NIKE Reports 8% Revenue Decline to $12.4 Billion in Q2 Fiscal 2025

NIKE, Inc. reported a decline in financial performance for the second quarter of fiscal 2025, with revenues of $12.4 billion, down 8% from $13.4 billion in the same period last year. Net income for the quarter was $1.163 billion, a decrease of 26% compared to $1.578 billion in the prior year. For the first six months of fiscal 2025, revenues totaled $23.943 billion, down 9% from $26.327 billion, while net income fell to $2.214 billion from $3.028 billion in the previous year. The company's gross margin also decreased by 100 basis points to 43.6%, attributed to higher discounts and changes in channel mix.

The decline in revenue was primarily driven by lower wholesale shipments and increased sales-related reserves, alongside a decrease in traffic and elevated promotional activity across NIKE Direct. The company reported a 13% drop in NIKE Direct revenues, which amounted to $5.0 billion for the quarter, compared to $5.7 billion in the same period last year. Wholesale revenues also decreased, totaling $6.9 billion, down from $7.1 billion. The company noted that the decrease in revenues was particularly pronounced in North America, Europe, and Greater China.

In terms of operational developments, NIKE has been focusing on strategic initiatives to reposition its business. This includes reducing the supply of certain footwear products and repositioning NIKE Brand Digital as a full-price platform. The company is also increasing investments in demand creation, including brand and sports marketing, to support key product launches. As of November 30, 2024, NIKE's inventories rose to $8.0 billion, a 6% increase from the previous fiscal year, driven by an increase in units.

The company continues to manage its workforce strategically, having recognized a net reduction in its global workforce as part of a multi-year enterprise initiative aimed at accelerating growth. As of the latest report, NIKE's employee headcount remains stable, with no significant changes reported. The company also returned approximately $1.6 billion to shareholders through share repurchases and dividends during the quarter.

Looking ahead, NIKE anticipates that the actions taken to reposition the business may negatively impact revenues and gross margins in the short term. However, the company believes these strategic decisions will ultimately drive long-term shareholder value. The effective tax rate for the first six months of fiscal 2025 was reported at 18.7%, an increase from 15.2% in the previous year, primarily due to one-time benefits recognized in the prior fiscal period.