digital sales declines of 15% and comparable store sales declines of 3% compared to the third quarter of fiscal 2024. For additional information regarding comparable store sales, including the definition, see "Comparable Store Sales". FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024 • NIKE, Inc. Revenues were $35.2 billion for the first nine months of fiscal 2025 compared to $38.8 billion for the first nine months of fiscal 2024. On a currency-neutral basis, NIKE, Inc. Revenues decreased 8%, primarily due to lower revenues in North America, EMEA, Greater China and Converse which each reduced NIKE, Inc. Revenues by 3, 3, 1 and 1 percentage points, respectively. • NIKE Brand revenues, which represented over 90% of NIKE, Inc. Revenues, decreased 9% on a reported basis and 8% on a currency-neutral basis. The decrease on a currency-neutral basis was due to lower revenues in the Jordan Brand, Men's, Women's and Kids'. • NIKE Brand footwear revenues decreased 10% on a currency-neutral basis. Unit sales of footwear decreased 8%, while lower ASP per pair reduced footwear revenues by approximately 2 percentage points. Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by strategic pricing actions. • NIKE Brand apparel revenues decreased 4% on a currency-neutral basis. Unit sales of apparel decreased 5%, while higher ASP per unit contributed approximately 1 percentage point of apparel revenue growth. Higher ASP per unit was primarily due to strategic pricing actions, partially offset by changes in channel mix. • NIKE Brand wholesale revenues decreased 6% and 5% on a reported and currency-neutral basis, respectively. The decrease on a currency-neutral basis was driven by lower revenues in EMEA, Greater China, North America, and APLA. • NIKE Direct revenues were $14.4 billion for the first nine months of fiscal 2025, compared to $16.5 billion for the first nine months of fiscal 2024. NIKE Brand Digital sales were $7.6 billion for the first nine months of fiscal 2025 compared to $9.4 billion for the first nine months of fiscal 2024. On a currency-neutral basis, NIKE Direct revenues decreased 12%, primarily due to NIKE Brand Digital sales declines of 19% and comparable store sales declines of 2% compared to the first nine months of fiscal 2024. GROSS MARGIN THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE Gross profit $ 4,675 $ 5,562 -16 % $ 15,321 $ 17,253 -11 % Gross margin 41.5 % 44.8 % (330) bps 43.5 % 44.5 % (100) bps THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024 For the third quarter of fiscal 2025, our consolidated gross margin was 330 basis points lower than the prior year due to: • Lower NIKE Brand ASP (decreasing gross margin approximately 150 basis points), primarily due to higher discounts and changes in channel mix; • Higher other costs (decreasing gross margin approximately 90 basis points), in part due to higher inventory obsolescence reserves; • Higher NIKE Brand product costs (decreasing gross margin approximately 70 basis points); • Unfavorable changes in foreign currency exchange rates, net of hedges (decreasing gross margin approximately 30 basis points); and • Lower gross margin from Converse (decreasing gross margin approximately 20 basis points). This was partially offset by: • Restructuring charges in the prior year (increasing gross margin approximately 50 basis points). 28 Table of Contents FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024 For the first nine months of fiscal 2025, our consolidated gross margin was 100 basis points lower than the prior year due to: • Lower NIKE Brand ASP (decreasing gross margin approximately 140 basis points), primarily due to higher discounts and changes in channel mix, partially offset by benefits from strategic pricing actions; • Higher other costs (decreasing gross margin approximately 70 basis points), in part due to higher inventory obsolescence reserves; and • Lower gross margin from Converse (decreasing gross margin approximately 10 basis points). This was partially offset by: • Lower NIKE Brand product costs (increasing gross margin approximately 100 basis points); • Lower warehousing and logistics costs (increasing gross margin approximately 30 basis points); and • Restructuring charges in the prior year (increasing gross margin approximately 20 basis points). TOTAL SELLING AND ADMINISTRATIVE EXPENSE THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE Demand creation expense (1) $ 1,088 $ 1,011 8 % $ 3,436 $ 3,194 8 % Operating overhead expense (2) 2,799 3,215 -13 % 8,504 9,294 -9 % Total selling and administrative expense $ 3,887 $ 4,226 -8 % $ 11,940 $ 12,488 -4 % % of revenues 34.5 % 34.0 % 50 bps 33.9 % 32.2 % 170 bps (1) Demand creation expense consists of brand marketing expense, including advertising and promotion costs such as production and media costs, digital marketing expense, brand events and retail brand presentation costs, and sports marketing expense, including expenses related to endorsement contracts, complimentary product and sports marketing events. (2) Operating overhead expense consists primarily of wage and benefit-related expenses and other administrative expenses, such as research and development costs, bad debt expense, rent, depreciation and amortization and costs related to professional services, certain technology investments, meetings and travel. THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024 Demand creation expense increased 8% primarily due to an increase in brand marketing expense, reflecting investment in key sports events. Changes in foreign currency exchange rates did not have a material impact on Demand creation expense. Operating overhead expense decreased 13% primarily due to restructuring charges in the prior year and lower wage-related expenses. Changes in foreign currency exchange rates did not have a material impact on Operating overhead expense. FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024 Demand creation expense increased 8% primarily due to an increase in brand marketing expense, reflecting investment in key sports events. Changes in foreign currency exchange rates did not have a material impact on Demand creation expense. Operating overhead expense decreased 9% due to restructuring charges in the prior year, lower wage-related expenses and lower other administrative costs. Changes in foreign currency exchange rates did not have a material impact on Operating overhead expense. 