NIKE, Inc. (NKE) Bundle
A Brief History of NIKE, Inc.
NIKE, Inc., founded in 1964 as Blue Ribbon Sports, officially became NIKE, Inc. in 1971. The company's name is derived from the Greek goddess of victory, and it has grown to become a global leader in sports apparel and footwear. As of 2024, NIKE operates in over 190 countries, with a diverse product portfolio that includes footwear, apparel, and equipment for a wide range of sports and lifestyle activities.
Financial Performance Overview
For the first quarter of fiscal 2025, which ended August 31, 2024, NIKE reported total revenues of $11.589 billion, a decrease of 10% compared to $12.939 billion in the same period of fiscal 2024. The decline was primarily driven by lower revenues across key markets, including North America and Europe.
Region | Q1 FY2025 Revenues (in millions) | Q1 FY2024 Revenues (in millions) | % Change |
---|---|---|---|
North America | $4,826 | $5,423 | -11% |
Europe, Middle East & Africa | $3,143 | $3,610 | -13% |
Greater China | $1,666 | $1,735 | -4% |
Asia Pacific & Latin America | $1,462 | $1,572 | -7% |
Global Brand Divisions | $14 | $13 | 8% |
Profitability Metrics
NIKE's gross profit for Q1 FY2025 was $5.257 billion, representing a gross margin of 45.4%, compared to $5.720 billion and a margin of 44.2% in Q1 FY2024. This improvement in margin was attributed to lower product costs and decreased warehousing expenses.
Operating Expenses
Total selling and administrative expenses decreased by 2% to $4.048 billion. This includes:
- Demand creation expense: Increased by 15% to $1.226 billion
- Operating overhead expense: Decreased by 7% to $2.822 billion
Net Income and Earnings Per Share
NIKE reported net income of $1.051 billion for Q1 FY2025, down from $1.450 billion in Q1 FY2024. The diluted earnings per share for the quarter were $0.70, compared to $0.94 in the prior year.
Cash Flow Analysis
For the first three months of fiscal 2025, NIKE generated an operating cash inflow of $394 million, compared to an outflow of $66 million in the same period last year. Cash used in investing activities was an outflow of $166 million.
Share Repurchase Program
During the quarter, NIKE repurchased approximately 14.8 million shares at an average price of $80.60, totaling $1.193 billion. As of August 31, 2024, NIKE had repurchased a total of 99.7 million shares under its current $18 billion share repurchase program.
Capital Resources
As of August 31, 2024, NIKE’s total long-term debt was approximately $7.932 billion. The company maintains a strong liquidity position with $8.485 billion in cash and equivalents at the end of the quarter.
Market Position and Future Outlook
NIKE continues to focus on digital transformation and sustainability initiatives to drive future growth. The company aims to leverage its brand strength and global reach to navigate challenges in the retail environment and enhance shareholder value.
A Who Owns NIKE, Inc. (NKE)
Major Shareholders
As of 2024, the primary ownership of NIKE, Inc. is distributed among a mix of institutional investors and individual shareholders. The largest stakeholders include:
Shareholder | Type of Ownership | Percentage Ownership |
---|---|---|
The Vanguard Group, Inc. | Institutional Investor | 8.5% |
BlackRock, Inc. | Institutional Investor | 7.5% |
State Street Corporation | Institutional Investor | 4.0% |
FMR LLC (Fidelity) | Institutional Investor | 3.5% |
Bill Bowerman (founder) | Individual Investor | 1.0% |
Phil Knight (co-founder) | Individual Investor | 18.5% |
Other Investors | Public | 57.0% |
Class Structure of Shares
NIKE, Inc. has two classes of common stock: Class A and Class B. The Class B shares are the only ones publicly traded. The ownership structure is as follows:
Class | Shares Outstanding | Voting Rights |
---|---|---|
Class A | 298 million | 1 vote per share |
Class B | 1,193 million | 10 votes per share |
Shareholder Rights and Voting
Class B shareholders have enhanced voting rights compared to Class A shareholders. This structure allows key figures, such as Phil Knight, to maintain significant control over the company's strategic direction despite not holding the majority of shares.
Recent Stock Performance
As of August 31, 2024, NIKE, Inc. reported a total revenue of $11.6 billion for the first quarter of fiscal 2025, reflecting a decrease from $12.9 billion in the same period of the previous year. The company's stock performance has been impacted by various market conditions, including consumer spending trends and competitive pressures.
Metric | Q1 Fiscal 2025 | Q1 Fiscal 2024 |
---|---|---|
Total Revenue | $11.6 billion | $12.9 billion |
Net Income | $1.051 billion | $1.450 billion |
Gross Margin | 45.4% | 44.2% |
Earnings Before Interest and Taxes (EBIT) | $1.264 billion | $1.614 billion |
Share Repurchase Activity
In the first quarter of fiscal 2025, NIKE repurchased a total of 14.8 million shares of its Class B common stock for approximately $1.2 billion as part of its ongoing share repurchase program. The average price paid per share during this period was $80.60.
