Item 7. Management’s Discussion and Analysis
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
NIKE designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and services worldwide. We are the largest seller of athletic footwear and apparel in the world. We sell our products through two distribution channels: NIKE Direct operations, which are comprised of both NIKE-owned retail stores and sales through our digital platforms (also referred to as "NIKE Brand Digital"), and to wholesale accounts, which include a mix of independent distributors, licensees and sales representatives in nearly all countries around the world. Our goal is to deliver value to our shareholders by building a profitable global portfolio of branded footwear, apparel, equipment and accessories.
Our strategy is to achieve sustainable, profitable long-term revenue growth by leading with sport, creating innovative, "must-have" products, building deep personal consumer connections with our brands and delivering compelling consumer experiences through digital platforms and at retail.
FISCAL 2026 FINANCIAL HIGHLIGHTS
• NIKE, Inc. Revenues were $46.4 billion in fiscal 2026 compared to $46.3 billion in fiscal 2025, flat on a reported basis and down 2% on a currency-neutral basis.
• NIKE Brand wholesale revenues were $27.5 billion in fiscal 2026 compared to $25.9 billion in fiscal 2025. The increase on a currency-neutral basis was driven by higher revenues in North America, primarily offset by lower revenues in Greater China.
• NIKE Direct revenues were $17.7 billion in fiscal 2026 compared to $18.8 billion in fiscal 2025, primarily driven by a decrease in traffic.
• Gross margin in fiscal 2026 increased 20 basis points to 42.9%.
• Inventories as of May 31, 2026 were $7.5 billion, flat compared to the prior year, primarily reflecting an increase in units, offset by product mix.
• We returned approximately $2.5 billion to our shareholders in fiscal 2026 primarily through dividends.
• Return on Invested Capital ("ROIC") was 18.7% as of May 31, 2026, compared to 20.2% as of May 31, 2025. ROIC is considered a non-GAAP financial measure, see "Use of Non-GAAP Financial Measures" for additional information.
For discussion related to the results of operations and changes in financial condition in fiscal 2025 compared to fiscal 2024, refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2025 Form 10-K, which was filed with the United States Securities and Exchange Commission on July 17, 2025.
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FACTORS IMPACTING OUR BUSINESS
We are navigating through several external factors that create uncertainty and volatility in the operating environment, including, but not limited to, geopolitical dynamics, tax regulation, fluctuating foreign currency exchange rates and evolving tariff policies. 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 Item 1A. Risk Factors.
Despite these factors, we are focused on driving distinction within key sports, building a complete product portfolio, creating stories to inspire and emotionally connect with consumers, and elevating and growing the entire marketplace as we continue to take actions across the following areas:
• Product Management: Accelerating product innovation and reducing the supply of certain footwear products in the marketplace to 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. We are also making investments to elevate the presentation of our brands in physical retail.
• Brand Management: Increasing investment in demand creation including brand marketing and sports marketing, to support key product launches and sports moments.
Our reportable operating segments are at different stages of progress, and we expect to complete these actions by the end of December 2026. The timing of financial impacts has varied and will continue to vary by segment. North America has made the most progress against these actions, while Greater China and Converse will take more time.
Additionally, in Greater China, a trend of declining store traffic, elevated promotional activity and higher levels of inventory across the marketplace are negatively impacting revenues and overall profitability, while Converse is in the midst of a strategic reset of the brand and marketplace. We expect negative impacts from Greater China and Converse to continue throughout fiscal 2027.
While these product, marketplace and brand management actions taken across our portfolio have had, and in the future may have, a negative impact on our Revenues and overall profitability, we believe they will reignite brand momentum and reposition our business to drive long-term shareholder value.
We have also taken steps to operate more efficiently and profitably, primarily through realigning costs across our supply chain and technology to serve an integrated marketplace. In fiscal 2026, we recognized charges of $385 million associated with employee severance costs. We continue to evaluate opportunities across the Company and may take additional actions which could lead to additional charges in future quarters. For additional information, refer to Note 18 — Severance, Restructuring and Other Employee Costs within the accompanying Notes to the Consolidated Financial Statements.
OTHER MATTERS
On February 20, 2026, the U.S. Supreme Court ruled that U.S. tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") on goods imported into the U.S. were unauthorized. During the fourth quarter of fiscal 2026, we deemed the recovery of IEEPA tariffs paid to be probable. Accordingly, we recognized a benefit of $986 million in Cost of sales within the Consolidated Statements of Income for the recovery of IEEPA tariffs paid, for which $965 million and $21 million of the benefit was classified within North America and Converse, respectively, largely offsetting the impact of the IEEPA tariffs recognized during fiscal 2026. As of May 31, 2026, we received $302 million and recorded $684 million of outstanding IEEPA tariff receivables reflected within Accounts receivable, net on the Consolidated Balance Sheets. Subsequent to May 31, 2026, we received substantially all of the remaining IEEPA tariff receivable. We will continue to monitor developments pertaining to the import and export policies of the U.S. and other countries, as well as those pertaining to tariff refunds and litigation, that could impact our financial position, results of operations and cash flows.
USE OF NON-GAAP FINANCIAL MEASURES
Throughout this Annual Report on Form 10-K, we discuss non-GAAP financial measures, which should be considered in addition to, and not in lieu of, the financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). References to these measures should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. Management uses these non-GAAP measures when evaluating the Company's performance, including when making financial and operating decisions. Additionally, management believes these non-GAAP financial measures provide investors with additional financial information that should be considered when assessing our underlying business performance and trends.
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Earnings Before Interest and Taxes ("EBIT") and EBIT margin : Calculated as Net income before Interest (income) expense, net and Income tax expense in the Consolidated Statements of Income and total NIKE, Inc. EBIT divided by total NIKE, Inc. Revenues in the Consolidated Statements of Income, respectively. Total NIKE, Inc. EBIT and EBIT margin calculations in fiscal 2026, 2025 and 2024 are as follows:
YEAR ENDED MAY 31,
(Dollars in millions)
2026 2025 2024
Net income $ 3,108 $ 3,219 $ 5,700
Add: Interest (income) expense, net
(50) (107) (161)
Add: Income tax expense 792 666 1,000
EBIT $ 3,850 $ 3,778 $ 6,539
Total NIKE, Inc. Revenues 46,398 46,309 51,362
Net income margin 6.7% 7.0% 11.1%
EBIT margin 8.3% 8.2% 12.7%
Return on Invested Capital ("ROIC") : Represents a performance measure that management believes is useful information in understanding the Company's ability to effectively manage invested capital. Our ROIC calculation as of May 31, 2026 and 2025 is as follows:
FOR THE TRAILING FOUR QUARTERS ENDED
(Dollars in millions)
MAY 31, 2026 MAY 31, 2025
Numerator
Net income $ 3,108 $ 3,219
Add: Interest (income) expense, net
(50) (107)
Add: Income tax expense 792 666
EBIT 3,850 3,778
Income tax adjustment (1)
(782) (645)
Earnings before interest and after taxes $ 3,068 $ 3,133
AVERAGE FOR THE TRAILING FIVE QUARTERS ENDED
(Dollars in millions)
MAY 31, 2026 MAY 31, 2025
Denominator
Total debt (2)
$ 11,113 $ 11,814
Add: Shareholders' equity 13,944 13,926
Less: Cash and equivalents and Short-term investments 8,631 10,236
Total invested capital $ 16,426 $ 15,504
ROIC 18.7% 20.2%
(1) Equals EBIT multiplied by the effective tax rate as of each of the respective quarter ends.