29 Table of Contents OTHER (INCOME) EXPENSE, NET THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 FEBRUARY 28, 2025 FEBRUARY 29, 2024 Other (income) expense, net $ (38) $ (16) $ (101) $ (101) 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 outside the normal course of business. For the third quarter of fiscal 2025, Other (income) expense, net increased from $16 million of other income, net, in the prior year to $38 million of other income, net, in the current year, primarily due to goodwill impairment in the prior year and a net favorable change in foreign currency conversion gains and losses, including hedges. For the first nine months of fiscal 2025, Other (income) expense, net was flat compared to the prior year. INCOME TAXES THREE MONTHS ENDED NINE MONTHS ENDED FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE Effective tax rate 5.9 % 16.5 % (1,060) bps 15.7 % 15.6 % 10 bps Our effective tax rate was 5.9% for the third quarter of fiscal 2025, compared to 16.5% for the third quarter of fiscal 2024 primarily due to a one-time, non-cash deferred tax benefit provided by recently finalized U.S. tax regulations related to foreign currency gains and losses. Our effective tax rate was 15.7% for the first nine months of fiscal 2025, compared to 15.6% for the first nine months of fiscal 2024, primarily due to decreased benefits from stock-based compensation and one-time benefits in the first nine months of fiscal 2024 including the impact of the delay of the effective date of certain U.S. foreign tax credit regulations. These impacts were largely offset by a one-time, non-cash deferred tax benefit in the first nine months of fiscal 2025 provided by recently finalized U.S. tax regulations related to foreign currency gains and losses. For additional information, refer to Note 5 — Income Taxes within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. 30 Table of Contents OPERATING SEGMENTS As discussed in Note 11 — Operating Segments in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements, our operating segments are evidence of the structure of the Company's internal organization. The NIKE Brand segments are defined by geographic regions for operations participating in NIKE Brand sales activity. The breakdown of Revenues is as follows: THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1) North America $ 4,864 $ 5,070 -4 % -4 % $ 14,869 $ 16,118 -8 % -8 % Europe, Middle East & Africa 2,811 3,138 -10 % -6 % 9,257 10,315 -10 % -10 % Greater China 1,733 2,084 -17 % -15 % 5,110 5,682 -10 % -10 % Asia Pacific & Latin America 1,470 1,647 -11 % -4 % 4,676 5,024 -7 % -3 % Global Brand Divisions (2) 12 9 33 % 21 % 39 34 15 % 13 % TOTAL NIKE BRAND 10,890 11,948 -9 % -6 % 33,951 37,173 -9 % -8 % Converse 405 495 -18 % -16 % 1,335 1,602 -17 % -16 % Corporate (3) (26) (14) — — (74) (19) — — TOTAL NIKE, INC. REVENUES $ 11,269 $ 12,429 -9 % -7 % $ 35,212 $ 38,756 -9 % -8 % (1) The percent change excluding currency changes represents a non-GAAP financial measure. For additional information, see "Use of Non-GAAP Financial Measures". (2) Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. (3) Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program. The primary financial measure used by the Company to evaluate performance of individual operating segments is EBIT. As discussed in Note 11 — Operating Segments in the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements, certain corporate costs are not included in EBIT of our operating segments. The breakdown of EBIT is as follows: THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE North America $ 1,103 $ 1,400 -21 % $ 3,690 $ 4,360 -15 % Europe, Middle East & Africa 480 734 -35 % 2,103 2,591 -19 % Greater China 421 722 -42 % 1,298 1,761 -26 % Asia Pacific & Latin America 346 471 -27 % 1,208 1,406 -14 % Global Brand Divisions (1,093) (1,199) 9 % (3,453) (3,572) 3 % TOTAL NIKE BRAND (1) 1,257 2,128 -41 % 4,846 6,546 -26 % Converse 39 98 -60 % 213 380 -44 % Corporate (470) (874) 46 % (1,577) (2,060) 23 % TOTAL NIKE, INC. EARNINGS BEFORE INTEREST AND TAXES (1) 826 1,352 -39 % 3,482 4,866 -28 % EBIT margin (1) 7.3 % 10.9 % 9.9 % 12.6 % Interest expense (income), net (18) (52) — (85) (108) — TOTAL NIKE, INC. INCOME BEFORE INCOME TAXES $ 844 $ 1,404 -40 % $ 3,567 $ 4,974 -28 % (1) Total NIKE Brand EBIT, Total NIKE, Inc. EBIT and EBIT margin represent non-GAAP financial measures. For additional information, see "Use of Non-GAAP Financial Measures". 31 Table of Contents NORTH AMERICA THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 3,132 $ 3,460 -9 % -9 % $ 9,580 $ 10,950 -13 % -12 % Apparel 1,510 1,408 7 % 8 % 4,534 4,555 0 % 0 % Equipment 222 202 10 % 10 % 755 613 23 % 23 % TOTAL REVENUES $ 4,864 $ 5,070 -4 % -4 % $ 14,869 $ 16,118 -8 % -8 % Revenues by: Sales to Wholesale Customers $ 2,499 $ 2,440 2 % 3 % $ 7,840 $ 8,114 -3 % -3 % Sales through NIKE Direct 2,365 2,630 -10 % -10 % 7,029 8,004 -12 % -12 % TOTAL REVENUES $ 4,864 $ 5,070 -4 % -4 % $ 14,869 $ 16,118 -8 % -8 % EARNINGS BEFORE INTEREST AND TAXES $ 1,103 $ 1,400 -21 % $ 3,690 $ 4,360 -15 % THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024 • North America revenues decreased 4% on a currency-neutral basis, primarily due to lower revenues in the Jordan Brand. Wholesale revenues increased 3%. NIKE Direct revenues decreased 10%, primarily due to digital sales declines of 12% and comparable store sales declines of 7%. • Footwear revenues decreased 9% on a currency-neutral basis. Unit sales of footwear decreased 8%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point. Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by product mix. • Apparel revenues increased 8% on a currency-neutral basis. Unit sales of apparel increased 6%, while higher ASP per unit contributed approximately 2 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to product mix, partially offset by changes in channel mix. Reported EBIT decreased 21% reflecting lower revenues and the following: • Gross margin contraction of 210 basis points primarily due to lower ASP and higher inventory obsolescence reserves. Lower ASP primarily reflects higher discounts and changes in channel mix, partially offset by product mix. • Selling and administrative expense increase of 12% driven by higher operating overhead expense and higher demand creation expense. The increase in operating overhead expense was primarily due to higher other administrative costs. The increase in demand creation expense was primarily due to higher brand marketing expense, reflecting investment in key sports events. FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024 • North America revenues decreased 8% on a currency-neutral basis, primarily due to lower revenues in the Jordan Brand, Men's and Women's. Wholesale revenues decreased 3%. NIKE Direct revenues decreased 12%, primarily due to digital sales declines of 17% and comparable store sales declines of 3%. • Footwear revenues decreased 12% on a currency-neutral basis. Unit sales of footwear decreased 10%, while lower ASP per pair reduced footwear revenues by approximately 2 percentage points. Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by strategic pricing actions. • Apparel revenues were flat on a currency-neutral basis. Unit sales of apparel and ASP per unit were flat, as strategic pricing actions were offset by changes in channel mix. Reported EBIT decreased 15% reflecting lower revenues and the following: • Gross margin contraction of 10 basis points primarily due to lower ASP and higher inventory obsolescence reserves, partially offset by lower product costs. Lower ASP primarily reflects higher discounts and changes in channel mix. • Selling and administrative expense increase of 3% driven by higher demand creation expense, partially offset by lower operating overhead expense. The increase in demand creation expense was primarily due to higher brand marketing expense, reflecting investment in key sports events. The decrease in operating overhead expense was due to lower wage-related expenses, partially offset by higher other administrative costs. 32 Table of Contents EUROPE, MIDDLE EAST & AFRICA THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 1,742 $ 1,960 -11 % -7 % $ 5,676 $ 6,406 -11 % -11 % Apparel 913 994 -8 % -4 % 3,042 3,331 -9 % -8 % Equipment 156 184 -15 % -12 % 539 578 -7 % -6 % TOTAL REVENUES $ 2,811 $ 3,138 -10 % -6 % $ 9,257 $ 10,315 -10 % -10 % Revenues by: Sales to Wholesale Customers $ 1,817 $ 1,966 -8 % -3 % $ 6,011 $ 6,483 -7 % -6 % Sales through NIKE Direct 994 1,172 -15 % -12 % 3,246 3,832 -15 % -15 % TOTAL REVENUES $ 2,811 $ 3,138 -10 % -6 % $ 9,257 $ 10,315 -10 % -10 % EARNINGS BEFORE INTEREST AND TAXES $ 480 $ 734 -35 % $ 2,103 $ 2,591 -19 % THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024 • EMEA revenues decreased 6% on a currency-neutral basis primarily due to lower revenues in the Jordan Brand, Men's and Kids'. Wholesale revenues decreased 3%. NIKE Direct revenues decreased 12%, due to digital sales declines of 25% partially offset by comparable store sales growth of 9%. • Footwear revenues decreased 7% on a currency-neutral basis. Unit sales of footwear decreased 4%, while lower ASP per pair reduced footwear revenues by approximately 3 percentage points. Lower ASP per pair was primarily due to changes in channel mix and higher discounts, partially offset by product mix. • Apparel revenues decreased 4% on a currency-neutral basis. Unit sales of apparel decreased 1%, while lower ASP per unit reduced apparel revenues by approximately 3 percentage points. Lower ASP per unit was primarily due to changes in channel mix and higher discounts. Reported EBIT decreased 35% reflecting lower revenues and the following: • Gross margin contraction of 420 basis points primarily due to higher other product costs and lower ASP, partially offset by lower warehousing and logistics costs. Lower ASP primarily reflects changes in channel mix and higher discounts. • Selling and administrative expense decrease of 4% driven by lower operating overhead expense, partially offset by higher demand creation expense. The decrease in operating overhead expense was primarily due to lower wage-related expenses and favorable changes in foreign currency exchange rates. The increase in demand creation expense was due to higher sports marketing expense and brand marketing expense, partially offset by favorable changes in foreign currency exchange rates. FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024 • EMEA revenues decreased 10% on a currency-neutral basis due to lower revenues in Men's, the Jordan Brand, Women's and Kids'. Wholesale revenues decreased 6%. NIKE Direct revenues decreased 15%, due to digital sales declines of 28%, partially offset by comparable store sales growth of 4% and the addition of new stores. • Footwear revenues decreased 11% on a currency-neutral basis. Unit sales of footwear decreased 10%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point. Lower ASP per pair was primarily due to changes in channel mix and higher discounts, partially offset by strategic pricing actions. • Apparel revenues decreased 8% on a currency-neutral basis. Unit sales of apparel decreased 8%, while ASP per unit was flat, as strategic pricing actions were offset by changes in channel mix. 33 Table of Contents Reported EBIT decreased 19% reflecting lower revenues and the following: • Gross margin contraction of 30 basis points primarily due to lower ASP, partially offset by lower warehousing and logistics costs. Lower ASP primarily reflects changes in channel mix and higher