Nike Inc (NKE)

“And last, we are increasingly confident we are on track to return to balanced growth in North America across both NIKE Direct and wholesale channels in the near term.”

“As it relates to Greater China, we are managing sell-in. And by managing sell-in, we expect to continue the trend, like we saw this quarter, of sequential improvement in sell-through rates.”

“We have got a strong order book for summer.”

“We expect performance across territories in APLA to remain mixed in the near term.”

“We expect to continue to see growth in the performance dimensions.”

“And we expect our full-year tax rate to be in the low 20% range.”

“And we expect other expense, net of interest income, to be an expense of $15 million to $25 million in the fourth quarter.”

“We expect Q4 SG&A dollars to be flat to down slightly.”

“We expect sequential improvement in gross margin, with Q4 down approximately 25 to 75 basis points, including 250 basis points due to higher tariffs in North America.”

“We anticipate a two-point benefit from foreign exchange.”

“We expect Greater China to be down approximately 20% in the fourth quarter, reflecting reduced sell-in that we highlighted last quarter, as well as accelerated actions to clean up the marketplace.”

“We expect revenues in Q4 to be down 2% to 4%, with modest growth in North America despite lapping a value liquidation in the prior year, largely offset by declines in Greater China and Converse.”

“Given the softness in Sportswear, traffic patterns, and promotions across Europe, as well as recent disruption in the Middle East, we anticipate ending the fourth quarter with elevated inventory.”

“Matt shared last quarter that by the end of this fiscal year, we will have intentionally reduced over $4 billion of revenue from the peak levels of classic footwear franchises.”

“I think that we have been clear that we believe that we can complete the Win Now actions in EMEA and APLA by the end of this calendar year.”

“Underlying profitability has now improved over three consecutive quarters, giving us confidence that we can recover the transitory headwinds to margin associated with our Win Now actions.”

“That is why I gave the commentary around, while the actions we are taking will create a headwind to revenue in Greater China, we do expect to see profitability bottom faster because it is going to be a healthier, more profitable business as we set that foundation for much more balanced growth as we go forward in China.”

“For the first half of next year, I think it is safe to look to the range we provided for Q4 as a guide for what we are expecting for revenue for those last two quarters.”

“And last, we will return to providing full-year and long-term guidance at our Investor Day in the fall.”

“We expect earnings to be flattish with gross margins beginning to inflect and disciplined SG&A management, setting the foundation for earnings recovery from there.”

“We expect gross margin expansion to begin in the second quarter due to actions to mitigate tariffs and recovery of transitory impacts from Win Now.”

“While the tariff environment has been uncertain, assuming no significant changes, we expect Q2 fiscal 2027 to be the final quarter where higher tariffs continue to be a material year-over-year headwind to gross margin.”

“We expect revenues to be down low single digits versus the prior year, with gains in North America offset by declines in Greater China, driven by intentionally reduced sell-in and marketplace management actions over that period.”

“We expect these actions will continue throughout fiscal 2027 and remain a headwind to revenue growth, while profitability should bottom sooner as marketplace management makes progress.”

“Momentum in Running continues to be strong, and we expect Football, Training, and Basketball to return to growth over the next few quarters.”

“From here, we expect that to translate into consistent growth in North America.”

“It will expand into multiple sports, including NIKE Running in the fall.”

“We responded by doubling production of NIKE MIND over the next two seasons to meet demand from more than 2 million consumers who signed up for “Notify Me” on nike.com.”

“By the end of the tournament, we will have elevated our presentation in more than 5,000 Football doors around the world, with wholesale partners and NIKE Direct.”

“By the end of the calendar year, we expect to have finished our Win Now actions.”

“I would also say that we've said that we believe we're gonna drive modest growth in wholesale this year.”

“I wouldn't leave that to believe that we've necessarily decided we're gonna go much higher than the 10% of revenue at this point in time because we feel like that gives us a good amount of investment to be able to continue to drive our brand forward.”

“And then we expect the trends in Greater China and Converse for Q3 to be relatively in line with what we saw in Q2.”

“We expect other expense net of interest income, to be an income of 0 to $10 million in the third quarter.”

“However, excluding the 315 basis point impact, of higher gross product costs related to new tariffs gross margin expansion would be positive in the third quarter.”

