Nike Earnings and Financials

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NIKE, Inc. (NKE) reported total revenues of $51.362 billion in fiscal year 2024, which ended May 31, 2024, roughly flat compared with $51.217 billion in fiscal year 2023. Gross margin expanded to 44.6% from approximately 43.5% in FY2023. Net income was $5.700 billion and diluted EPS was $3.73. Nike's fiscal year runs from June 1 through May 31, distinct from the calendar year. The company entered a significant restructuring period in late 2024 under returning CEO Elliott Hill, with the Win Now plan addressing channel imbalances built up during an aggressive direct-to-consumer push from 2020 to 2023.

Revenue by geography (FY2023 to FY2024)

Nike organizes its revenue reporting around four geographic segments plus the Converse brand, which is tracked separately regardless of where it sells. Segment revenues exclude corporate and eliminations.

North America is Nike's largest and most profitable segment, generating approximately 41% of total revenues in FY2024. The segment saw a modest decline year over year as Nike worked through elevated inventory levels and reduced promotional activity to protect gross margins. EMEA was broadly stable, benefiting from athletic demand and the European retail calendar. Greater China recovered from pandemic-era disruption but remains below its pre-2021 peak, as local sportswear rivals gained ground. APLA continued its steady growth trajectory across markets including Japan, Australia, and Mexico.

Converse, Nike's second distinct brand, declined slightly as the classic canvas silhouette faced product fatigue and competition from newer heritage sneaker brands. Converse operates its own retail stores and wholesale accounts independently from the Nike brand.

Source: NIKE, Inc.: Form 10-K SEC Filings (CIK 0000320187)

Key financial metrics (FY2023 to FY2024)

Gross margin improvement from approximately 43.5% in FY2023 to 44.6% in FY2024 was a deliberate outcome of Nike's inventory reset. In FY2022 and early FY2023, supply chain backlogs caused Nike to carry excess inventory that it had to discount to clear. As those elevated inventory levels normalized, promotional pricing declined and gross margins recovered. The improvement was meaningful: at Nike's scale, a one percentage point gross margin gain represents approximately $500 million in incremental gross profit.

Free cash flow of approximately $6.0 billion in FY2024 supported Nike's capital return program. Nike paid approximately $2.0 billion in dividends in FY2024 and repurchased shares during the year, continuing a multi-year pattern of returning cash to shareholders while maintaining investment-grade credit. Nike has increased its dividend for more than 22 consecutive years as of FY2024, placing it among companies with extended dividend growth records.

Direct-to-consumer and wholesale channel rebalancing

The most consequential strategic shift in Nike's recent history was a deliberate pullback from wholesale retail partners beginning around 2020. Under CEO John Donahoe, who joined from ServiceNow in 2020, Nike accelerated its direct-to-consumer ambitions: the Nike website, the Nike app, and company-owned stores were prioritized as the primary growth channels, while partnerships with multi-brand retailers including Foot Locker, DSW, Urban Outfitters, and thousands of smaller specialty accounts were reduced or eliminated.

The rationale was sound in principle. Direct sales carry higher gross margins because Nike captures the full retail margin rather than sharing it with a wholesale partner. Nike also gains richer consumer data and more control over pricing and brand presentation when selling directly. The shift aligned with a broader industry trend toward direct channels during the pandemic years.

The execution created problems that became apparent in FY2023 and FY2024. Pulling back from wholesale reduced Nike's physical retail presence at the point of purchase, particularly for casual footwear categories where consumers browse in stores before deciding. Wholesale partners who lost Nike allocation filled the shelf space with competing brands including New Balance, On Running, and Hoka. Those brands gained consumer visibility precisely during the years when Nike had vacated shelf space.

Nike's direct channels also proved less effective than expected at sustaining sell-through without promotional support. The company accumulated inventory that required markdowns in FY2022 and FY2023, which pressured gross margins during those years. By FY2024, Nike was actively working to restore wholesale relationships it had previously scaled back, and the Win Now plan under Elliott Hill explicitly committed to rebalancing the channel mix.

The Nike Brand footwear category, which generated approximately $33 billion in FY2024, remains dominated by the Air, Jordan, and running franchises. Nike Brand apparel contributed approximately $13 billion and equipment approximately $2.1 billion. Jordan Brand, a subsidiary of the Nike Brand rather than a standalone reporting segment, is widely regarded as the most valuable sneaker sub-brand in the world by resale value and consumer demand, particularly for basketball and lifestyle silhouettes.

Greater China headwinds and the Win Now turnaround

Greater China generated approximately $7.7 billion in FY2024, a modest recovery from approximately $7.2 billion in FY2023. The trajectory matters as much as the level: Greater China reached approximately $8.2 billion in Nike's fiscal year 2021, meaning the segment has not yet returned to its pre-disruption peak four years later.

The headwinds in China reflect a combination of factors. In 2021, Nike and other Western sportswear brands became the subject of a consumer boycott in China related to their public statements on Xinjiang cotton sourcing. Chinese state media amplified calls for consumers to buy domestic alternatives, and the boycott materially accelerated market share gains by local brands Anta Sports and Li-Ning, which had already been improving product quality and design. Government-linked consumers and younger urban shoppers who might previously have gravitated toward Nike for its aspirational positioning shifted toward brands they perceived as more aligned with Chinese national identity.

Anta Sports and Li-Ning invested their gained share in product development and international sports sponsorships, improving their competitive standing beyond what the boycott alone would have produced. By the time the acute boycott attention faded, these brands had established stronger positions in Chinese retail than they held before 2021, and Nike faced a structurally more competitive market.

The Win Now plan, announced alongside Elliott Hill's appointment as CEO in October 2024, targeted three interconnected problems. First, reducing excess inventory that accumulated as Nike over-produced into a slowing demand environment. Second, restoring wholesale channel relationships that had been allowed to atrophy during the DTC push. Third, cutting approximately $2 billion in costs through workforce reductions and operational simplification to fund reinvestment in marketing and product innovation. Hill, a Nike veteran who spent more than 30 years at the company before retiring in 2020, was chosen explicitly to restore cultural and operational continuity after the Donahoe-era strategic pivot proved more disruptive than expected.

The early fiscal year 2025 results covering June through November 2024 reflected the friction of the transition: revenues declined as Nike intentionally pulled back from lower-quality promotional sales, and margins were under pressure from restructuring costs. Investors evaluating Nike on FY2025 reported figures should account for the fact that FY2025 is a reset year, not a steady-state comparison.

Frequently Asked Questions

References

• NIKE, Inc.: Investor Relations
• NIKE, Inc.: Form 10-K SEC Filings (CIK 0000320187)

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