discounts, partially offset by strategic pricing actions. • Selling and administrative expense decrease of 1% driven by lower operating overhead expense, partially offset by higher demand creation expense. The decrease in operating overhead expense was primarily due to lower wage-related expenses and lower other administrative costs. The increase in demand creation expense was primarily due to higher brand marketing expense, reflecting investment in key sports events, partially offset by lower sports marketing expense. GREATER CHINA THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 1,282 $ 1,547 -17 % -15 % $ 3,731 $ 4,195 -11 % -11 % Apparel 412 498 -17 % -15 % 1,244 1,368 -9 % -9 % Equipment 39 39 0 % -1 % 135 119 13 % 13 % TOTAL REVENUES $ 1,733 $ 2,084 -17 % -15 % $ 5,110 $ 5,682 -10 % -10 % Revenues by: Sales to Wholesale Customers $ 995 $ 1,243 -20 % -18 % $ 2,870 $ 3,165 -9 % -9 % Sales through NIKE Direct 738 841 -12 % -11 % 2,240 2,517 -11 % -11 % TOTAL REVENUES $ 1,733 $ 2,084 -17 % -15 % $ 5,110 $ 5,682 -10 % -10 % EARNINGS BEFORE INTEREST AND TAXES $ 421 $ 722 -42 % $ 1,298 $ 1,761 -26 % THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024 • Greater China revenues decreased 15% on a currency-neutral basis due to lower revenues in Men's, the Jordan Brand, Women's and Kids', reflecting our actions to prioritize the health of the marketplace. Wholesale revenues decreased 18%. NIKE Direct revenues decreased 11% due to digital sales declines of 20% and comparable store sales declines of 6%. • Footwear revenues decreased 15% on a currency-neutral basis. Unit sales of footwear decreased 15%, while ASP per pair was flat, as strategic pricing actions were offset by higher discounts and changes in channel mix. • Apparel revenues decreased 15% on a currency-neutral basis. Unit sales of apparel decreased 19%, while higher ASP per unit contributed approximately 4 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to strategic pricing actions. Reported EBIT decreased 42% reflecting lower revenues and the following: • Gross margin contraction of approximately 580 basis points, reflecting higher inventory obsolescence reserves and unfavorable changes in standard foreign currency exchange rates, partially offset by higher ASP. Higher ASP primarily reflects strategic pricing actions, partially offset by higher discounts. • Selling and administrative expense increase of 3% driven by higher demand creation expense. Demand creation expense increased primarily due to higher brand marketing expense. Operating overhead expense was flat as higher other administrative costs were offset by favorable changes in foreign currency exchange rates. FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024 • Greater China revenues decreased 10% on a currency-neutral basis due to lower revenues in Men's, the Jordan Brand, Women's and Kids'. Wholesale revenues decreased 9%. NIKE Direct revenues decreased 11% due to digital sales declines of 19% and comparable store sales declines of 7%. • Footwear revenues decreased 11% on a currency-neutral basis. Unit sales of footwear decreased 9%, while lower ASP per pair reduced footwear revenues by approximately 2 percentage points. Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by strategic pricing actions. • Apparel revenues decreased 9% on a currency-neutral basis. Unit sales of apparel decreased 14%, while higher ASP per unit contributed approximately 5 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to strategic pricing actions. 34 Table of Contents Reported EBIT decreased 26% reflecting lower revenues and the following: • Gross margin contraction of approximately 410 basis points, primarily due to unfavorable changes in standard foreign currency exchange rates and higher inventory obsolescence reserves. • Selling and administrative expense decrease of 3% driven by lower operating overhead expense, partially offset by higher demand creation expense. Operating overhead expense decreased primarily due to lower wage-related expenses and lower other administrative costs. Demand creation expense increased primarily due to higher sports marketing expense. ASIA PACIFIC & LATIN AMERICA THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 1,052 $ 1,195 -12 % -5 % $ 3,338 $ 3,639 -8 % -4 % Apparel 358 390 -8 % -1 % 1,143 1,198 -5 % -1 % Equipment 60 62 -3 % 5 % 195 187 4 % 8 % TOTAL REVENUES $ 1,470 $ 1,647 -11 % -4 % $ 4,676 $ 5,024 -7 % -3 % Revenues by: Sales to Wholesale Customers $ 844 $ 939 -10 % -4 % $ 2,764 $ 2,927 -6 % -2 % Sales through NIKE Direct 626 708 -12 % -4 % 1,912 2,097 -9 % -4 % TOTAL REVENUES $ 1,470 $ 1,647 -11 % -4 % $ 4,676 $ 5,024 -7 % -3 % EARNINGS BEFORE INTEREST AND TAXES $ 346 $ 471 -27 % $ 1,208 $ 1,406 -14 % THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024 • APLA revenues decreased 4% on a currency-neutral basis primarily due to lower revenues in Southeast Asia and India ("SEA&I") and Korea, partially offset by higher revenues in Central and South America. APLA revenues decreased primarily due to lower revenues in Men's and the Jordan Brand. Wholesale revenues decreased 4%. NIKE Direct revenues decreased 4% due to digital sales declines of 8% and comparable store sales declines of 3%, partially offset by the addition of new stores. • Footwear revenues decreased 5% on a currency-neutral basis. Unit sales of footwear decreased 2%, while lower ASP per pair reduced footwear revenues by approximately 3 percentage points. Lower ASP per pair was primarily due to product mix and higher discounts. • Apparel revenues decreased 1% on a currency-neutral basis. Unit sales of apparel decreased 1%, while ASP per unit was flat, as strategic pricing actions were offset by higher discounts and changes in channel mix. Reported EBIT decreased 27% reflecting lower revenues and the following: • Gross margin contraction of approximately 250 basis points primarily due to lower ASP, unfavorable changes in standard foreign currency exchange rates and higher warehousing and logistics costs, partially offset by lower product costs. Lower ASP reflects higher discounts and product mix. Lower product costs primarily reflects product mix. • Selling and administrative expense increase of 2% driven by higher demand creation expense. Demand creation expense increased primarily due to higher sports marketing expense and higher brand marketing expense. Operating overhead expense was flat as higher wage-related expenses and higher other administrative costs were offset by favorable changes in foreign currency exchange rates. 