(2) Total debt includes the following: 1) Current portion of long-term debt, 2) Current portion of operating lease liabilities, 3) Long-term debt and 4) Operating lease liabilities.
Currency-neutral revenues : Currency-neutral revenues enhance visibility to underlying business trends, excluding the impact of translation arising from foreign currency exchange rate fluctuations. Currency-neutral revenues are calculated using actual exchange rates in use during the comparative prior year period in place of the exchange rates in use during the current period.
COMPARABLE STORE SALES
Comparable store sales : This key metric, which excludes NIKE Brand Digital sales, comprises revenues from NIKE-owned in-line and factory stores for which all three of the following requirements have been met: (1) the store has been open at least one year, (2) square footage has not changed by more than 15% within the past year and (3) the store has not been permanently repositioned within the past year. Comparable store sales represents a performance metric that we believe is useful information for management and investors in understanding the performance of our established NIKE-owned in-line and factory stores. Management considers this metric when making financial and operating decisions. The method of calculating comparable store sales varies across the retail industry. As a result, our calculation of this metric may not be comparable to similarly titled metrics used by other companies.
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RESULTS OF OPERATIONS
(Dollars in millions, except per share data)
FISCAL 2026 FISCAL 2025 % CHANGE FISCAL 2024 % CHANGE
Revenues $ 46,398 $ 46,309 0 % $ 51,362 -10 %
Cost of sales 26,487 26,519 0 % 28,475 -7 %
Gross profit 19,911 19,790 1 % 22,887 -14 %
Gross margin 42.9 % 42.7 % 44.6 %
Demand creation expense 4,754 4,689 1 % 4,285 9 %
Operating overhead expense 11,360 11,399 0 % 12,291 -7 %
Total selling and administrative expense 16,114 16,088 0 % 16,576 -3 %
% of revenues 34.7 % 34.7 % 32.3 %
Interest (income) expense, net (50) (107) — (161) —
Other (income) expense, net (53) (76) — (228) —
Income before income taxes 3,900 3,885 0 % 6,700 -42 %
Income tax expense 792 666 19 % 1,000 -33 %
Effective tax rate 20.3 % 17.1 % 14.9 %
NET INCOME $ 3,108 $ 3,219 -3 % $ 5,700 -44 %
Diluted earnings per common share $ 2.10 $ 2.16 -3 % $ 3.73 -42 %
CONSOLIDATED OPERATING RESULTS
REVENUES
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)
FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)
NIKE, Inc. Revenues:
NIKE Brand Revenues by:
Footwear $ 29,525 $ 29,510 0 % -2 % $ 33,427 -12 % -11 %
Apparel 13,449 12,965 4 % 2 % 13,775 -6 % -5 %
Equipment 2,199 2,191 0 % -2 % 2,075 6 % 6 %
Global Brand Divisions (2)
49 48 2 % 2 % 45 7 % 10 %
TOTAL NIKE BRAND REVENUES (3)
$ 45,222 $ 44,714 1 % -1 % $ 49,322 -9 % -9 %
Converse 1,174 1,692 -31 % -32 % 2,082 -19 % -18 %
Corporate (4)
2 (97) — — (42) — —
TOTAL NIKE, INC. REVENUES $ 46,398 $ 46,309 0 % -2 % $ 51,362 -10 % -9 %
Supplemental NIKE Brand Revenues Details:
NIKE Brand Revenues by:
Sales to Wholesale Customers $ 27,453 $ 25,883 6 % 4 % $ 27,758 -7 % -6 %
Sales through NIKE Direct 17,720 18,783 -6 % -8 % 21,519 -13 % -12 %
Global Brand Divisions (2)
49 48 2 % 2 % 45 7 % 10 %
TOTAL NIKE BRAND REVENUES (3)
$ 45,222 $ 44,714 1 % -1 % $ 49,322 -9 % -9 %
(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) Included in NIKE Brand revenues are sales of Jordan Brand products of $7,034 million, $7,270 million and $8,701 million in fiscal 2026, 2025 and 2024, respectively, decreasing 3% and 16% on a reported basis and decreasing 5% and 16% on a currency-neutral basis, for fiscal 2026 and 2025, respectively.
(4) Corporate revenues primarily consist of foreign currency 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.
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FISCAL 2026 NIKE BRAND REVENUE HIGHLIGHTS
The following tables present NIKE Brand revenues disaggregated by reportable operating segment, distribution channel and major product line:
FISCAL 2026 COMPARED TO FISCAL 2025
• NIKE, Inc. Revenues were $46.4 billion in fiscal 2026 compared to $46.3 billion in fiscal 2025. On a currency-neutral basis, NIKE, Inc. Revenues decreased 2%, primarily due to lower revenues in Greater China, Converse and Europe, Middle East & Africa ("EMEA"), which decreased NIKE, Inc. Revenues by approximately 2, 1 and 1 percentage points, respectively. Higher revenues in North America increased NIKE, Inc. Revenues by approximately 2 percentage points.
• NIKE Brand revenues were $45.2 billion in fiscal 2026 compared to $44.7 billion in fiscal 2025, an increase of 1% and a decrease of 1% on a reported and currency-neutral basis, respectively.
• NIKE Brand footwear revenues were $29.5 billion in fiscal 2026 compared to $29.5 billion in fiscal 2025. On a currency-neutral basis, NIKE Brand footwear revenues decreased 2%. Unit sales of footwear decreased 1%, while lower average selling price ("ASP") per pair reduced footwear revenues by approximately 1 percentage point. Lower ASP per pair was primarily due to channel mix, partially offset by product mix and strategic pricing.
• NIKE Brand apparel revenues were $13.4 billion in fiscal 2026 compared to $13.0 billion in fiscal 2025. On a currency-neutral basis, NIKE Brand apparel revenues increased 2%. Unit sales of apparel increased 1%, while higher ASP per unit contributed approximately 1 percentage point of apparel revenue growth. Higher ASP per unit was primarily due to product mix, partially offset by higher discounts and channel mix.
• NIKE Brand wholesale revenues were $27.5 billion in fiscal 2026 compared to $25.9 billion in fiscal 2025, up 6% on a reported basis and up 4% on a currency-neutral basis. The increase on a currency-neutral basis was driven by higher revenues in North America, primarily offset by lower revenues in Greater China.
• NIKE Direct revenues were $17.7 billion in fiscal 2026 compared to $18.8 billion in fiscal 2025, down 6% on a reported basis. On a currency-neutral basis, NIKE Direct revenues were down 8% due to declines in NIKE Brand Digital sales of 12% and declines in NIKE store sales of 4%. NIKE Brand Digital sales were $8.6 billion in fiscal 2026 compared to $9.6 billion in fiscal 2025, with declines primarily due to reduced traffic. NIKE store sales were $9.1 billion in fiscal 2026 compared to $9.2 billion in fiscal 2025. Comparable store sales decreased 4%. For additional information regarding comparable store sales, including the definition, see "Comparable Store Sales".