“And while we have begun to take actions to reduce this to a net impact of approximately 120 basis points, it is still a significant factor impacting our near-term EBIT margins amidst the turnaround in a very dynamic operating environment.”

“We are also navigating new structural headwinds from the $1.5 billion of annualized incremental product costs due to higher US tariffs. This represents a gross headwind of approximately 320 basis points to gross margin. In fiscal 2026.”

“We highlighted last quarter that it will take more time to return to healthy growth in Greater China and Converse. And we expect headwinds to continue for the balance of the fiscal year.”

“The classics footwear franchises are on track to decline from peak levels by more than $4 billion by fiscal year-end.”

“All of these new concepts will come to the consumer in the back half of the year. As a result, our order book is improving season on season.”

“We do see a path back to double-digit EBIT margins.”

“Margin expansion is a top priority for me and my leadership team. While it will take time, we see the path back to double-digit Aegion EBIT margins for NIKE, Inc.”

“I think that we would expect or we do expect that we should start to see some gross margin benefit in the second half from lapping these aggressive actions.”

“we believe that China will continue to be a headwind on the top line and on margin for the balance of fiscal year 2026.”

“Given the progress that we're making, the steady progress on exiting the first half with a healthy marketplace, we do expect the benefit from less inventory clearance to start to take shape in our margins in the second half of this year.”

“We continue to expect SG&A to grow low single digits in fiscal 2026.”

“Foreign exchange has become a tailwind to reported revenue, but we expect minimal benefit to gross margin in fiscal 2026 due to our hedged positions entering the year.”

“We have made steady progress on our plans for a healthy marketplace by the end of the first half. And so we expect to begin to see a modest headwind to revenue across both wholesale and NIKE Direct as we lap aggressive clearance activity in the prior year.”

“we expect revenue and gross margin headwinds from Greater China and Converse to continue throughout fiscal 2026.”

“we expect North America will continue to lead our global recovery, while Greater China will require more time due to the unique marketplace dynamics Elliott and I have outlined.”

“Organic traffic continues to decline double digits. With a business in the prior year that was more concentrated on classic footwear franchises and sneaker launch, as well as a higher mix of off-price sales, traffic comps will remain under pressure. And so we do not expect NIKE Direct to return to growth for fiscal 2026.”

“We see momentum building with our wholesale partners. Our spring order book is up versus the prior year, with growth led by sport. And as a result, we expect wholesale revenue to return to modest growth for fiscal 2026.”

“We expect the tax rate for the second quarter and the full year to be in the low 20% range due to anticipated changes in earnings mix.”

“We expect other expense net of interest income to be an expense of $10 to $20 million in the second quarter.”

“we now expect the net headwind in fiscal 2026 to increase from approximately 75 basis points to 120 basis points to gross margin.”

“we now estimate the gross incremental cost to NIKE on an annualized basis to be approximately $1.5 billion, up from the $1 billion we shared ninety days ago.”

“I think that, you know, we continue to believe that double-digit margins are something that are achievable.”

“we're confident that the win-now actions that were put in place will help us return the market over time back to growth.”

“We remain on track for a healthy and clean market by the end of the first half of fiscal '26.”

“And so that business in the second half will be more full price, it will be more profitable, but there will be a revenue headwind from the compare to the higher level of off-price liquidation in the prior year.”

“And we expect to see those headwinds begin to moderate from there.”

“But we do expect that to moderate in the second half of the fiscal year.”

“We do expect our margins to remain under pressure in the first half of '26 as we finish executing our Win Now actions.”

“But we do expect to see continued momentum building with our wholesale partners.”

“We expect Digital to continue to be a headwind for the full year as we reposition the channel.”

“As we look to the back half, I highlighted that we expect that the franchise management headwinds will heavily be focused on the first half, but we do expect our actions on the Dunk to continue throughout the full year.”

“We expect to continue to see headwinds from the franchise management actions that we're taking there.”

“We expect other income and expense, including net interest income, to be 0 to $10 million in the first quarter.”

“This includes approximately 100 basis points negative impact due to the new tariffs based on the rates that are in place today.”

“We expect SG&A to grow low single digits in fiscal '26.”

“We continue to expect Digital traffic to be down double digits in fiscal '26 as we reposition NIKE Digital as a full-price model and reduce the mix of our classic footwear franchises.”

“In the second half, we then expect to see a modest headwind to revenue as we lap aggressive clearance activity in the prior year.”