35 Table of Contents FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024 • APLA revenues decreased 3% on a currency-neutral basis primarily due to lower revenues in Korea and SEA&I. APLA revenues decreased primarily due to lower revenues in Men's and the Jordan Brand. Wholesale revenues decreased 2%. NIKE Direct revenues decreased 4% due to digital sales declines of 10%, partially offset by comparable store sales growth of 1% and the addition of new stores. • Footwear revenues decreased 4% on a currency-neutral basis. Unit sales of footwear decreased 3%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point. Lower ASP per pair was primarily due to higher discounts and changes in channel mix, partially offset by strategic pricing actions. • Apparel revenues decreased 1% on a currency-neutral basis. Unit sales of apparel decreased 3%, while higher ASP per unit contributed approximately 2 percentage points of apparel revenue growth. Higher ASP per unit was primarily due to strategic pricing actions. Reported EBIT decreased 14% reflecting lower revenues and the following: • Gross margin contraction of approximately 110 basis points primarily due to unfavorable changes in standard foreign currency exchange rates, lower ASP and higher warehousing and logistics costs, partially offset by lower product costs. Lower ASP reflects higher discounts and changes in channel mix, partially offset by strategic pricing actions. • Selling and administrative expense decrease of 2% driven by lower demand creation expense. Demand creation expense decreased primarily due to favorable changes in foreign currency exchange rates and lower brand marketing expense. Operating overhead expense was flat as favorable changes in foreign currency exchange rates were offset by higher wage-related expenses and higher other administrative costs. GLOBAL BRAND DIVISIONS THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues $ 12 $ 9 33 % 21 % $ 39 $ 34 15 % 13 % Earnings (Loss) Before Interest and Taxes $ (1,093) $ (1,199) 9 % $ (3,453) $ (3,572) 3 % Global Brand Divisions primarily represent demand creation and operating overhead expense, including product creation and design expenses that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment. THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024 Global Brand Divisions' loss before interest and taxes decreased 9% driven by lower operating overhead expense, partially offset by higher demand creation expense. The decrease in operating overhead expense was due to lower wage-related expenses and lower other administrative costs. Higher demand creation expense was due to increased brand marketing expense. FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024 Global Brand Divisions' loss before interest and taxes decreased 3% driven by lower operating overhead expense, partially offset by higher demand creation expense. The decrease in operating overhead expense was primarily due to lower wage-related expenses. Higher demand creation expense was due to increased brand marketing expense and sports marketing expense. 36 CONVERSE THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES Revenues by: Footwear $ 349 $ 426 -18 % -16 % $ 1,149 $ 1,390 -17 % -17 % Apparel 22 25 -12 % -12 % 65 75 -13 % -14 % Equipment 7 9 -22 % -22 % 25 27 -7 % -6 % Other (1) 27 35 -23 % -20 % 96 110 -13 % -12 % TOTAL REVENUES $ 405 $ 495 -18 % -16 % $ 1,335 $ 1,602 -17 % -16 % Revenues by: Sales to Wholesale Customers $ 208 $ 257 -19 % -17 % $ 695 $ 843 -18 % -17 % Sales through Direct to Consumer 170 203 -16 % -15 % 544 649 -16 % -16 % Other (1) 27 35 -23 % -19 % 96 110 -13 % -12 % TOTAL REVENUES $ 405 $ 495 -18 % -16 % $ 1,335 $ 1,602 -17 % -16 % EARNINGS BEFORE INTEREST AND TAXES $ 39 $ 98 -60 % $ 213 $ 380 -44 % (1) Other revenues consist of territories serviced by third-party licensees who pay royalties to Converse for the use of its registered trademarks and other intellectual property rights. THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024 • Converse revenues decreased 16% on a currency-neutral basis driven by revenue declines in all territories. Unit sales decreased 6%, while ASP decreased 10%, reflecting higher discounts in direct to consumer. • Wholesale revenues decreased 17% on a currency-neutral basis, as declines in Western Europe and Asia were partially offset by growth in North America. • Direct to consumer revenues decreased 15% on a currency-neutral basis, primarily due to reduced traffic in North America and lower ASP due to higher discounts. Reported EBIT decreased 60% reflecting lower revenues and the following: • Gross margin contraction of approximately 470 basis points due to lower ASP, partially offset by lower product costs. Lower ASP primarily reflects higher discounts. • Selling and administrative expense decrease of 4% driven by lower operating overhead expense. Operating overhead expense decreased primarily due to lower other administrative costs. FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024 • Converse revenues decreased 16% on a currency-neutral basis driven by revenue declines in all territories. Unit sales decreased 10%, while ASP decreased 6%, reflecting higher discounts in direct to consumer. • Wholesale revenues decreased 17% on a currency-neutral basis, as declines in Western Europe and Asia were partially offset by growth in North America. • Direct to consumer revenues decreased 16% on a currency-neutral basis due to reduced traffic in all territories and lower ASP due to higher discounts. Reported EBIT decreased 44% reflecting lower revenues and the following: • Gross margin contraction of approximately 280 basis points due to lower ASP, and higher logistics costs, partially offset by lower product costs. Lower ASP primarily reflects higher discounts. • Selling and administrative expense decrease of 3% driven by lower operating overhead expense, partially offset by higher demand creation expense. Operating overhead expense decreased primarily due to lower wage-related expenses and lower other administrative costs. Demand creation expense increased primarily due to higher brand marketing expense. 