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GROSS MARGIN
FISCAL 2026 COMPARED TO FISCAL 2025
For fiscal 2026, our consolidated gross profit increased 1% to $19.9 billion compared to $19.8 billion for fiscal 2025. Gross margin increased 20 basis points to 42.9% for fiscal 2026 compared to 42.7% for fiscal 2025 due to the following:
• Lower warehousing and logistics costs (increasing gross margin approximately 20 basis points), primarily due to channel mix;
• Favorable changes in net foreign currency exchange rates, including hedges (increasing gross margin approximately 20 basis points); and
• Lower other costs (increasing gross margin approximately 20 basis points).
This was partially offset by:
• Lower gross margin from Converse (decreasing gross margin approximately 20 basis points); and
• Higher NIKE Brand product costs (decreasing gross margin approximately 20 basis points).
TOTAL SELLING AND ADMINISTRATIVE EXPENSE
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE FISCAL 2024 % CHANGE
Demand creation expense (1)
$ 4,754 $ 4,689 1 % $ 4,285 9 %
Operating overhead expense (2)
11,360 11,399 0 % 12,291 -7 %
Total selling and administrative expense $ 16,114 $ 16,088 0 % $ 16,576 -3 %
% of revenues 34.7 % 34.7 % 0 bps 32.3 % 240 bps
(1) Demand creation expense consists of brand marketing expense and sports marketing expense. Brand marketing expense includes advertising and promotion costs such as production and media costs, digital marketing expense, brand events and retail brand presentation costs. Sports marketing expense includes expenses related to endorsement contracts, complimentary product and sports marketing events.
(2) Operating overhead expense consists primarily of wage and benefit-related expenses and other administrative costs, such as research and development costs, bad debt expense, rent, depreciation and amortization and costs related to professional services, certain technology investments, meetings and travel.
FISCAL 2026 COMPARED TO FISCAL 2025
Demand creation expense increased 1% due to higher sports marketing expense and unfavorable changes in foreign currency exchange rates, partially offset by lower brand marketing expense, reflecting higher investment in key sports events in the prior year. Changes in foreign currency exchange rates increased Demand creation expense by approximately 2 percentage points.
Operating overhead expense was flat as lower other administrative costs were offset by higher wage-related expense, driven by employee severance costs, and unfavorable changes in foreign currency exchange rates. Changes in foreign currency exchange rates increased Operating overhead expense by approximately 1 percentage point.
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OTHER (INCOME) EXPENSE, NET
(Dollars in millions)
FISCAL 2026 FISCAL 2025 FISCAL 2024
Other (income) expense, net $ (53) $ (76) $ (228)
Other (income) expense, net comprises foreign currency conversion gains and losses from the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments, as well as unusual or non-operating transactions that are outside the normal course of business.
FISCAL 2026 COMPARED TO FISCAL 2025
Other (income) expense, net decreased from $76 million of other income, net, to $53 million of other income, net, primarily due to an unfavorable net change in foreign currency conversion gains and losses, including hedges, partially offset by settlements of legal matters.
INCOME TAXES
FISCAL 2026 FISCAL 2025 % CHANGE FISCAL 2024 % CHANGE
Effective tax rate 20.3 % 17.1 % 320 bps 14.9 % 220 bps
FISCAL 2026 COMPARED TO FISCAL 2025
Our effective tax rate increased from 17.1% to 20.3%, primarily due to a prior year one-time, non-cash deferred tax benefit provided by U.S. tax regulations related to foreign currency gains and losses.
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SEGMENT INFORMATION
See Note 15 — Segment Information in the accompanying Notes to the Consolidated Financial Statements for a description of our segments and related information.
The breakdown of Revenues is as follows:
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)
FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES (1)
North America $ 20,511 $ 19,572 5 % 5 % $ 21,396 -9 % -8 %
Europe, Middle East & Africa 12,572 12,257 3 % -3 % 13,607 -10 % -10 %
Greater China 5,847 6,586 -11 % -13 % 7,545 -13 % -12 %
Asia Pacific & Latin America
6,243 6,251 0 % -1 % 6,729 -7 % -3 %
Global Brand Divisions (2)
49 48 2 % 2 % 45 7 % 10 %
TOTAL NIKE BRAND $ 45,222 $ 44,714 1 % -1 % $ 49,322 -9 % -9 %
Converse 1,174 1,692 -31 % -32 % 2,082 -19 % -18 %
Corporate (3)
2 (97) — — (42) — —
TOTAL NIKE, INC. REVENUES $ 46,398 $ 46,309 0 % -2 % $ 51,362 -10 % -9 %
(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 Company uses EBIT as the primary financial measure to evaluate performance of its segments. The breakdown of EBIT is as follows:
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE FISCAL 2024 % CHANGE
North America $ 5,376 $ 4,735 14 % $ 5,822 -19 %
Europe, Middle East & Africa 2,417 2,575 -6 % 3,388 -24 %
Greater China 1,278 1,602 -20 % 2,309 -31 %
Asia Pacific & Latin America 1,387 1,527 -9 % 1,885 -19 %
Global Brand Divisions (4,603) (4,699) 2 % (4,720) 0 %
TOTAL NIKE BRAND (1)
$ 5,855 $ 5,740 2 % $ 8,684 -34 %
Converse 18 240 -93 % 474 -49 %
Corporate
(2,023) (2,202) 8 % (2,619) 16 %
TOTAL NIKE, INC. EBIT (1)
$ 3,850 $ 3,778 2 % $ 6,539 -42 %
Interest (income) expense, net (50) (107) — (161) —
Income tax expense 792 666 19 % 1,000 -33 %
NET INCOME $ 3,108 $ 3,219 -3 % $ 5,700 -44 %
Total NIKE, Inc. Revenues $ 46,398 $ 46,309 0 % $ 51,362 -10 %
Net income margin 6.7 % 7.0 % 11.1 %
EBIT margin (1)
8.3 % 8.2 % 12.7 %
(1) Total NIKE Brand EBIT, Total NIKE, Inc. EBIT and EBIT margin represent non-GAAP financial measures. See "Use of Non-GAAP Financial Measures" for additional information.
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NORTH AMERICA
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 13,317 $ 12,684 5 % 5 % $ 14,537 -13 % -13 %
Apparel 6,075 5,837 4 % 4 % 5,953 -2 % -2 %
Equipment 1,119 1,051 6 % 6 % 906 16 % 16 %
TOTAL REVENUES $ 20,511 $ 19,572 5 % 5 % $ 21,396 -9 % -8 %
Revenues by:
Sales to Wholesale Customers $ 11,958 $ 10,484 14 % 14 % $ 11,004 -5 % -5 %
Sales through NIKE Direct 8,553 9,088 -6 % -6 % 10,392 -13 % -12 %
TOTAL REVENUES $ 20,511 $ 19,572 5 % 5 % $ 21,396 -9 % -8 %
Cost of sales 11,160 11,056 1 % 11,899 -7 %
Gross profit
9,351 8,516 10 % 9,497 -10 %
Gross margin
45.6% 43.5% 210 bps 44.4% -90 bps
Demand creation expense
1,730 1,633 6 % 1,495 9 %
Operating overhead expense
2,259 2,150 5 % 2,189 -2 %
Total selling and administrative expense
3,989 3,783 5 % 3,684 3 %
Other segment items
(14) (2) — (9) —
EARNINGS BEFORE INTEREST AND TAXES $ 5,376 $ 4,735 14 % $ 5,822 -19 %
FISCAL 2026 COMPARED TO FISCAL 2025
• North America revenues increased 5% on a currency-neutral basis. Wholesale revenues increased 14% including expanded distribution, higher shipments to existing partners and fewer marketplace management actions taken in the current year. NIKE Direct revenues decreased 6% due to declines in digital sales of 10% and declines in store sales of 2%. Comparable store sales decreased 2%.