“We expect these headwinds to continue through the first half of fiscal '26, with signals that the Air Force 1 is stabilizing while we plan for larger reductions for the Dunk.”

“With the new tariff rates in place today, we estimate a gross incremental cost increase to NIKE of approximately $1 billion.”

“Currently, China represents roughly 16% of the footwear we import into the United States, and we expect this to reduce to the high single-digit range by the end of fiscal '26 with supply from China reallocated to other countries around the world.”

“We closed the year in line with our plans and remain on track to exit the first half of fiscal '26 in a healthy and clean position.”

“We expect the headwinds to revenue and gross margin to begin to moderate from here.”

“We're finding a better balance with our portfolio of sport performance and new dimensions of sportswear, expected to offset the declines in our classic franchise with wholesale partners.”

“A strong signal of our progress is the momentum we're seeing in NIKE performance product, which we expect to continue throughout fiscal year '26.”

“From here, we expect our business results to improve.”

“We intend to fully mitigate the impact of these headwinds over time as we implement and annualize the actions I've outlined.”

“We're going to take it 90 days at a time because we believe full recovery will take time.”

“As we look forward, I think we're going to continue to manage expenses tightly.”

“And we intend to drive that down more in fiscal year 2026.”

“You can expect new additions to the franchise to release in our next fiscal year.”

“We plan to build on the momentum and double the distribution of a Vomero 18 by mid-April, supported by a large-scale running campaign.”

“And we expect that these headwinds will continue in 2026.”

“And we now expect Q4 to reflect the largest impact from these Win Now actions.”

“Due to these actions, and as we continue to reduce investment in paid media, we expect digital traffic to be down double digits in fiscal 2026.”

“We intend to drive this mix lower in fiscal 2026 with total units planned down double digits with the most aggressive actions on the Dunk.”

“In the last quarter of this fiscal year, we expect our classic footwear franchises will be down by more than 10 points as a percent of our total footwear mix.”

“Looking ahead, we believe that the fourth quarter will reflect the largest impact from our Win Now actions and that the headwinds to revenue and gross margin will begin to moderate from there.”

“And we expect the tax rate for the full year to be in the mid-teens range.”

“We expect other income and expense, including net interest income, to be $45 million to $55 million for Q4.”

“We expect Q4 gross margins to be down approximately 400 basis points to 500 basis points, including restructuring charges during the same period last year.”

“We expect Q4 revenues to be down in the mid-teens range, albeit at the low end.”

“So we're going to focus in on five sports to start with, running, basketball, training, football and sportswear.”

“As a result, summer order books will be down versus the prior year.”

“We are targeting a significant reduction in weeks of supply of our classic footwear franchises over the next few seasons, with timelines varying by franchise, channel, market and geography.”

“As it relates to kind of what's in the third quarter outlook and how quickly are we moving with revenues being down low double-digits and our margins being down 300 basis points to 350 basis points, we are certainly accelerating some of these actions.”

“And we expect demand creation to continue to lead our SG&A growth over the next few quarters.”

“So over the next couple of quarters, you will see our demand creation investment continue to go up.”

“We expect other income and expense including net interest income to be $30 million to $40 million for Q3.”

“But over the near-term, the net effect of these actions will result in lower revenue, additional gross margin pressure and higher demand creation expenses, with a greater headwind to the fourth quarter compared to the third quarter.”

“While we are seeing near-term traffic impact as we reduce promotional activity in paid media, we believe these shifts will elevate the total marketplace over time.”

“We plan to accelerate inventory actions in our second half to drive a return to a healthy marketplace.”

“As I said last call, we expect the impact of these shifts to continue for the next few quarters.”

“I recognize that some of these actions will have a negative impact on our near-term results.”

“What I can tell you is that the continued actions results in us expecting to see a headwind similar to what we experienced in the first quarter. In other words, a mid-single digit headwind on revenue for the balance of this year, as a result of more proactively managing these franchises back into a proper place within the overall portfolio.”

“We intend to remain disciplined on cost, especially operating overhead, while we invest to fuel brand momentum.”

“We now expect gross margins to decline versus the prior year, due to incremental headwinds based on the previously mentioned factors.”

“Franchise management actions will continue throughout the year, and we expect a similar impact in scale to what we experienced in Q1.”

“And we expect our effective tax rate to be in the high-teens range.”

