Nike reveals flatlined Q2 revenues and plans to streamline the business

Nike has reported that revenues for the second quarter of fiscal 2024, ending 30 November 2023, increased by 1% to £10.5 billion ($13.4 billion) compared to the prior year and decreased by 1% on a currency-neutral basis.

In terms of brands, revenues for the Nike brand stood at £10.1 billion ($12.9 billion), up by 1% compared to the prior year and flat on a currency-neutral basis. Revenues for Converse were £408 million ($519 million), down by 11% compared to the prior year and down by 13% on a currency-neutral basis, due to declines in North America and Europe.

Gross margin increased 170 basis points to 44.6%, driven by strategic pricing actions and lower ocean freight rates.

Net income stood at £1.2 billion ($1.6 billion), up by 19% and Diluted earnings per share were £0.80 ($1.03), up by 21%.

John Donahoe, President & CEO of Nike, commented: "Our Q2 results demonstrated how we are getting back on our front foot in our key areas of innovation and growth.

"This quarter showed strong execution by our team as we focus on our winning formula of innovative product, distinctive storytelling and differentiated marketplace experiences."

Matthew Friend, Executive Vice President & Chief Financial Officer of Nike, said: "Nike’s second-quarter financial performance was a turning point in driving more profitable growth. As we look ahead to a softer second-half revenue outlook, we remain focused on strong gross margin execution and disciplined cost management."

Moving forward, the company is identifying opportunities to deliver up to £1.5 billion ($2 billion) in cumulative cost savings over the next three years. Areas of potential savings include simplifying its product assortment, increasing the use of technology and streamlining the business.

As part of this commitment, Nike is taking steps to streamline the organization, which will largely take place in Q3 2024. This is expected to result in pre-tax restructuring charges of approximately £315-£354 million ($400-$450 million), primarily associated with employee severance costs.

Donahoe added: "We see an outstanding opportunity to drive long-term profitable growth.

"Today we are embracing a company-wide journey to invest in our areas of greatest potential, increase the pace of our innovation, and accelerate our agility and responsiveness."