EPS of $0.70 decreased by 26.3% from previous year
Gross margin of 45.4%
Net income of 1.05B
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Nike Inc (NKE.DE) QQ1 2025 Earnings Review: Revenue Decline, Margin Resilience, and a Robust Balance Sheet
Executive Summary
Nike Inc reported QQ1 2025 revenue of $11.589 billion, a year-over-year decline of 10.4% and a sequential drop of 8.1%. Despite the top-line softness, the company delivered a solid gross margin of 45.36% and an operating margin of 10.43%, resulting in diluted earnings per share of $0.70 and net income of $1.051 billion. The quarter underscored margin resilience amid a softer demand environment, supported by a diversified product portfolio and a shift toward higher-margin direct-to-consumer activities, even as promotional activity remained elevated in certain markets.
Nike maintained a strong liquidity position with cash and short-term investments totaling approximately $10.3 billion (cash at period-end of $8.485 billion and short-term investments of $1.811 billion). The company generated $394 million of operating cash flow and delivered free cash flow of $274 million for the quarter. However, financing actions resulted in net cash outflows of $1.622 billion, including share repurchases of $1.184 billion and dividends paid of $558 million, contributing to a decline in ending cash from $9.86 billion to $8.49 billion. Net debt stood at $3.64 billion, with total debt of $12.13 billion and a debt-to-capitalization ratio of ~46.5%.
From a profitability and efficiency standpoint, Nike’s gross margin remained firm in the mid-40s, while the operating margin implied that cost discipline and mix management continued to support earnings power even as revenue contracted. The quarter’s earnings performance should be viewed in the context of a consumer environment characterized by currency headwinds and uneven demand across geographies, with greater emphasis on improving DTC penetration, digital-enabled consumer engagement, and geographic expansion to offset near-term softness. Investors should monitor the cadence of inventory management, promotional intensity, and currency translation impacts as the company continues to navigate a multi-speed global marketplace.
Revenue: $11.589B; YoY -10.43%; QoQ -8.07%
- Gross Profit: $5.257B; Gross Margin: 45.36%
- Operating Income: $1.209B; Operating Margin: 10.43%
- Net Income: $1.051B; Net Margin: 9.07%
- EPS (Diluted): $0.70; YoY EPS -26.32%; QoQ EPS -29.29%
- EBITDA: $1.393B; EBITDA Margin: ~12.02%
- Cash Flow: Operating Cash Flow $394M; Free Cash Flow $274M
- Balance Sheet: Cash & equivalents $8.485B; Short-term investments $1.811B; Total debt $12.126B; Net debt $3.641B; Total assets $37.867B; Total equity $13.944B
- Working Capital: Current ratio 2.36; Quick ratio 1.58; Cash ratio 0.80
- Capital Allocation: Share repurchases $1.184B; Dividends paid $0.558B; Net cash used in financing activities $1.622B
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
11.59B
-10.43%
-8.07%
Gross Profit
5.26B
-8.09%
-6.69%
Operating Income
1.21B
-24.63%
-23.72%
Net Income
1.05B
-27.52%
-29.93%
EPS
0.70
-26.32%
-29.29%
Key Financial Ratios
currentRatio
2.36
grossProfitMargin
45.4%
operatingProfitMargin
10.4%
netProfitMargin
9.07%
returnOnAssets
2.78%
returnOnEquity
7.54%
debtEquityRatio
0.87
operatingCashFlowPerShare
$0.26
freeCashFlowPerShare
$0.18
dividendPayoutRatio
53.1%
priceToBookRatio
8.86
priceEarningsRatio
29.4
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript provided in the supplied data. As a result, management-specific themes, cadence, and direct quotes could not be extracted.
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Forward Guidance
Forward guidance is not detailed in the provided data. Qualitative takeaways: (i) macro headwinds and currency translation remain meaningful overhangs for revenue, (ii) ongoing emphasis on direct-to-consumer growth, digital transformation, and margin optimization via product mix and pricing actions, (iii) de-risking inventory through improved planning and regional mix shifts. Investors should monitor: region-by-region demand signals (notably North America and Greater China), currency trends, promotional intensity, DTC penetration, and the trajectory of gross margins as mix and pricing actions play out across geographies.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NKE.DE Focus
45.36%
10.40%
7.54%
29.40%
ADS.DE
51.20%
6.16%
3.49%
53.26%
APC.DE
46.90%
34.50%
54.40%
26.53%
MSF.DE
69.40%
46.60%
8.57%
32.40%
NFC.DE
46.90%
28.20%
10.90%
28.22%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Quantitatively, QQ1 2025 shows a conservative profit trajectory amid a softer revenue base: revenue fell 10.4% YoY, with net income down ~27.5% YoY and EPS down ~26.3% YoY, while gross margin remained stable at ~45.4% and operating margin at ~10.4%. The balance sheet remains healthy with substantial liquidity (~$8.5B cash, $1.8B short-term investments) and a net debt position of ~$3.6B. The company continues to allocate capital toward share repurchases and dividends, signaling confidence in cash generation and a commitment to capital returns despite near-term top-line softness.
Qualitatively, Nike’s long-term investment thesis remains anchored in DTC growth, digital-channel optimization, and international expansion to offset slower core markets. The lack of formal forward guidance in the provided data suggests a cautious stance given macro uncertainty and currency effects. Investors should monitor regional demand dynamics (notably North America and Greater China), gross margin trajectory driven by mix and pricing, inventory levels, and the pace of cash flow restoration as operating efficiency initiatives and price/mix actions take hold. Relative to peers, Nike combines strong brand equity with a scalable platform, but valuation implies premium expectations for continued margin expansion and market-share gains. Overall, the outlook is cautiously constructive with a bias toward resolution of near-term headwinds through strategic execution in DTC, digital, and international markets.
Key Investment Factors
Growth Potential
Longer-term growth hinges on expanding DTC and digital platforms, expanding international penetration (especially China and Europe), and elevating margin through mix, pricing, and product innovation across high-growth categories.
Profitability Risk
Key risks include sustained macro weakness, currency headwinds, elevated promotions compressing margins, inventory overhang in certain regions, and intensified competition from peers (e.g., Adidas, Lululemon) and upstarts in athletic/apparel segments.
Financial Position
Solid liquidity with ~$10.3B in cash and short-term investments, modest free cash flow generation this quarter, and a manageable debt load (~$12.1B) with a net debt position of ~$3.64B. Balance sheet strength supports ongoing share repurchases and dividends, albeit with a near-term emphasis on working capital efficiency and cash flow optimization.
SWOT Analysis
Strengths
Iconic global brand with broad product category coverage (footwear, apparel, equipment).
Large and scalable direct-to-consumer (DTC) ecosystem complemented by robust digital channels.
Strong balance sheet and liquidity position supporting shareholder returns and strategic investments.
Diversified geographic footprint reducing single-market risk and enabling mix optimization.
Weaknesses
Revenue decline in QQ1 2025 indicates sensitivity to macro conditions and region-specific softness.
Promotional intensity in some markets may compress margins and dampen profitability.
High working capital levels (inventory) remain a point of focus for optimization.
Opportunities
Accelerate DTC and e-commerce penetration to lift margins and deepen consumer relationships.
Geographic expansion, particularly in international markets and China, to offset mature-market headwinds.
Product innovation and category expansion to drive higher-margin growth and pricing power.
Threats
Macro volatility and currency fluctuations continuing to weigh on reported top-line results.
Intense competition from global and regional sportswear brands impacting market share.
Supply chain disruptions or shifts in consumer demand patterns could impact inventory discipline.