“We expect other income and expense, including net interest income to be $30 million to $40 million, reflecting lower interest rates.”

“We expect Q2 gross margins to be down approximately 150 basis points, with higher promotions, channel mix headwinds, and supply chain deleverage more than offsetting lower product costs and a decreasing benefit from strategic pricing actions.”

“And over the coming seasons, we expect to see sequential gains and the percentage of newness and innovation as a mix of our total footwear business.”

“As we look to the spring season, contribution from newness and innovation will take a significant step forward with growth in footwear units of mid to high-single digits versus the prior year.”

“The order book looking forward is strong with spring '25 footwear units set to grow double-digits versus the prior year.”

“And we expect NIKE Digital to decline double-digits in fiscal '25 versus the prior year.”

“The Jordan brand was planned down double-digits this quarter, and we expect Jordan to be down at the same rate for fiscal '25.”

“Our men's and women's lifestyle business was planned down double-digits in Q1, and we expect these declines to continue through the year.”

“We expect this trend to continue tempering our reported revenue over the coming seasons.”

“However, we continue to see indications of slight second half improvement in revenue trends versus our first half, as we plan to introduce and scale newness and innovation across the marketplace.”

“we've set a goal of doubling the growth of our new innovations by the end of 2025 versus the beginning of 2024. And we're on track to achieve that.”

“And so, that's what we've done, and we will continue to manage SG&A tightly, leveraging this program and this initiative to create the capacity for us to invest, to push us forward with the consumer.”

“We'll look to other areas to provide ways of savings, non-labor areas.”

“And so, over the course of the next couple of quarters, we're going to execute the plan that we've laid out here for fiscal 2025.”

“So we feel very good about the track we're on, and we think it will accelerate as the year goes on.”

“As far as the channel shift mix going forward, it certainly will have a headwind in fiscal year 2025, both in terms of revenue, as I just mentioned in answering a prior question, but also on margin.”

“our scaling of newness is on track. And our teams are hustling to see whether there's even opportunities to accelerate the scaling of that newness in the second half.”

“And the bigger impact of this will be in the first half of this year, but we are planning for meaningful sequential improvement in the second half of the year.”

“We expect first quarter gross margins to be in line with the full year guidance.”

“Other income and expense, including net interest income, is expected to be approximately $250 million to $300 million for the year.”

“We expect full year SG&A growth to be up slightly versus the prior year as we increase investments in demand creation to ignite brand momentum and maximize reach and impact, while holding operating overhead largely flat.”

“Foreign exchange headwinds have also worsened and will now have a one-point translational impact on revenue in fiscal 2025.”

“We now expect fiscal 2025 reported revenue to be down mid-single digits, with the first half down high single digits.”

“In turn, we are reinvesting nearly $1 billion in consumer-facing activities in fiscal 2025, which we expect to accelerate our return to strong growth.”

“Added up, we expect the business contribution from new products to more than double from the start of fiscal 2024 to where we end the year in fiscal 2025.”

“Building on this quarter's double-digit growth, we plan to scale new performance and lifestyle models in spring 2025.”

“And we expect to build on that momentum, leading with Performance in fiscal 2025.”

“All told, we expect these actions to create several points of short-term headwinds on revenue in fiscal 2025.”

“That said, this quarter we have been navigating several headwinds, which we now expect to have a more pronounced impact on fiscal 2025.”

“We experienced significant quarter-over-quarter retail sales growth for Y2K and now expect to nearly triple our retro-running business by the end of fiscal 2025 compared with the start of fiscal 2024.”

“We're already seeing strong wholesale order book for running across the next few seasons as we continue to take meaningful strides to assert our leadership in this key sport.”

“We'll be adding several dimensions for Peg in holiday before introducing additional exciting innovations in the second half of the year, including Pegasus Premium and Vomero 18.”

“and in the second half of the fiscal year, you'll see other new innovations come out of Speed Lane, including several exciting new franchises across fitness and lifestyle.”

“And then, the connection of the innovation, to the pipeline of product that's coming that we expect will drive growth through their balance of '25 and into '26.”

“It won't happen overnight, but we're already seeing momentum in North America. And we believe that will continue around the world.”

“I think the only thing I would say at this point, is the way that we're thinking about the geography splits, is we're not assuming that economic conditions in the international markets in particular get better. It assumes a status quo, relative to where we are today.”