Month | Shares Repurchased | Average Price | Total Cost |
---|---|---|---|
June 2024 | 3.26 million | $94.11 | $8.638 billion |
July 2024 | 6.16 million | $74.19 | $8.181 billion |
August 2024 | 5.39 million | $79.76 | $7.752 billion |
Dividend Information
NIKE, Inc. declared dividends totaling $554 million during the first quarter of fiscal 2025, reflecting its commitment to returning value to shareholders.
Dividend Type | Amount | Frequency |
---|---|---|
Common Dividend | $0.370 per share | Quarterly |
Preferred Dividend | $0.10 per share | Quarterly |
Conclusion on Ownership Trends
With a diversified ownership base comprising institutional investors and significant individual shareholders, NIKE, Inc. continues to navigate the complexities of the market while maintaining a robust structure for shareholder engagement and value creation.
NIKE, Inc. (NKE) Mission Statement
Mission Statement Overview
NIKE, Inc. aims to bring inspiration and innovation to every athlete in the world. The company defines an athlete as anyone with a body, promoting inclusivity in its mission. This mission is supported by its commitment to sustainability and community engagement.
Financial Performance Metrics
As of the first quarter of fiscal 2025, NIKE, Inc. reported total revenues of $11.589 billion, reflecting a decrease of 10% from $12.939 billion in the same period of the previous year. The breakdown of revenues by segment is as follows:
Segment | Q1 FY 2025 Revenues (in millions) | Q1 FY 2024 Revenues (in millions) | % Change |
---|---|---|---|
North America | $4,826 | $5,423 | -11% |
Europe, Middle East & Africa | $3,143 | $3,610 | -13% |
Greater China | $1,666 | $1,735 | -4% |
Asia Pacific & Latin America | $1,462 | $1,572 | -7% |
Global Brand Divisions | $14 | $13 | 8% |
Converse | $501 | $588 | -15% |
Corporate | ($23) | ($2) | N/A |
Total NIKE, Inc. Revenues | $11,589 | $12,939 | -10% |
Revenue Sources
NIKE Brand revenues accounted for over 90% of total revenues, with the breakdown by category as follows:
Category | Q1 FY 2025 Revenues (in millions) | Q1 FY 2024 Revenues (in millions) | % Change |
---|---|---|---|
Footwear | $7,462 | $8,421 | -11% |
Apparel | $3,032 | $3,388 | -11% |
Equipment | $603 | $531 | 14% |
Total NIKE Brand Revenues | $11,111 | $12,353 | -10% |
Gross Margin and Profitability
For the first quarter of fiscal 2025, NIKE reported a gross profit of $5,257 million, resulting in a gross margin of 45.4%, which represents an increase of 120 basis points compared to the previous year. The following details encapsulate the profitability metrics:
Metric | Q1 FY 2025 | Q1 FY 2024 | % Change |
---|---|---|---|
Gross Profit (in millions) | $5,257 | $5,720 | -8% |
Gross Margin (%) | 45.4% | 44.2% | 120 bps |
Net Income (in millions) | $1,051 | $1,450 | -28% |
EBIT Margin (%) | 10.9% | 12.5% | -160 bps |
Investment in Demand Creation
NIKE's demand creation expenses, which include marketing and promotional costs, amounted to $1,226 million in Q1 FY 2025, a 15% increase from $1,069 million in the previous year. This investment reflects the company’s emphasis on brand marketing and engagement in key sports events.
Shareholder Returns
In the first quarter of fiscal 2025, NIKE returned approximately $1.8 billion to shareholders through share repurchases and dividends. The details of share repurchase activities are as follows:
Month | Total Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares Remaining |
---|---|---|---|
June 2024 | 3,256,769 | $94.11 | $8,638 million |
July 2024 | 6,159,134 | $74.19 | $8,181 million |
August 2024 | 5,388,115 | $79.76 | $7,752 million |
Total | 14,804,018 | $80.60 | N/A |
Conclusion
NIKE, Inc. continues to focus on its mission of inspiration and innovation while navigating challenges in revenue growth and profitability. The company’s strategic investments in demand creation and shareholder returns underscore its commitment to long-term value creation.
How NIKE, Inc. (NKE) Works
Business Overview
NIKE, Inc. operates as a global supplier of athletic footwear, apparel, equipment, and accessories. The company is divided into several geographical segments, including North America, Europe, Middle East & Africa (EMEA), Greater China, and Asia Pacific & Latin America (APLA).
Financial Performance
For the first quarter of fiscal 2025, NIKE, Inc. reported total revenues of $11.589 billion, a decrease of 10% from $12.939 billion in the same quarter of fiscal 2024. The decrease in revenue was attributed primarily to declines in NIKE Brand and Converse revenues across various segments.