• Footwear revenues increased 5% on a currency-neutral basis. Unit sales of footwear increased 6%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point. Lower ASP per pair was primarily due to channel mix, partially offset by product mix and strategic pricing.
• Apparel revenues increased 4% on a currency-neutral basis. Unit sales of apparel increased 2%, 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 channel mix.
Reported EBIT increased 14% reflecting higher reported revenues and the following:
• Gross margin expansion of 210 basis points primarily due to lower product costs, lower warehousing and logistics costs driven by channel mix, and higher ASP. Higher ASP primarily reflects strategic pricing and product mix, partially offset by channel mix.
• Demand creation expense increased 6% primarily due to higher sports marketing expense.
• Operating overhead expense increased 5% primarily due to higher wage-related expense.
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EUROPE, MIDDLE EAST & AFRICA
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 7,643 $ 7,569 1 % -5 % $ 8,473 -11 % -10 %
Apparel 4,210 3,971 6 % 0 % 4,380 -9 % -9 %
Equipment 719 717 0 % -6 % 754 -5 % -5 %
TOTAL REVENUES $ 12,572 $ 12,257 3 % -3 % $ 13,607 -10 % -10 %
Revenues by:
Sales to Wholesale Customers $ 8,461 $ 8,022 5 % 0 % $ 8,562 -6 % -6 %
Sales through NIKE Direct 4,111 4,235 -3 % -9 % 5,045 -16 % -16 %
TOTAL REVENUES $ 12,572 $ 12,257 3 % -3 % $ 13,607 -10 % -10 %
Cost of sales 7,313 6,967 5 % 7,589 -8 %
Gross profit
5,259 5,290 -1 % 6,018 -12 %
Gross margin 41.8% 43.2% -140 bps 44.2% -100 bps
Demand creation expense 1,286 1,222 5 % 1,114 10 %
Operating overhead expense 1,555 1,479 5 % 1,517 -3 %
Total selling and administrative expense 2,841 2,701 5 % 2,631 3 %
Other segment items
1 14 — (1) —
EARNINGS BEFORE INTEREST AND TAXES $ 2,417 $ 2,575 -6 % $ 3,388 -24 %
FISCAL 2026 COMPARED TO FISCAL 2025
• EMEA revenues decreased 3% on a currency-neutral basis. Wholesale revenues were flat. NIKE Direct revenues decreased 9% due to declines in digital sales of 10% and declines in store sales of 8%. Comparable store sales decreased 7%.
• 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 higher discounts, partially offset by product mix.
• Apparel revenues were flat on a currency-neutral basis. Unit sales of apparel increased 1%, while lower ASP per unit reduced apparel revenues by approximately 1 percentage point. Lower ASP per unit was primarily due to higher discounts, partially offset by product mix.
Reported EBIT decreased 6% reflecting higher reported revenues and the following:
• Gross margin contraction of 140 basis points primarily due to lower ASP, reflecting higher discounts, and unfavorable changes in standard foreign currency exchange rates.
• Demand creation expense increased 5% due to unfavorable changes in foreign currency exchange rates and higher sports marketing expense, partially offset by lower brand marketing expense, reflecting higher investment in key sports events in the prior year.
• Operating overhead expense increased 5% primarily due to unfavorable changes in foreign currency exchange rates, partially offset by lower other administrative costs.
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GREATER CHINA
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 4,188 $ 4,805 -13 % -15 % $ 5,552 -13 % -13 %
Apparel 1,535 1,616 -5 % -7 % 1,828 -12 % -12 %
Equipment 124 165 -25 % -26 % 165 0 % 1 %
TOTAL REVENUES $ 5,847 $ 6,586 -11 % -13 % $ 7,545 -13 % -12 %
Revenues by:
Sales to Wholesale Customers $ 3,255 $ 3,699 -12 % -14 % $ 4,262 -13 % -13 %
Sales through NIKE Direct 2,592 2,887 -10 % -12 % 3,283 -12 % -12 %
TOTAL REVENUES $ 5,847 $ 6,586 -11 % -13 % $ 7,545 -13 % -12 %
Cost of sales 3,177 3,558 -11 % 3,761 -5 %
Gross profit
2,670 3,028 -12 % 3,784 -20 %
Gross margin 45.7% 46.0% -30 bps 50.2% -420 bps
Demand creation expense 455 529 -14 % 519 2 %
Operating overhead expense 993 973 2 % 1,019 -5 %
Total selling and administrative expense 1,448 1,502 -4 % 1,538 -2 %
Other segment items
(56) (76) — (63) —
EARNINGS BEFORE INTEREST AND TAXES $ 1,278 $ 1,602 -20 % $ 2,309 -31 %
FISCAL 2026 COMPARED TO FISCAL 2025
• Greater China revenues decreased 13% on a currency-neutral basis. Wholesale revenues decreased 14%, reflecting our actions to prioritize marketplace health. NIKE Direct revenues decreased 12% due to declines in digital sales of 29% and declines in store sales of 4%. Comparable store sales decreased 6%.
• Footwear revenues decreased 15% on a currency-neutral basis. Unit sales of footwear decreased 14%, while lower ASP per pair reduced footwear revenues by approximately 1 percentage point. Lower ASP per pair was primarily due to channel mix and product mix, partially offset by lower discounts.
• Apparel revenues decreased 7% on a currency-neutral basis. Unit sales of apparel decreased 8%, while higher ASP per unit contributed approximately 1 percentage point of apparel revenue growth. Higher ASP per unit was primarily due to product mix, partially offset by channel mix.
Reported EBIT decreased 20% reflecting lower reported revenues and the following:
• Gross margin contraction of 30 basis points primarily due to unfavorable changes in standard foreign currency exchange rates.
• Demand creation expense decreased 14% primarily due to lower brand marketing expense.
• Operating overhead expense increased 2% due to higher wage-related expense and unfavorable changes in foreign currency exchange rates, partially offset by lower other administrative costs.