“And that's going to come through gross margin expansion first. And then, continuing to be disciplined in the way we manage SG&A in order, to be able to drive more productive growth.”

“In the near term, one of the headwinds that we're going to see is that not surprisingly, our digital business carries a higher mix of the biggest franchises that consumers love. And so, as we manage the supply of our larger franchises, we do expect that there will be a near term channel mix headwind, from transitioning our product portfolio.”

“But as we look forward, we believe that more newness, more freshness, products that are more connected to stories that are relevant to consumers, should give us the ability on a structural basis, to continue to expand our profitability.”

“First, we expect revenue and earnings to grow versus the prior year, with operating margins expanding, excluding the impact of the restructuring charges in fiscal '24.”

“Excluding the impact of restructuring charges, we expect full year SG&A to be roughly flat.”

“For the full year, this translates into SG&A growing low single digits, including restructuring charges, also reflecting improvement versus our prior guidance.”

“For the full year, this translates into gross margins expanding approximately 120 basis points, including approximately 60 basis points of impact from foreign exchange headwinds.”

“For the full year, we continue to expect revenue to grow approximately 1%.”

“Looking ahead, we expect lifecycle management of key product franchises to create some near-term headwinds, particularly on digital.”

“One of the other things that we're starting to get visibility into when we look at our margins in the fourth quarter is product costs -- product input costs are starting to flip to a tailwind.”

“We've been talking about 200 basis points of impact from ocean freight cumulatively over the past two years... Our rates for this year locked. And so we expect to continue to see up -- to see that the recovery of that in Q3 and Q4.”

“With running, we'll be focusing on calendar '24 will be the year of Pegasus for us with the Peg 41 and the Peg Family Refresh.”

“Excluding restructuring charges, we expect to deliver on our prior full-year earnings outlook.”

“We continue to expect our full year effective tax rate to be in the high-teens range.”

“We now expect other income and expense, including net interest income to be $275 million to $325 million for the full year.”

“Specifically, we expect SG&A dollars in both Q3 and Q4 to be modestly above our first half run-rate, excluding the charge.”

“We continue to expect full year gross margins to expand 140 to 160 basis points.”

“Looking forward, the impact of these risks is becoming clear. And as a result, we are adjusting our full-year financial outlook.”

“We're excited to scale these styles over the next few seasons.”

“We are identifying opportunities across the company to deliver up to $2 billion in cumulative cost-savings over the next three years, both up and down our P&L and across our value chain.”

“And in Greater China, consecutive quarters of double-digit growth, healthy inventory and sequential improvement in full price sales will enable us to begin rebuilding towards higher profitability in the geography.”

“Our reported numbers in China are going to be challenging for the next couple of quarters because of foreign exchange headwinds.”

“So as we get into the second half of this year and we think about our gross margins, we're going to start to see even more impact from ocean freight because those are rolling in midway through this quarter. We're expecting to see lower product costs in the second half and our FX headwinds are going to abate a little bit as we get into the back half of this year.”

“What I said last quarter in terms of the way that I was thinking about channel growth for this year, I said that NIKE Direct would lead our growth. And it did this quarter, and we do expect NIKE Direct to continue to lead our growth throughout the remainder of this fiscal year.”

“we continue to expect our effective tax rate to be in the high teens range.”

“We continue to expect other income and expense, including net interest income to be $225 million to $275 million for the year”

“We continue to expect SG&A to slightly outpace revenue growth. more specifically at the high end of mid-single digits.”

“We continue to expect gross margins to expand 140 to 160 basis points on a reported basis, which includes 50 basis points of negative impact from foreign exchange headwinds.”

“For the full year, we continue to expect reported revenue to grow mid-single digits.”

“Our Q1 results reaffirm our expectation for healthy profitable growth this fiscal year.”

“Finally, we are focused on improving our marginal cost of growth with more modest increases in operating overhead this fiscal year, following two consecutive years of double-digit growth.”

“We continue the reset of our business with Foot Locker, planning for near-term sales declines as they invest in consumer-right concepts for the future.”

“On the whole, we are very comfortable with the level of inventory in the marketplace in relation to the retail sales that we're seeing as we begin increasing levels of wholesale sell-in in our second half.”

“When combined with our structural opportunities to improve profitability as we grow, we are confident that we will deliver above average margin improvement in fiscal 2024 with many of the drivers continuing into fiscal 2025.”