Segment | Revenues (Q1 FY 2025) | Revenues (Q1 FY 2024) | % Change |
---|---|---|---|
North America | $4,826 million | $5,423 million | -11% |
EMEA | $3,143 million | $3,610 million | -13% |
Greater China | $1,666 million | $1,735 million | -4% |
APLA | $1,462 million | $1,572 million | -7% |
Global Brand Divisions | $14 million | $13 million | 8% |
Converse | $501 million | $588 million | -15% |
Revenue Breakdown
NIKE Brand revenues constituted over 90% of total revenues, with footwear, apparel, and equipment being key product categories. The following table summarizes the NIKE Brand revenues by category:
Category | Revenues (Q1 FY 2025) | Revenues (Q1 FY 2024) | % Change |
---|---|---|---|
Footwear | $7,462 million | $8,421 million | -11% |
Apparel | $3,032 million | $3,388 million | -11% |
Equipment | $603 million | $531 million | 14% |
Margins and Expenses
The gross margin for the first quarter of fiscal 2025 was 45.4%, an improvement from 44.2% in the prior year. This increase was driven by lower product costs, particularly in ocean freight and warehousing logistics.
Total selling and administrative expenses were $4.048 billion, down 2% from $4.116 billion in the previous year. The breakdown of these expenses is as follows:
Expense Type | Amount (Q1 FY 2025) | Amount (Q1 FY 2024) | % Change |
---|---|---|---|
Demand Creation Expense | $1,226 million | $1,069 million | 15% |
Operating Overhead Expense | $2,822 million | $3,047 million | -7% |
Net Income and Earnings Per Share
NIKE, Inc. reported a net income of $1,051 million for the first quarter of fiscal 2025, down 28% from $1,450 million in the previous year. The diluted earnings per share were $0.70, compared to $0.94 in the same period last year.
Cash Flow and Shareholder Returns
NIKE returned approximately $1.8 billion to shareholders in the first quarter of fiscal 2025 through share repurchases and dividends. Cash and equivalents at the end of the period stood at $8.485 billion.
Inventory Management
As of August 31, 2024, total inventories were reported at $8.253 billion, an increase of 10% compared to May 31, 2024. This increase was driven primarily by an increase in units available for sale.
Future Outlook
The company faces ongoing challenges related to consumer spending, product portfolio management, and foreign currency impacts, which may affect future revenue growth and profitability.
How NIKE, Inc. (NKE) Makes Money
Revenue Sources
NIKE, Inc. generates revenue primarily through the sale of athletic footwear, apparel, and equipment. For the first quarter of fiscal 2025, total revenues were reported at $11.589 billion, a decrease of 10% from $12.939 billion in the prior year. The breakdown of revenues is as follows:
Category | Q1 2025 (in millions) | Q1 2024 (in millions) | % Change |
---|---|---|---|
Footwear | $7,462 | $8,421 | -11% |
Apparel | $3,032 | $3,388 | -11% |
Equipment | $603 | $531 | 14% |
Global Brand Divisions | $14 | $13 | 8% |
Converse | $501 | $588 | -15% |
Sales Channels
NIKE's sales are distributed through two main channels: wholesale and direct-to-consumer (DTC). In Q1 2025, the revenue from these channels was:
Sales Channel | Q1 2025 (in millions) | Q1 2024 (in millions) | % Change |
---|---|---|---|
Wholesale | $6,410 | $6,983 | -8% |
NIKE Direct | $4,687 | $5,357 | -13% |
Geographic Performance
NIKE's revenues vary significantly by region. The following table summarizes revenue by geographic segment for Q1 2025:
Region | Q1 2025 (in millions) | Q1 2024 (in millions) | % Change |
---|---|---|---|
North America | $4,826 | $5,423 | -11% |
Europe, Middle East & Africa | $3,143 | $3,610 | -13% |
Greater China | $1,666 | $1,735 | -4% |
Asia Pacific & Latin America | $1,462 | $1,572 | -7% |
Cost Structure
For the first quarter of fiscal 2025, NIKE reported a cost of sales amounting to $6.332 billion, which is a 12% decrease from $7.219 billion in the previous year. The gross profit was $5.257 billion, reflecting a gross margin of 45.4%.
Expenses
Operating expenses consist of demand creation expenses and operating overhead expenses. In Q1 2025, these expenses were:
Expense Type | Q1 2025 (in millions) | Q1 2024 (in millions) | % Change |
---|---|---|---|
Demand Creation Expense | $1,226 | $1,069 | 15% |
Operating Overhead Expense | $2,822 | $3,047 | -7% |
Total Selling and Administrative Expense | $4,048 | $4,116 | -2% |
Net Income and Earnings Before Interest and Taxes (EBIT)
NIKE's net income for Q1 2025 was $1.051 billion, a decrease of 28% compared to $1.450 billion in Q1 2024. The EBIT for the same period was $1.264 billion, reflecting a decrease of 22% from $1.614 billion in the prior year.
Financial Ratios
The EBIT margin for Q1 2025 was calculated at 10.9%, down from 12.5% in Q1 2024.
Cash Flow and Investments
Cash provided (used) by investing activities was an outflow of $166 million for the first three months of fiscal 2025. Cash provided (used) by financing activities was an outflow of $1.622 billion.
Conclusion
NIKE's revenue generation is heavily reliant on footwear and apparel sales through both wholesale and DTC channels. The company continues to adapt its operations in response to shifts in consumer demand and market conditions.
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