37 Table of Contents CORPORATE THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE FEBRUARY 28, 2025 FEBRUARY 29, 2024 % CHANGE Revenues $ (26) $ (14) — $ (74) $ (19) — Earnings (Loss) Before Interest and Taxes $ (470) $ (874) 46 % $ (1,577) $ (2,060) 23 % Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program. The Corporate loss before interest and taxes primarily consists of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to our corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses. In addition to the foreign currency gains and losses recognized within Corporate revenues, foreign currency results in Corporate include gains and losses resulting from the difference between actual foreign currency exchange rates and standard rates used to record non-functional currency denominated product purchases within the NIKE Brand geographic operating segments and Converse; related foreign currency hedge results; conversion gains and losses arising from remeasurement of monetary assets and liabilities in non-functional currencies; and certain other foreign currency derivative instruments. THIRD QUARTER OF FISCAL 2025 COMPARED TO THIRD QUARTER OF FISCAL 2024 Corporate's loss before interest and taxes decreased $404 million for the third quarter of fiscal 2025, primarily due to the following: • a favorable change of $403 million, related to restructuring charges in the prior year, $340 million of which was reported as a component of consolidated Operating overhead expense and $63 million of which was reported as a component of consolidated gross margin; • a favorable change of $14 million related to the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, reported as a component of consolidated Other (income) expense, net; and • an unfavorable change of $39 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, reported as a component of consolidated gross margin. FIRST NINE MONTHS OF FISCAL 2025 COMPARED TO FIRST NINE MONTHS OF FISCAL 2024 Corporate's loss before interest and taxes decreased $483 million for the first nine months of fiscal 2025, primarily due to the following: • a favorable change of $403 million, related to restructuring charges in the prior year, $340 million of which was reported as a component of consolidated Operating overhead expense and $63 million of which was reported as a component of consolidated gross margin; • a favorable change of $142 million primarily related to lower wage-related expenses and lower other administrative costs, reported as a component of consolidated Operating overhead expense; • an unfavorable change of $68 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, reported as a component of consolidated gross margin; and • an unfavorable change of $18 million related to the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, reported as a component of consolidated Other (income) expense, net. 38 Table of Contents FOREIGN CURRENCY EXPOSURES AND HEDGING PRACTICES OVERVIEW As a global company with significant operations outside the United States, in the normal course of business we are exposed to risk arising from changes in currency exchange rates. Our primary foreign currency exposures arise from the recording of transactions denominated in non-functional currencies and the translation of foreign currency denominated results of operations, financial position and cash flows into U.S. Dollars. Our foreign exchange risk management program is intended to lessen both the positive and negative effects of currency fluctuations on our consolidated results of operations, financial position and cash flows. We manage global foreign exchange risk centrally on a portfolio basis to address those risks material to NIKE, Inc. Our hedging policy is designed to partially or entirely offset the impact of exchange rate changes on the underlying net exposures being hedged. Where exposures are hedged, our program has the effect of delaying the impact of exchange rate movements on our Unaudited Condensed Consolidated Financial Statements; the length of the delay is dependent upon hedge horizons. We do not hold or issue derivative instruments for trading or speculative purposes. As of and for the three and nine months ended February 28, 2025, there have been no material changes to the Company's hedging program or strategy from what was disclosed within our 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. For additional information about our Foreign Currency Exposures and Hedging Practices, refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report. TRANSACTIONAL EXPOSURES We conduct business in various currencies and have transactions which subject us to foreign currency risk. Our most significant transactional foreign currency exposures are: • Product Costs — Product purchases denominated in currencies other than the functional currency of the transacting entity and factory input costs from the foreign currency adjustments program with certain factories. • Non-Functional Currency Denominated External Sales — A portion of our NIKE Brand and Converse revenues associated with European operations are earned in currencies other than the Euro (e.g., the British Pound) but are recognized at a subsidiary that uses the Euro as its functional currency. These sales generate a foreign currency exposure. • Other Costs — Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency risk, though to a lesser extent. • Non-Functional Currency Denominated Monetary Assets and Liabilities — Our global subsidiaries have various monetary assets and liabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies other than their functional currencies. These balance sheet items are subject to remeasurement which may create fluctuations in Other (income) expense, net within our Unaudited Condensed Consolidated Statements of Income. MANAGING TRANSACTIONAL EXPOSURES Transactional exposures are managed on a portfolio basis within our foreign currency risk management program. We manage these exposures by taking advantage of natural offsets and currency correlations that exist within the portfolio and may also elect to use currency forward and option contracts to hedge the remaining effect of exchange rate fluctuations on probable forecasted future cash flows, including certain product cost exposures, non-functional currency denominated external sales and other costs described above. Generally, these are accounted for as cash flow hedges. Certain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated monetary assets and liabilities subject to remeasurement are not formally designated as hedging instruments. Accordingly, changes in fair value of these instruments are recognized within Other (income) expense, net within our Unaudited Condensed Consolidated Statements of Income and are intended to offset the foreign currency impact of the remeasurement of the related non-functional currency denominated asset or liability being hedged. 39 Table of Contents TRANSLATIONAL EXPOSURES Many of our foreign subsidiaries operate in functional currencies other than the U.S. Dollar. Fluctuations in currency exchange rates create volatility in our reported results as we are required to translate the balance sheets, operational results and cash flows of these subsidiaries into U.S. Dollars for consolidated reporting. The translation of foreign subsidiaries' non-U.S. Dollar denominated balance sheets into U.S. Dollars for consolidated reporting results in a cumulative translation adjustment to Accumulated other comprehensive income (loss) within Shareholders' equity. The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a detriment of approximately $310 million and $342 million for the three and nine months ended February 28, 2025, respectively. The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a detriment of approximately $67 million and $70 million for the three and nine months ended February 28, 2025, respectively. MANAGING TRANSLATIONAL EXPOSURES To minimize the impact of translating foreign currency denominated revenues and expenses into U.S. Dollars for consolidated reporting, certain foreign subsidiaries use excess cash to purchase U.S. Dollar denominated available-for-sale investments. The variable future cash flows associated with the purchase and subsequent sale of these U.S. Dollar denominated investments at non-U.S. Dollar functional currency subsidiaries creates a foreign currency exposure that qualifies for hedge accounting under U.S. GAAP. We utilize forward contracts and/or options to mitigate the variability of the forecasted future purchases and sales of these U.S. Dollar investments. The combination of the purchase and sale of the U.S. Dollar investment and the hedging instrument has the effect of partially offsetting the year-over-year foreign currency translation impact on net earnings in the period the investments are sold. Hedges of the purchase of U.S. Dollar denominated available-for-sale investments are accounted for as cash flow hedges. We estimate the combination of translation of foreign currency-denominated profits from our international businesses and the year-over-year change in foreign currency related gains and losses included in Other (income) expense, net had an unfavorable impact of approximately $53 million and $88 million on our Income before income taxes for the three and nine months ended February 28, 2025, respectively. LIQUIDITY AND CAPITAL RESOURCES CASH FLOW ACTIVITY Cash provided (used) by operations was an inflow of $3,235 million for the first nine months of fiscal 2025 compared to an inflow of $4,810 million for the first nine months of fiscal 2024. Net income, adjusted for non-cash items, generated $3,883 million of operating cash inflow for the first nine months of fiscal 2025, compared to $5,096 million for the first nine months of fiscal 2024. The net change in certain working capital components and other assets and liabilities resulted in a decrease to cash provided by operations of $648 million for the first nine months of fiscal 2025 compared to a decrease of $286 million for the first nine months of fiscal 2024. This net change was primarily impacted by unfavorable changes to Inventories and favorable changes to Accounts receivables, net. This was due to lower sales in the current period as well as an increase in inventory units, partially offset by lower product costs and shifts in product mix. Cash provided (used) by investing activities was an outflow of $289 million for the first nine months of fiscal 2025, compared to an inflow of $1,184 million for the first nine months of fiscal 2024, primarily driven by the net change in short-term investments (including sales, maturities and purchases). For the first nine months of fiscal 2025, the net change in short-term investments resulted in a cash inflow of $33 million compared to a cash inflow of $1,792 million for the first nine months of fiscal 2024, primarily reflecting higher maturities in the prior period. Cash provided (used) by financing activities was an outflow of $4,176 million for the first nine months of fiscal 2025 compared to an outflow of $4,468 million for the first nine months of fiscal 2024. The decreased outflow was primarily due to lower share repurchases of $2,786 million in the first nine months of fiscal 2025 compared to $3,214 million in the first nine months