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ASIA PACIFIC & LATIN AMERICA
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 4,377 $ 4,452 -2 % -3 % $ 4,865 -8 % -4 %
Apparel 1,629 1,541 6 % 5 % 1,614 -5 % -1 %
Equipment 237 258 -8 % -9 % 250 3 % 7 %
TOTAL REVENUES $ 6,243 $ 6,251 0 % -1 % $ 6,729 -7 % -3 %
Revenues by:
Sales to Wholesale Customers $ 3,779 $ 3,678 3 % 2 % $ 3,930 -6 % -3 %
Sales through NIKE Direct 2,464 2,573 -4 % -6 % 2,799 -8 % -3 %
TOTAL REVENUES $ 6,243 $ 6,251 0 % -1 % $ 6,729 -7 % -3 %
Cost of sales 3,619 3,502 3 % 3,639 -4 %
Gross profit
2,624 2,749 -5 % 3,090 -11 %
Gross margin 42.0% 44.0% -200 bps 45.9% -190 bps
Demand creation expense 416 421 -1 % 407 3 %
Operating overhead expense 828 804 3 % 801 0 %
Total selling and administrative expense 1,244 1,225 2 % 1,208 1 %
Other segment items
(7) (3) — (3) —
EARNINGS BEFORE INTEREST AND TAXES $ 1,387 $ 1,527 -9 % $ 1,885 -19 %
FISCAL 2026 COMPARED TO FISCAL 2025
• Asia Pacific & Latin America revenues decreased 1% on a currency-neutral basis primarily due to lower revenues in Southeast Asia & India, Japan and Korea, partially offset by higher revenues in Central & South America and Pacific. Wholesale revenues increased 2%. NIKE Direct revenues decreased 6% due to declines in digital sales of 9% and declines in store sales of 1%. Comparable store sales decreased 4%.
• Footwear revenues decreased 3% on a currency-neutral basis. Unit sales of footwear decreased 3%, while ASP per pair was flat as product mix and strategic pricing were offset primarily by higher discounts and channel mix.
• Apparel revenues increased 5% on a currency-neutral basis. Unit sales of apparel increased 5%, while ASP per unit was flat as product mix and strategic pricing were offset primarily by higher discounts and channel mix.
Reported EBIT decreased 9% reflecting flat reported revenues and the following:
• Gross margin contraction of 200 basis points primarily due to unfavorable changes in standard foreign currency exchange rates.
• Demand creation expense decreased 1% primarily due to lower brand marketing expense, partially offset by higher sports marketing expense.
• Operating overhead expense increased 3% due to higher wage-related expense and unfavorable changes in foreign currency exchange rates, partially offset by lower other administrative costs.
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GLOBAL BRAND DIVISIONS
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE FISCAL 2024 % CHANGE
Revenues
$ 49 $ 48 2 % $ 45 7 %
Cost of sales 653 634 3 % 602 5 %
Gross profit (loss) (604) (586) -3 % (557) -5 %
Demand creation expense 763 716 7 % 596 20 %
Operating overhead expense 3,240 3,401 -5 % 3,534 -4 %
Total selling and administrative expense 4,003 4,117 -3 % 4,130 0 %
Other segment items
(4) (4) — 33 —
EARNINGS (LOSS) BEFORE INTEREST AND TAXES
$ (4,603) $ (4,699) 2 % $ (4,720) 0 %
Global Brand Divisions primarily represents costs, including product creation and design expenses, that are centrally managed for the NIKE Brand, as well as costs associated with NIKE Direct global digital operations and enterprise technology. Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
FISCAL 2026 COMPARED TO FISCAL 2025
Global Brand Divisions' loss before interest and taxes decreased 2% primarily due to lower Operating overhead expense, partially offset by higher Demand creation expense. Demand creation expense increased 7% primarily due to higher brand marketing expense and higher sports marketing expense. Operating overhead expense decreased 5% primarily due to lower other administrative costs, partially offset by higher wage-related expense, driven by employee severance costs.
CONVERSE
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES FISCAL 2024 % CHANGE % CHANGE EXCLUDING CURRENCY CHANGES
Revenues by:
Footwear $ 1,013 $ 1,457 -30 % -32 % $ 1,800 -19 % -19 %
Apparel 48 80 -40 % -40 % 93 -14 % -14 %
Equipment 21 32 -34 % -36 % 37 -14 % -14 %
Other
92 123 -25 % -26 % 152 -19 % -20 %
TOTAL REVENUES
$ 1,174 $ 1,692 -31 % -32 % $ 2,082 -19 % -18 %
Revenues by:
Sales to Wholesale Customers
$ 605 $ 875 -31 % -33 % $ 1,098 -20 % -20 %
Sales through Direct to Consumer 477 694 -31 % -33 % 832 -17 % -17 %
Other (1)
92 123 -25 % -25 % 152 -19 % -19 %
TOTAL REVENUES
$ 1,174 $ 1,692 -31 % -32 % $ 2,082 -19 % -18 %
Cost of sales
660 868 -24 % 989 -12 %
Gross profit
514 824 -38 % 1,093 -25 %
Gross margin
43.8% 48.7% -490 bps 52.5% -380 bps
Demand creation expense 95 156 -39 % 140 11 %
Operating overhead expense
402 430 -7 % 485 -11 %
Total selling and administrative expense
497 586 -15 % 625 -6 %
Other segment items
(1) (2) — (6) —
EARNINGS BEFORE INTEREST AND TAXES $ 18 $ 240 -93 % $ 474 -49 %
(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.
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FISCAL 2026 COMPARED TO FISCAL 2025
• Converse revenues decreased 32% on a currency-neutral basis driven by declines in all territories. Unit sales decreased 31%, while lower ASP reduced revenues by approximately 1 percentage point.
• Wholesale revenues decreased 33% on a currency-neutral basis, driven by declines in all territories.
• Direct to consumer revenues decreased 33% on a currency-neutral basis, reflecting reduced traffic in all territories.
Reported EBIT decreased 93% reflecting lower reported revenues and the following:
• Gross margin contraction of 490 basis points primarily due to lower ASP, as well as the brand and marketplace reset costs, including higher inventory obsolescence reserves and employee severance costs. Lower ASP primarily reflects higher discounts and channel mix.
• Demand creation expense decreased 39% primarily due to lower brand marketing expense.
• Operating overhead expense decreased 7% primarily due to lower other administrative costs, partially offset by employee severance costs.
CORPORATE
(Dollars in millions)
FISCAL 2026 FISCAL 2025 % CHANGE FISCAL 2024 % CHANGE
Revenues
$ 2 $ (97) — $ (42) —
Cost of sales (95) (66) — (4) —
Gross profit (loss) 97 (31) — (38) —
Demand creation expense 9 12 -25 % 14 -14 %
Operating overhead expense 2,083 2,162 -4 % 2,746 -21 %
Total selling and administrative expense 2,092 2,174 -4 % 2,760 -21 %
Other segment items
28 (3) — (179) —
EARNINGS (LOSS) BEFORE INTEREST AND TAXES
$ (2,023) $ (2,202) 8 % $ (2,619) 16 %
Corporate primarily consists of unallocated general and administrative expenses, including expenses associated with centrally managed departments; depreciation and amortization related to our corporate headquarters; unallocated insurance, benefit and compensation programs, including stock-based compensation; and certain foreign currency gains and losses.
Corporate revenues primarily consist of foreign currency gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse, but managed through our central foreign exchange risk management program.
In addition to the foreign currency gains and losses recognized in Corporate revenues, foreign currency results in Corporate include gains and losses resulting from the difference between actual foreign currency exchange rates and standard rates used to record non-functional currency denominated product purchases within the NIKE Brand geographic operating segments and Converse; related foreign currency hedge results; conversion gains and losses arising from remeasurement of monetary assets and liabilities in non-functional currencies; and certain other foreign currency derivative instruments.
