NIKE INC CLASS B

Analysis of Financial Figures and Key Ratios

Based on the provided excerpts from NIKE Inc.'s fiscal 2025 second quarter conference call, the following financial figures and insights are available:

Revenue Performance

• Q2 Revenue Decline:
  • Reported Basis: Down 8%
  • Currency-Neutral Basis: Down 9%
• Segment Performance:
  • NIKE Direct: Declined 15%
    • NIKE Digital: Down 21%
    • NIKE Stores: Down 2%
  • Wholesale: Declined 4%

Profitability Metrics

• Gross Margins:
  • Declined by 100 basis points to 43.6% (reported basis)
• Earnings Per Share (EPS):
  • $0.78
• Earnings Before Interest and Taxes (EBIT):
  • Greater China: Declined 27%
  • APLA: Declined 12%
  • North America & EMEA: Declined 10%

Operating Expenses

• SG&A Expenses:
  • Down 3% (reported basis)
  • Demand Creation: Up 1%

Inventory Management

• Overall Inventory: Flat compared to the prior year
  • Footwear Inventory: Declined
  • Apparel and Accessories Inventory: Increased

Outlook for Q3

• Revenue Expectation: Down low double-digits
• Gross Margins Expectation: Down 300-350 basis points
• SG&A Expectation: Slightly down year-over-year

Limitations in Analysis

The provided context does not include comprehensive financial statements such as the Balance Sheet, Income Statement, or Cash Flow Statement. Essential figures required to calculate key financial ratios, including:

• Liquidity Ratios: Current Assets, Current Liabilities
• Solvency Ratios: Total Debt, Total Equity, Total Assets
• Efficiency Ratios: Total Assets, Revenue, Inventory Levels
• Return Ratios: Net Income, Total Assets, Total Equity

are not available. Without these, a complete calculation and evaluation of the requested financial ratios (e.g., Current Ratio, Quick Ratio, Debt-to-Equity Ratio, ROA, ROE) are not feasible.

Implications Based on Available Data

• Profitability Concerns: The decline in gross margins and EBIT across various segments indicates pressure on profitability. A 43.6% gross margin suggests challenges in maintaining cost efficiency amidst declining revenues.

• Revenue Pressure: Significant declines in key segments like NIKE Digital (21%) and overall NIKE Direct (15%) highlight potential liquidity and operational challenges.

• Expense Management: While SG&A expenses have been reduced by 3%, the increase in demand creation costs by 1% indicates a strategic shift towards marketing and brand investment amidst declining sales.

• Inventory Strategy: Maintaining flat inventory levels with a strategic decline in footwear inventory and an increase in apparel and accessories suggest a focus on optimizing stock based on category performance.

Recommendations for Further Analysis

To provide a comprehensive evaluation of NIKE Inc.'s financial health, the following additional information is required:

• Detailed Balance Sheet: To assess liquidity and solvency ratios.
• Complete Income Statement: For a thorough profitability analysis.
• Cash Flow Statement: To evaluate cash generation and usage.
• Historical Data: For trend analysis and benchmarking against industry standards.

Conclusion

While the provided excerpts offer insights into NIKE Inc.'s recent financial performance and strategic outlook, the absence of detailed financial statements limits the ability to calculate and evaluate key financial ratios comprehensively. For a more thorough analysis, access to complete financial disclosures is essential.