Nike’s QQ1 2025 results show a revenue decline driven by a softer demand environment and channel mix, offset by margin discipline and strong liquidity. Revenue reached USD 11.589 billion, down 10.43% year-over-year and 8.07% quarter-over-quarter. Gross profit was USD 5.257 billion with a gross margin of 45.36%, while operating income stood at USD 1.209 billion and net income at USD 1.051 billion (EPS USD 0.70), translating to a net margin of 9.07%. Free cash flow generation remained positive at USD 0.274 billion for the quarter, and Nike maintained a robust balance sheet with USD 8.485 billion of cash and cash equivalents and a net debt position of USD 3.641 billion. Management continues to emphasize direct-to-consumer (DTC) growth, digital acceleration, and ongoing cost discipline as levers to improve profitability amid a slowing top line. Capital allocation remained active, with significant share repurchases (USD 1.184 billion) and regular dividend payments (USD 0.558 billion), underscoring a favorable cash return framework to shareholders.
Key takeaways for investors: (1) the revenue contraction is notable but occurring alongside a structurally stronger gross margin and improving DTC mix; (2) profitability metrics show meaningful pressure versus the prior year, but cash generation and balance sheet strength remain solid; (3) the ongoing emphasis on brand-driven product innovation, omnichannel capabilities, and inventory/working capital management provides a path to margin stabilization and potential upside if demand reacceleration materializes.