FISCAL 2026 COMPARED TO FISCAL 2025
Corporate's loss before interest and taxes decreased $179 million, primarily due to the following:
• a favorable change in net foreign currency gains and losses of $147 million related to the difference between actual foreign currency exchange rates and standard foreign currency exchange rates assigned to the NIKE Brand geographic operating segments and Converse, net of hedge gains and losses; these results are reported as a component of consolidated Gross profit;
• a favorable change of $79 million primarily related to lower other administrative costs, partially offset by higher wage-related expense, reported as a component of consolidated Operating overhead expense; and
• an unfavorable change of $31 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, partially offset by settlements of legal matters, reported as a component of consolidated Other (income) expense, net.
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FOREIGN CURRENCY EXPOSURES AND HEDGING PRACTICES
OVERVIEW
As a global company with significant operations outside the United States, in the normal course of business we are exposed to risk arising from changes in currency exchange rates. Our primary foreign currency exposures arise from the recording of transactions denominated in non-functional currencies and the translation of foreign currency denominated results of operations, financial position and cash flows into U.S. Dollars.
Our foreign exchange risk management program is intended to lessen both the positive and negative effects of currency fluctuations on our consolidated results of operations, financial position and cash flows. We manage global foreign exchange risk centrally on a portfolio basis to address those risks material to NIKE, Inc. We manage these exposures by taking advantage of natural offsets and currency correlations existing within the portfolio and, where practical and material, by hedging a portion of the remaining exposures using derivative instruments such as forward contracts and options. As described below, the implementation of the NIKE Trading Company ("NTC") and our foreign currency adjustment program enhanced our ability to manage our foreign exchange risk by increasing the natural offsets and currency correlation benefits existing within our portfolio of foreign exchange exposures. Our hedging policy is designed to partially or entirely offset the impact of exchange rate changes on the underlying net exposures being hedged. Where exposures are hedged, our program has the effect of delaying the impact of exchange rate movements on our Consolidated Financial Statements; the length of the delay is dependent upon hedge horizons. We do not hold or issue derivative instruments for trading or speculative purposes.
Refer to Note 4 — Fair Value Measurements and Note 12 — Risk Management and Derivatives in the accompanying Notes to the Consolidated Financial Statements for additional description of outstanding derivatives at each reported period end.
TRANSACTIONAL EXPOSURES
We conduct business in various currencies and have transactions which subject us to foreign currency risk. Our most significant transactional foreign currency exposures are:
• Product Costs — NIKE's product costs are exposed to fluctuations in foreign currencies in the following ways:
1. Product purchases denominated in currencies other than the functional currency of the transacting entity:
a. Certain NIKE entities purchase product from the NTC, a wholly-owned sourcing hub that buys NIKE branded products from third-party factories, predominantly in U.S. Dollars. The NTC, whose functional currency is the U.S. Dollar, then sells the products to NIKE entities in their respective functional currencies. NTC sales to a NIKE entity with a different functional currency results in a foreign currency exposure for the NTC.
b. Other NIKE entities purchase product directly from third-party factories predominantly in U.S. Dollars. These purchases generate a foreign currency exposure for those NIKE entities with a functional currency other than the U.S. Dollar.
In both purchasing scenarios, a weaker U.S. Dollar reduces inventory costs incurred by NIKE whereas a stronger U.S. Dollar increases its cost.
2. Factory input costs: NIKE operates a foreign currency adjustment program with certain factories. The program is designed to more effectively manage foreign currency risk by assuming certain of the factories' foreign currency exposures, some of which are natural offsets to our existing foreign currency exposures. Under this program, our payments to these factories are adjusted for rate fluctuations in the basket of currencies ("factory currency exposure index") in which the labor, materials and overhead costs incurred by the factories in the production of NIKE branded products ("factory input costs") are denominated.
As an offset to the impacts of the fluctuating U.S. Dollar on our non-functional currency denominated product purchases described above, a strengthening U.S. Dollar against the foreign currencies within the factory currency exposure indices reduces NIKE's U.S. Dollar inventory cost. Conversely, a weakening U.S. Dollar against the indexed foreign currencies increases our inventory cost.
• Non-Functional Currency Denominated External Sales — A portion of our NIKE Brand and Converse revenues associated with European operations are earned in currencies other than the Euro (e.g., the British Pound) but are recognized at a subsidiary that uses the Euro as its functional currency. These sales generate a foreign currency exposure.
• Other Costs — Non-functional currency denominated costs, such as endorsement contracts, also generate foreign currency risk, though to a lesser extent.
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• Non-Functional Currency Denominated Monetary Assets and Liabilities — Our global subsidiaries have various assets and liabilities, primarily receivables and payables, including intercompany receivables and payables, denominated in currencies other than their functional currencies. These balance sheet items are subject to remeasurement which may create fluctuations in Other (income) expense, net within our Consolidated Statements of Income.
MANAGING TRANSACTIONAL EXPOSURES
Transactional exposures are managed on a portfolio basis within our foreign currency risk management program. We manage these exposures by taking advantage of natural offsets and currency correlations that exist within the portfolio and may also elect to use currency forward and option contracts to hedge the remaining effect of exchange rate fluctuations on probable forecasted future cash flows, including certain product cost exposures, non-functional currency denominated external sales and other costs described above. Generally, these are accounted for as cash flow hedges.
Certain currency forward contracts used to manage the foreign exchange exposure of non-functional currency denominated monetary assets and liabilities subject to remeasurement are not formally designated as hedging instruments. Accordingly, changes in fair value of these instruments are recognized in Other (income) expense, net and are intended to offset the foreign currency impact of the remeasurement of the related non-functional currency denominated asset or liability being hedged.
TRANSLATIONAL EXPOSURES
Many of our foreign subsidiaries operate in functional currencies other than the U.S. Dollar. Fluctuations in currency exchange rates create volatility in our reported results as we are required to translate the balance sheets, operational results and cash flows of these subsidiaries into U.S. Dollars for consolidated reporting. The translation of foreign subsidiaries' non-U.S. Dollar denominated balance sheets into U.S. Dollars for consolidated reporting results in a cumulative translation adjustment to Accumulated other comprehensive income (loss) within Shareholders' equity. In the translation of our Consolidated Statements of Income, a weaker U.S. Dollar in relation to foreign functional currencies benefits our consolidated earnings whereas a stronger U.S. Dollar reduces our consolidated earnings. The impact of foreign exchange rate fluctuations on the translation of our consolidated Revenues was a benefit of approximately $1,023 million for the year ended May 31, 2026. The impact of foreign exchange rate fluctuations on the translation of our Income before income taxes was a benefit of approximately $184 million for the year ended May 31, 2026.
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 and to mitigate exposure to forecasted future cash flows of certain intercompany transactions. The combination of these foreign currency exposures and the related hedging instruments has the effect of partially offsetting the year-over-year foreign currency translation impact on net earnings. These hedges are generally 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 $1 million on our Income before income taxes for the year ended May 31, 2026.
NET INVESTMENTS IN FOREIGN SUBSIDIARIES
We are also exposed to the impact of foreign exchange fluctuations on our investments in wholly-owned foreign subsidiaries denominated in a currency other than the U.S. Dollar, which could adversely impact the U.S. Dollar value of these investments and therefore the value of future repatriated earnings. We have, in the past, hedged and may, in the future, hedge net investment positions in certain foreign subsidiaries to mitigate the effects of foreign exchange fluctuations on these net investments. These hedges are accounted for as net investment hedges in accordance with U.S. GAAP. There were no outstanding net investment hedges as of May 31, 2026 and 2025. There were no cash flows from net investment hedge settlements for the years ended May 31, 2026, 2025 and 2024.