of fiscal 2024, partially offset by higher dividend payments of $1,709 million in the first nine months of fiscal 2025 compared to $1,609 million in the first nine months of fiscal 2024. During the first nine months of fiscal 2025, we repurchased a total of 34.4 million shares of NIKE's Class B Common Stock for $2,753 million (an average price of $80.02 per share) under the four-year, $18 billion share repurchase plan authorized by the Board of Directors in June 2022. As of February 28, 2025, we have repurchased 119.3 million shares at a cost of approximately $11.8 billion (an average price of $98.97 per share) under this $18 billion share repurchase program. We continue to expect funding of share repurchases will come from operating cash flows, excess cash and/or proceeds from debt. The timing and the amount of share repurchases will be dictated by our capital needs and stock market conditions. 40 Table of Contents CAPITAL RESOURCES On July 21, 2022, we filed a shelf registration statement (the "Shelf") with the U.S. Securities and Exchange Commission (the "SEC") which permits us to issue an unlimited amount of debt securities from time to time. The Shelf expires on July 21, 2025. As of February 28, 2025, our committed credit facilities were unchanged from the information previously reported within our Annual Report. We currently have long-term debt ratings of AA- and A1 from Standard and Poor's Corporation and Moody's Investor Services, respectively. Any changes to these ratings could result in interest rate and facility fee changes. As of February 28, 2025, we were in full compliance with the covenants under our facilities and believe it is unlikely we will fail to meet any of the covenants in the foreseeable future. As of February 28, 2025 and May 31, 2024, no amounts were outstanding under our committed credit facilities. On March 7, 2025, subsequent to the end of the third quarter of fiscal 2025, we entered into a 364-day committed credit facility agreement with a syndicate of banks, which provides for up to $1 billion of borrowings, with an option to increase borrowings up to $1.5 billion in total with lender approval. The facility matures on March 6, 2026, with an option to extend the maturity date an additional 364 days. This facility replaces the prior $1 billion 364-day credit facility agreement entered into on March 8, 2024, which matured on March 7, 2025. Refer to Note 4 – Short-term Borrowings and Credit Lines for more information. On March 7, 2025, we also entered into a five-year committed credit facility agreement with a syndicate of banks which provides for up to $2 billion of borrowings, with the option to increase borrowings up to $3 billion in total with lender approval. The facility matures on March 7, 2030, with options to extend the maturity date up to an additional two years. This facility replaces the prior $2 billion five-year credit facility agreement entered into on March 11, 2022, which would have matured on March 11, 2027. Refer to Note 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 February 28, 2025, 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. In March 2025, subsequent to the end of the third quarter of fiscal 2025, we repaid the $1.0 billion aggregate principal amount outstanding of our 2.40% notes due 2025 at maturity. To date, in fiscal 2025, we have not experienced difficulty accessing the capital or credit markets; however, future volatility may increase costs associated with issuing commercial paper or other debt instruments or affect our ability to access those markets. As of February 28, 2025, we had Cash and equivalents and Short-term investments totaling $10.4 billion, primarily consisting of commercial paper, corporate notes, deposits held at major banks, money market funds, U.S. Treasury obligations and other investment grade fixed-income securities. Our fixed-income investments are exposed to both credit and interest rate risk. All of our investments are investment grade to minimize our credit risk. While individual securities have varying durations, as of February 28, 2025, the weighted average days to maturity of our cash equivalents and short-term investments portfolio was 87 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. CONTRACTUAL OBLIGATIONS As a result of renewals of, and additions to, outstanding endorsement contracts, including associated marketing commitments, cash payments due under these contracts have increased from what was reported within our Annual Report. Obligations under these endorsement contracts as of February 28, 2025, and significant contracts entered into through the date of this report, were $15.1 billion, with $1.4 billion payable within 12 months. Other than the changes reported above, there have been no significant changes to the material cash requirements reported within our Annual Report. OFF-BALANCE SHEET ARRANGEMENTS As of February 28, 2025, 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. 41 Table of Contents NEW ACCOUNTING PRONOUNCEMENTS Refer to Note 1 — Summary of Significant Accounting Policies within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for recently adopted and issued accounting standards. CRITICAL ACCOUNTING ESTIMATES Our discussion and analysis of our financial condition and results of operations are based upon our Unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. We believe the assumptions and judgments involved in the accounting estimates described in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section within our Annual Report have the greatest potential impact on our financial statements, so we consider these to be our critical accounting estimates. Actual results could differ from these estimates. We are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported. 42 Table of Contents ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes from the information previously reported under Part II, Item 7A within our Annual Report on Form 10-K for the fiscal year ended May 31, 2024.