“Last, we can now see around the corner on the transitory cost headwinds that pressured profitability in fiscal 2022 and 2023.”

“At this point in time, we're not planning that we're going to recover back to that level of full price realization, but that instead, we will be operating at or around the 65% level, but we've also now seen a new way of living.”

“Those benefits don't kick-in until halfway through the second quarter. And so, we'll start to see that tailwind come in, in Q2 and then accelerate in Q3 and Q4 and then carry into fiscal year 2025.”

“NIKE Direct is going to continue to lead our growth.”

“And actually, when we look at the first half and the second half of next year, we're actually planning for a fairly consistent level of retail sales growth to the consumer.”

“We expect SG&A to grow low double digits on a reported basis, driven by increased demand creation investments around the women's World Cup and transformational investments to drive efficiency including the activation of the next stages of our ERP implementation in North America.”

“We will continue to manage SG&A to remain below pre-pandemic levels as a percentage of revenue.”

“We expect this to be partially offset by higher product costs with inflation causing higher labor and fulfillment expenses in parts of our supply chain.”

“We also expect continued structural gains from our focus on price value, including low-single-digit price increases in fiscal 2024, plus ongoing benefits from our shift to a more direct business.”

“In addition, based on current spot rates, we do not expect any material translation impact on revenue in fiscal 2024.”

“For the year, we had strong digital growth of 24% and we expect digital to continue to lead our growth.”

“So we expect to continue to see improvement in Q4 in our inventory and are confident that we're going to finish this year in a position of strength as we look ahead to fiscal year '24.”

“we are confident that we will exit the year with healthy inventories across the marketplace. In fact, given our brand momentum, we now intend to move through even more units by year-end than we had previously considered.”

“Obviously, this year, we've seen higher markdowns and promotions in our direct channels as we've been moving through excess inventory, but we think those are transitory costs, and we should begin to see the recovery of those beginning in fiscal year '24.”

“And that focus and attention on expense growth or managing expense growth and head count growth, we definitely intend to carry into our next fiscal year.”

“And we absolutely expect that China continues to be a growth opportunity for NIKE.”

“And we expect that those transitory headwinds will begin to recover in fiscal year '24, and I'll give specific guidance about how much next quarter.”

“And then our GT Series will have major updates in each of the run, cut and jump silos.”

“And then in the next six to 12 months, we'll do major updates to the other five road running models, where we're taking some of the innovations from our racing platform, putting them in for everyday runners, very strong innovations around foams and other materials.”

“And so the Invincible which was just launched, we see a lot of legs left with Invincible in the coming quarters and years.”

“We continue to expect our tax rate to be in the high teens range.”

“For the full year, we expect SG&A to grow approximately 10%.”

“We expect fiscal '23 gross margin to decline approximately 250 basis points at the low end of our previous guidance range.”

“For the fourth quarter, this translates into flat to low single-digit revenue growth.”

“As a result of our strong Q3 performance, we now expect fiscal '23 reported revenue to grow high single digits, an improvement from mid-single-digit guidance in the prior quarter with approximately 600 basis points of foreign exchange headwinds.”

“This approach will be accelerating as we focus on positioning ourselves for share gains in this important category.”

“We continue to be very confident in our ability to continue that liquidation through the balance of this fiscal year.”

“So overall, our Q2 results give us confidence that we will deliver the year, and we remain on a path toward our long-term goals as well.”

“So those structural drivers we continue to believe are going to be accelerants for us.”

“But those, we do believe are recoverable.”

“And those specifically relate to two successive years of elevated transit and freight costs; and then secondarily, the cost to liquidate some of the excess inventory in North America. And we do expect those to be transient or transitory. We should expect to start to see some recovery in fiscal year '24.”

“Yes. And I would just say that from a revenue growth perspective, we think this quarter was clearly a peak in terms of year-over-year revenue growth in the channel.”

“Yes. When you compare this quarter to last year, our inventory supply was so lean that last year, we saw extraordinary levels full price realization through our digital channel and the lowest levels of discounts that we've ever experienced in running that channel. So we expected that to normalize in this fiscal year.”

“And that's what you're seeing through the last couple of quarters, and we believe continuing in the next several quarters.”

“And we now expect our effective tax rate to be in the high teens range, primarily due to decreased benefits from stock-based compensation.”

“We expect third quarter SG&A dollars to be in line with the second quarter.”

