Nike Direct saw a significant downturn, with revenues falling to $5.0 billion, down by 13 per cent on a reported basis and 14 per cent on a currency-neutral basis. Wholesale revenues also decreased to $6.9 billion, a 3 per cent decline on a reported basis and 4 per cent on a currency-neutral basis.
Nike reported a decrease in Q2 FY25 revenues to $12.4 billion, a decline of 8 per cent from Q2 of the previous fiscal, with significant drops in both Nike Direct and wholesale revenues.
Its gross margin fell to 43.6 per cent due to higher discounts and a shifting channel mix, although mitigated by reduced costs.
Net income dropped 26 per cent to $1.2 billion, and earnings per share were down 24 per cent.
The gross margin receded by 100 basis points to 43.6 per cent, influenced by higher discounts and changes in channel mix, though partially mitigated by lower product input costs and reduced warehousing and logistics expenses. Selling and administrative expenses saw a decrease of 3 per cent to $4.0 billion, the company said in a media release.
The quarter also saw a decrease in net income to $1.2 billion, a 26 per cent decline, with diluted earnings per share falling to $0.78, down 24 per cent from the previous year.
On the balance sheet as of November 30, 2024, Nike’s inventories remained steady at $8.0 billion, balanced by an increase in units against lower product input costs and shifts in product mix. However, cash and equivalents, along with short-term investments, saw a slight decrease to $9.8 billion, impacted by share repurchases, cash dividends, and capital expenditures exceeding cash generated from operations.
Elliott Hill, president and CEO of Nike, emphasised the company’s renewed focus, stating, “After an energising 60 days of being back with my Nike teammates, our clear priority is to return sport to the centre of everything we do. We’re taking immediate action to reposition our business, so we can get back to driving long-term shareholder value. Our team is ready to go, and I’m confident you will see more moments of Nike being Nike again.”
“Nike’s second-quarter financial performance largely met our expectations, as we continue to make progress in shifting our portfolio. Under Elliott’s leadership, we are accelerating our pace and reigniting brand momentum through sport,” said Matthew Friend, executive vice president and chief financial officer.
Fibre2Fashion News Desk (KD)