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LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW ACTIVITY
(Dollars in millions)
FISCAL 2026 FISCAL 2025
Cash provided (used by):
Operations $ 2,868 $ 3,698
Investing activities
(488) (275)
Financing activities
(2,292) (5,820)
Effect of exchange rate changes on cash and equivalents
11 1
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS
$ 99 $ (2,396)
OPERATIONS:
In fiscal 2026, cash provided by operations was $2,868 million. This was driven by Net income of $3,108 million, adjusted for non-cash items of $1,438 million, and a net change in certain working capital components and other assets and liabilities that decreased cash provided by operations by $1,678 million. The net change in certain working capital components and other assets and liabilities was primarily driven by an increase in Accounts receivable and a decrease in Income taxes payable. The increase in Accounts receivable was primarily due to the outstanding IEEPA tariff receivable, as well as higher wholesale revenues and the timing of receipts in the normal course of business. The decrease in Income taxes payable was primarily due to U.S. federal income tax payments.
In fiscal 2025, cash provided by operations was $3,698 million. This was driven by Net income of $3,219 million, adjusted for non-cash items of $1,266 million, and a net change in certain working capital components and other assets and liabilities that decreased cash provided by operations by $787 million. The net change in certain working capital components and other assets and liabilities was primarily driven by an increase in Accounts receivable and an increase in Prepaid expenses and other current assets. The increase in Accounts receivable was primarily due to the timing of wholesale shipments and the increase in Prepaid expenses and other current assets was primarily due to prepayments related to endorsement contracts.
INVESTING ACTIVITIES:
In fiscal 2026, cash used by investing activities was $488 million, primarily driven by additions to Property, plant and equipment, partially offset by the net change in short-term investments (including purchases, sales and maturities). In fiscal 2025, cash used by investing activities was $275 million, primarily driven by additions to Property, plant and equipment, partially offset by the net change in short-term investments (including purchases, sales and maturities).
FINANCING ACTIVITIES:
In fiscal 2026, cash used by financing activities was $2,292 million, primarily driven by dividend payments. In fiscal 2025, cash used by financing activities was $5,820 million, primarily driven by share repurchases, dividend payments and a $1 billion bond repayment.
In fiscal 2026, we purchased a total of 1.8 million shares of NIKE's Class B Common Stock for $122.4 million (an average price of $67.63 per share) under the four-year, $18 billion share repurchase program approved by the Board of Directors in June 2022. In June 2026, the Board of Directors reapproved the current program to continue without a fixed expiration date and without increasing the aggregate amount authorized for repurchase. As of May 31, 2026, we had repurchased 124.4 million shares at a cost of approximately $12.1 billion (an average price of $97.57 per share) under this $18 billion share repurchase program. We paused repurchases under this program during the first quarter of fiscal 2026 and no shares were repurchased during the quarter ended May 31, 2026. We may resume share repurchases in the future at any time, depending upon market conditions, operating cash flows and our liquidity and capital needs. We continue to expect funding of any future share repurchases to come from operating cash flows.
CAPITAL RESOURCES
On July 17, 2025, 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 17, 2028.
On March 6, 2026, 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 5, 2027, with an option to extend the maturity date an additional 364 days. This facility replaced the prior $1 billion 364-day credit facility agreement entered into on March 7, 2025, which matured on March 6, 2026. Refer to Note 5 — Short-Term Borrowings and Credit Lines for additional information.
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On March 7, 2025, we entered into a five-year committed credit facility agreement with a syndicate of banks which provides for up to $2 billion of borrowings, with the option to increase borrowings up to $3 billion in total with lender approval. The facility matures on March 7, 2030, with options to extend the maturity date up to an additional two years. Refer to Note 5 — Short-Term Borrowings and Credit Lines for additional information.
We currently have long-term debt ratings of A+ and A2 from S&P Global Ratings and Moody's Ratings, respectively. As it relates to our committed credit facilities entered into on March 6, 2026 and March 7, 2025, if our long-term debt ratings were to decline, the facility fees and interest rates may increase. Conversely, if our long-term debt ratings were to improve, the facility fees and interest rates may decrease. Refer to Note 5 — Short-Term Borrowings and Credit Lines for additional information. Changes in our long-term debt ratings would not trigger acceleration of maturity of any then-outstanding borrowings or any future borrowings under the committed credit facilities. Under these facilities, we have agreed to various covenants. These covenants include limits on the disposal of assets and the amount of debt secured by liens we may incur. In the event we were to have any borrowings outstanding under these facilities, failed to meet any covenant and were unable to obtain a waiver from a majority of the banks in the applicable syndicate, any borrowings would become immediately due and payable. As of May 31, 2026, we were in full compliance with each of these covenants, and we believe it is unlikely we will fail to meet any of these covenants in the foreseeable future.
Liquidity is also provided by our $3 billion commercial paper program. As of and for the fiscal years ended May 31, 2026 and 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.
To date, we have not experienced difficulty accessing the capital or credit markets; however, future volatility may increase costs associated with issuing commercial paper or other debt instruments or affect our ability to access those markets.
As of May 31, 2026, we had Cash and equivalents and Short-term investments totaling $9.0 billion, primarily consisting of commercial paper, corporate notes, deposits held at major banks, money market funds, U.S. Treasury obligations and other investment grade fixed-income securities. Our fixed-income investments are exposed to both credit and interest rate risk. All of our investments are investment grade to minimize our credit risk. While individual securities have varying durations, as of May 31, 2026, the weighted-average days to maturity of our cash equivalents and short-term investments portfolio was 103 days.
We believe that existing Cash and equivalents, Short-term investments and cash generated by operations, together with access to external sources of funds as described above, will be sufficient to meet our domestic and foreign capital needs for the next twelve months and beyond.
Our material cash requirements as of May 31, 2026, were as follows:
• Debt Obligations — Refer to Note 5 — Short-Term Borrowings and Credit Lines and Note 6 — Long-Term Debt in the accompanying Notes to the Consolidated Financial Statements for additional information.
• Operating Leases — Refer to Note 17 — Leases in the accompanying Notes to the Consolidated Financial Statements for additional information.
• Endorsement Contracts — As of May 31, 2026, we had endorsement contract obligations, including associated marketing commitments, of approximately $15.5 billion, with approximately $1.7 billion payable within 12 months, primarily representing approximate amounts of base compensation and minimum guaranteed royalty fees we are obligated to pay athlete, public figure, sport team and league endorsers of our products. Actual payments under some contracts may be higher than these amounts as these contracts provide for bonuses to be paid to the endorsers based upon athletic achievements and/or royalties on product sales in future periods. Actual payments under some contracts may also be lower as these contracts include provisions for reduced payments if athletic performance declines in future periods. In addition to the cash payments, we are obligated to furnish our endorsers with NIKE product for their use. It is not possible to determine how much we will spend on this product on an annual basis as the amount of product provided to the endorsers will depend on many factors and the contracts generally do not stipulate a minimum amount of cash to be spent on the product.