“For the full year, we continue to expect SG&A to increase high single digits.”

“We expect the third quarter gross margin will decline at a similar rate as the second quarter, including 120 basis points of foreign exchange headwinds.”

“We continue to expect gross margin to decline between 200 basis points to 250 basis points versus the prior year, reflecting ongoing liquidation actions in the second half.”

“Third quarter revenue growth is expected to be higher than the fourth quarter due to timing of wholesale shipments.”

“We believe the inventory peak is behind us as actions we're taking in the marketplace are working.”

“And to the extent that consumer demand continues to be strong, with a supply chain that's providing product in a more predictable manner, in a more timely manner, if we ended up overcorrecting on our buys, then we will chase demand as we exit this year and enter into fiscal year '24.”

“As transit times stabilize, we are optimistic that we will begin to see a more normal and predictable flow supply in a more capital-efficient manner.”

“But we're confident that the actions that we're taking, which we started a bit in the first quarter and now we're more aggressively accelerating in the second quarter, are going to position us and our strategic partners very well for fiscal '24.”

“And then the total annual impact we see as a transitory 150 basis point cost to effectively liquidate the inventory that we want to liquidate and serve the marketplace with the fresh holiday product and then looking forward that we see.”

“We do expect that there will be some residual liquidation that takes place in the third quarter.”

“And so we will be aggressive, as Matt said, on liquidating excess inventory but also coming hard with our key popular franchises to bring heat and energy to them in Q just like we did in Q1.”

“And while our inventory was high at the end of the first quarter, we do expect to see sequential improvement in inventory balances from here over the next three quarters.”

“So when we look at our overall inventory, we think that there's about 10% of the inventory that we're focused on in terms of trying to drive more accelerated liquidation.”

“This reflects approximately 150 basis points of annual impact from higher markdowns and higher off-price mix to liquidate elevated inventory, a second straight year of more than 100 basis points of headwinds from elevated freight and logistics costs, and foreign exchange pressure now a 70 basis point headwind on the full year.”

“Based on current spot rates, net of hedging activity, we estimate the full year negative impact of foreign exchange on reported revenue and EBIT to now be approximately $4 billion and $900 million, respectively, creating a wide divergence in constant versus real dollar performance.”

“We expect that total inventory in North America peaked in Q1, and we anticipate seeing sequential improvement over the year as we rebalance supply and continue serving strong consumer demand.”

“While we expect this to have a transitory impact on gross margins this fiscal year, we believe this cost will be far outweighed by the benefit of clearing marketplace capacity to align seasonally relevant product, storytelling and retail experiences for the consumer.”

“In fiscal '23, we will deliver a new suite of commerce and support activity apps, deepening our connections with Chinese consumers through an enhanced user experience, including locally relevant features across our digital apps, services and our owned and partner retail stores.”

“We will go live with our new ERP in Greater China in July and continue building and testing in North America for deployment in fiscal '24.”

“We do expect to see wholesale growth in fiscal '23.”

“At this point in time, given all the variables that we see there, we're not planning for a significant increment in transit times in fiscal '23.”

“We expect to build Express Lane into a larger portion of our business in fiscal '23 and beyond.”

“We expect to benefit from mid-single-digit pricing actions and continued gains from our shift to a more direct business, offset by another 100 basis points headwind from elevated ocean freight costs, increased product costs, discrete supply chain investments and normalization of historically low markdown rates.”

“I still think that our longer-term vision of NIKE Direct representing approximately 60% of our business and digital -- owned digital representing 40% is a trajectory that we are still on.”

“But that doesn't change our confidence in our ability to drive high 40s gross margin by fiscal year '25 and beyond.”

“We're going to see inventory supply normalize this quarter, which gives us increased confidence that we'll have supply to meet the heightened levels of demand.”

“And so we're looking at the fourth quarter and our revenue guidance for the quarter and feel confident that we can still deliver mid-single-digit revenue growth on a full year basis.”

“And while transit times remain elevated, particularly getting into the North America marketplace, beginning in the fourth quarter, we're going to start seeing an improved flow of supply.”

“And as we've mentioned before, we earn a higher gross margin on our sales through the digital channels, and we expect to see leverage in our costs, which will enable us to hit that high teens operating profit over the multiyear period.”

“So as we look forward to the fourth quarter and fiscal '23, we're continuing to look at the opportunities for additional pricing, and we do see some.”

“Consumer demand continues to be incredibly strong. And while we've not been able to meet demand over the past couple of quarters, we're in a healthy pull market with that strong demand. And as a result of that, we really believe that, that sets a strong foundation for growth in the first half of fiscal '23 but for fiscal '23 in total.”

“Marketplace demand continues to exceed available supply as inventory supply begins to normalize in the fourth quarter, against the context of a healthy pull market, setting the foundation for another year of strong growth.”

“We continue to expect our effective tax rate to be in the low teens for the fiscal year.”

“We now expect SG&A to grow mid-teens for the full year as our spend normalizes, and we continue to advance our capabilities to support our ongoing digital transformation.”

“Despite the recent strengthening of the U.S. dollar, we continue to expect foreign exchange to be a 55 basis point tailwind versus the prior year.”

“Benefits of strategic pricing expected in Q4 are being partially offset by elevated product costs, primarily due to higher macro input costs, supply chain costs and strategic actions to expedite delivery of product in North America.”

“We now expect gross margin to expand by at least 150 basis points versus the prior year as strong consumer demand continues to fuel high levels of full price realization, low markdown rates and low customer returns.”

“And in Greater China, we expect to see another quarter of sequential improvement while we closely monitor the operational impact related to recent COVID lockdowns.”

“We continue to expect revenue for the full year to grow mid-single digits versus the prior year.”

“We will also begin testing a Jordan-only concept in North America in fiscal '23, leveraging a popular consumer experience that has been wildly successful in Greater China, the Philippines and Korea.”

“And over time, we plan to convert all partner mono-brand stores into digitally connected NIKE retail concepts as we unlock the benefits of data and inventory across the Greater China marketplace.”

“We expect FlyEase to be roughly $0.25 billion business by fiscal next year, with vast opportunity for even greater growth and value to come.”

“And as we restart our marketing activity and drive those connections with consumers, some of these signals that we’re seeing, these encouraging signs that we see give us a lot of confidence that our trajectory is going to improve from this quarter.”

“We still are confident in that high 40s gross margin outlook through fiscal ‘25.”

“And relative to where we were 90 days ago, we’re increasingly confident that inventory supply will normalize and that we’ll be in a position to meet the incredible demand that we’re seeing across the marketplace.”

“Compared to 90 days ago, we are increasingly confident supply will normalize heading into fiscal ‘23.”

“And as supply normalizes, as I referenced, we expect to see sequential improvement from these 2Q results.”

“As inventory supply normalizes, we would expect that to come back down to where our goals are at, but we’re also operating a far more agile operating model at this point in time.”

“We expect, as supply normalizes, to see sequential improvement versus the results that we delivered in the second quarter.”

“We now expect our effective tax rate to be in the low-teens for the full year.”

“We continue to expect SG&A to grow mid to high teens for the full year as demand-creation spend normalizes, and we continue to invest in the capabilities to support our consumer-led digital transformation.”

“Last, we now expect foreign exchange to be a 55 basis-point tailwind versus the prior year.”

“We’re also planning for supply chain costs for the full year to increase relative to our estimates 90 days ago with a greater impact in the second half.”

“However, we expect product costs to rise in the second half due to higher macro input costs.”

“We expect to continue benefiting from exceptional demand against the backdrop of lean marketplace inventory.”

“We are raising our gross margin guidance to expand 150 basis points versus the prior year.”

“Specifically for fiscal ‘22, we continue to expect revenue to grow mid-single digits versus the prior year, in line with guidance from 90 days ago.”

“We see encouraging signs in Greater China. And while inventory supply has been a major disruption in the marketplace, we continue to expect fiscal ‘22 to be a year of recovery.”

“As we look longer term, we’re absolutely continuing to look towards that high-40s gross margin outlook that we provided last quarter.”

“And if you combine that with longer lead times, the impact of the lost production is going to have a greater impact in North America in Q3.”

“And for the second quarter, we expect gross margin to expand at a rate lower than the full year due to higher planned airfreight investment for the holiday season.”

“We expect all geographies to be impacted by these factors.”

“We now expect fiscal ‘22 revenue to grow mid-single digits versus the prior year versus our prior guidance of low double-digit growth, due solely to the supply chain impacts that I just described.”

“So, we continue to expect digital to be our leading channel for growth in fiscal ‘22.”