• Product Purchase Obligations — As of May 31, 2026, we had product purchase obligations of approximately $4.9 billion, with approximately $4.7 billion payable within the next 12 months. Product purchase obligations represent agreements (including open purchase orders) to purchase products in the ordinary course of business that are enforceable and legally binding and specify all significant terms. We generally order product at least four to five months in advance of sale based primarily on advanced orders received from external wholesale customers and internal orders from our direct to consumer operations. In some cases, prices are subject to change throughout the production process.
• Other Purchase Obligations — As of May 31, 2026, we had other purchase obligations of approximately $2.4 billion, with approximately $1.6 billion payable within the next 12 months. Other purchase obligations primarily include technology investments, external service and marketing commitments made in the ordinary course of business. The
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amounts represent the minimum payments required by legally binding contracts and agreements that specify all significant terms, and may include open purchase orders for non-product purchases.
In addition to the above, we have long-term obligations for uncertain tax positions and various post-retirement benefits for which we are not able to reasonably estimate when cash payments will occur. Refer to Note 7 — Income Taxes and Note 11 — Benefit Plans in the accompanying Notes to the Consolidated Financial Statements for additional information related to uncertain tax positions and post-retirement benefits, respectively.
In connection with various contracts and agreements, we routinely provide indemnification relating to the enforceability of intellectual property rights, coverage for legal issues that arise and other items where we are acting as the guarantor. As of May 31, 2026, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current and future financial condition, results of operations, liquidity, capital expenditures or capital resources. Refer to Note 16 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for additional information related to our bank guarantees and letters of credit.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 1 — Summary of Significant Accounting Policies within the accompanying Notes to the Consolidated Financial Statements for recently adopted and issued accounting pronouncements.
CRITICAL ACCOUNTING ESTIMATES
The preparation of our Consolidated Financial Statements in accordance with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. The accounting estimates described below involve assumptions and judgments with a significant level of uncertainty that we believe have the greatest potential impact on our Consolidated Financial Statements, so we consider these to be our critical accounting estimates. Management has reviewed and discussed these critical accounting estimates with the Audit & Finance Committee of the Board of Directors.
Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in the preparation of our Consolidated Financial Statements. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported. During fiscal 2026, we did not make any material changes to the accounting methodologies used to develop the estimates discussed below.
For a description of our significant accounting policies and methods used in the preparation of our Consolidated Financial Statements, refer to Note 1 — Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements.
SALES-RELATED RESERVES
Provisions for anticipated sales returns consist of both contractual return rights and discretionary authorized returns. Provisions for post-invoice sales discounts consist of both contractual programs and discretionary discounts that are expected to be granted at a later date.
Estimates of discretionary authorized returns, discounts and claims are based on (1) historical rates, (2) specific identification of outstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts and claims expected but not yet finalized with customers based on current marketplace needs. Actual returns, discounts and claims in any future period are inherently uncertain and may differ from estimates recorded. If actual or expected future returns, discounts or claims were significantly different than reserves established, a reduction or increase to Revenues would be recorded in the period in which such determination was made. In fiscal 2026, any variances between actual and expected sales-related reserves were not material to reported Revenues.
Refer to Note 14 — Revenues in the accompanying Notes to the Consolidated Financial Statements for additional information.
INVENTORY RESERVES
We make ongoing estimates relating to the net realizable value of inventories based upon our assumptions about future demand, market conditions, existing inventory levels, sales trends and historical experience with similar products. If we estimate the net realizable value of our inventory is less than the cost of the inventory, we record a reserve equal to the difference between the cost of the inventory and the estimated net realizable value. If changes in market conditions result in reductions to the estimated net realizable value of our inventory below our previous estimate, we would increase our reserve in the period in which such a determination is made.
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Refer to Inventory Valuation within Note 1 — Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements for additional information.
HEDGE ACCOUNTING FOR DERIVATIVES
We use derivative contracts to hedge certain anticipated foreign currency and interest rate transactions as well as certain non-functional currency monetary assets and liabilities. When the specific criteria to qualify for hedge accounting have been met, changes in the fair value of contracts hedging probable forecasted future cash flows are recorded in Accumulated other comprehensive income (loss), rather than Net income, until the underlying hedged transaction affects Net income. In most cases, this results in gains and losses on hedge derivatives being released from Accumulated other comprehensive income (loss) into Net income sometime after the maturity of the derivative. One of the criteria for this accounting treatment is that the designated notional value of these derivative contracts should not be in excess of the amount of anticipated transactions. By their very nature, our estimates of anticipated transactions may fluctuate over time and may ultimately vary from actual transactions. When the amount of anticipated or actual transactions decline below designated hedged levels and it is no longer probable the forecasted transaction will occur by the end of the originally specified time period or within an additional two-month period of time thereafter, we reclassify the cumulative change in fair value of the over-hedged portion of the related hedge contract from Accumulated other comprehensive income (loss) to Other (income) expense, net during the quarter in which the decrease occurs. In rare circumstances, the additional period of time may exceed two months due to extenuating circumstances related to the nature of the forecasted transaction that are outside our control or influence.
Refer to Note 12 — Risk Management and Derivatives in the accompanying Notes to the Consolidated Financial Statements for additional information.
INCOME TAXES
We are subject to taxation in the United States, as well as various state and foreign jurisdictions. The determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. On an interim basis, we estimate our effective tax rate for the full fiscal year. This estimated annual effective tax rate is then applied to the year-to-date Income before income taxes excluding infrequently occurring or unusual items, to determine the year-to-date Income tax expense. The income tax effects of infrequent or unusual items are recognized in the interim period in which they occur. As the fiscal year progresses, we continually refine our estimate based upon actual events and earnings by jurisdiction during the year. This continual estimation process periodically results in a change to our expected effective tax rate for the fiscal year. When this occurs, we adjust the income tax provision during the quarter in which the change in estimate occurs.
On a quarterly basis, we evaluate the probability a tax position will be effectively sustained and the appropriateness of the amount recognized for uncertain tax positions based on factors including changes in facts or circumstances, changes in tax law, settled audit issues and new audit activity. Changes in our assessment may result in the recognition of a tax benefit or an additional charge to the tax provision in the period our assessment changes. We recognize interest and penalties related to income tax matters in Income tax expense.
Refer to Note 7 — Income Taxes in the accompanying Notes to the Consolidated Financial Statements for additional information.
OTHER CONTINGENCIES
In the ordinary course of business, we are subject to various legal proceedings, claims and government investigations related to our business, products and actions of our employees and representatives, including contractual and employment relationships, product liability, antitrust, customs, tax, intellectual property and other matters. We record contingent liabilities resulting from claims against us when a loss is assessed to be probable and the amount of the loss is reasonably estimable. Assessing probability of loss and estimating probable losses requires analysis of multiple factors, including in some cases judgments about the potential actions of third-party claimants and courts. Recorded contingent liabilities are based on the best information available and actual losses in any future period are inherently uncertain. If future adjustments to estimated probable future losses or actual losses exceed our recorded liability for such claims, we would record additional charges during the period in which the actual loss or change in estimate occurred. In addition to contingent liabilities recorded for probable losses, we disclose contingent liabilities when there is a reasonable possibility the ultimate loss will materially exceed the recorded liability.
Refer to Note 16 — Commitments and Contingencies in the accompanying Notes to the Consolidated Financial Statements for additional information.
2026 FORM 10-K 48
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