《耐克公司NIKE Inc. (NKE)2023財年第二財季財報（英文版）（54頁）.pdf》由會員分享，可在線閱讀，更多相關《耐克公司NIKE Inc. (NKE)2023財年第二財季財報（英文版）（54頁）.pdf（54頁珍藏版）》請在三個皮匠報告上搜索。

1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-Q(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30,2022OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE AC

2、T OF 1934FOR THE TRANSITION PERIOD FROM TO .Commission File No.1-10635NIKE,Inc.(Exact name of Registrant as specified in its charter)Oregon93-0584541(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)One Bowerman Drive,Beaverton,Oregon 97005-6453(Address

3、 of principal executive offices and zip code)(503)671-6453(Registrants telephone number,including area code)SECURITIES REGISTERED PURSUANT TO SECTION 12(B)OF THE ACT:Class B Common StockNKENew York Stock Exchange(Title of each class)(Trading symbol)(Name of each exchange on which registered)Indicate

4、 by check mark:YESNOwhether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing r

5、equirements for thepast 90 days.whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit

6、 such files).whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule

7、12b-2 of the Exchange Act.Large accelerated filerAccelerated filer Non-accelerated filerSmaller reporting companyEmerging growth companyif an emerging growth company,if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting stan

8、dards provided pursuant to Section 13(a)of the Exchange Act.whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).As of December 28,2022,the number of shares of the Registrants Common Stock outstanding were:Class A304,897,252 Class B1,245,665,731 1,550,562,983 Table of Conte

9、ntsNIKE,INC.FORM 10-QTABLE OF CONTENTSPAGEPART I-FINANCIAL INFORMATION1ITEM 1.Financial Statements1Unaudited Condensed Consolidated Statements of Income1Unaudited Condensed Consolidated Statements of Comprehensive Income2Unaudited Condensed Consolidated Balance Sheets3Unaudited Condensed Consolidate

10、d Statements of Cash Flows4Unaudited Condensed Consolidated Statements of Shareholders Equity5Notes to the Unaudited Condensed Consolidated Financial Statements7ITEM 2.Managements Discussion and Analysis of Financial Condition and Results of Operations24ITEM 3.Quantitative and Qualitative Disclosure

11、s about Market Risk43ITEM 4.Controls and Procedures43PART II-OTHER INFORMATION45ITEM 1.Legal Proceedings45ITEM 1A.Risk Factors45ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds46ITEM 6.Exhibits47Signatures48Table of ContentsPART I-FINANCIAL INFORMATIONITEM 1.FINANCIAL STATEMENTSNIK

12、E,INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOMETHREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(In millions,except per share data)2022202120222021Revenues$13,315$11,357$26,002$23,605 Cost of sales7,604 6,144 14,676 12,696 Gross profit5,711 5,213 11,326 10,909 Demand creation

13、expense1,102 1,017 2,045 1,935 Operating overhead expense3,022 2,742 5,999 5,396 Total selling and administrative expense4,124 3,759 8,044 7,331 Interest expense(income),net16 55 29 112 Other(income)expense,net(79)(102)(225)(141)Income before income taxes1,650 1,501 3,478 3,607 Income tax expense319

14、 164 679 396 NET INCOME$1,331$1,337$2,799$3,211 Earnings per common share:Basic$0.85$0.84$1.79$2.03 Diluted$0.85$0.83$1.77$1.98 Weighted average common shares outstanding:Basic1,559.0 1,582.4 1,563.1 1,582.2 Diluted1,572.4 1,617.4 1,579.1 1,618.5 The accompanying Notes to the Unaudited Condensed Con

15、solidated Financial Statements are an integral part of this statement.1Table of ContentsNIKE,INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMETHREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)2022202120222021Net income$1,331$1,337$2,799$3,211 Othe

16、r comprehensive income(loss),net of tax:Change in net foreign currency translation adjustment354(155)128(283)Change in net gains(losses)on cash flow hedges(401)366 154 804 Change in net gains(losses)on other(30)1(41)4 Total other comprehensive income(loss),net of tax(77)212 241 525 TOTAL COMPREHENSI

17、VE INCOME$1,254$1,549$3,040$3,736 The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.2Table of ContentsNIKE,INC.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSNOVEMBER 30,MAY 31,(In millions)20222022ASSETSCurrent assets:Cash and

18、 equivalents$6,490$8,574 Short-term investments4,131 4,423 Accounts receivable,net5,437 4,667 Inventories9,326 8,420 Prepaid expenses and other current assets2,063 2,129 Total current assets27,447 28,213 Property,plant and equipment,net4,854 4,791 Operating lease right-of-use assets,net2,809 2,926 I

19、dentifiable intangible assets,net280 286 Goodwill281 284 Deferred income taxes and other assets3,976 3,821 TOTAL ASSETS$39,647$40,321 LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt$500$500 Notes payable7 10 Accounts payable2,810 3,358 Current portion of oper

20、ating lease liabilities426 420 Accrued liabilities6,020 6,220 Income taxes payable436 222 Total current liabilities10,199 10,730 Long-term debt8,924 8,920 Operating lease liabilities2,668 2,777 Deferred income taxes and other liabilities2,584 2,613 Commitments and contingencies(Note 12)Redeemable pr

21、eferred stock Shareholders equity:Common stock at stated value:Class A convertible 305 and 305 shares outstanding Class B 1,245 and 1,266 shares outstanding3 3 Capital in excess of stated value11,851 11,484 Accumulated other comprehensive income(loss)559 318 Retained earnings2,859 3,476 Total shareh

22、olders equity15,272 15,281 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY$39,647$40,321 The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.3Table of ContentsNIKE,INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSSIX MONTHS

23、 ENDED NOVEMBER 30,(Dollars in millions)20222021Cash provided(used)by operations:Net income$2,799$3,211 Adjustments to reconcile net income to net cash provided(used)by operations:Depreciation342 358 Deferred income taxes(150)(222)Stock-based compensation364 306 Amortization,impairment and other137

24、3 Net foreign currency adjustments(125)48 Changes in certain working capital components and other assets and liabilities:(Increase)decrease in accounts receivable(878)543(Increase)decrease in inventories(948)268(Increase)decrease in prepaid expenses,operating lease right-of-use assets and other curr

25、ent and non-currentassets(239)(444)Increase(decrease)in accounts payable,accrued liabilities,operating lease liabilities and other current and non-current liabilities56(203)Cash provided(used)by operations1,358 3,868 Cash provided(used)by investing activities:Purchases of short-term investments(3,50

26、0)(6,699)Maturities of short-term investments1,951 3,891 Sales of short-term investments1,972 2,032 Additions to property,plant and equipment(500)(362)Other investing activities54 33 Cash provided(used)by investing activities(23)(1,105)Cash provided(used)by financing activities:Increase(decrease)in

27、notes payable(3)13 Proceeds from exercise of stock options and other stock issuances260 846 Repurchase of common stock(2,550)(1,723)Dividends common and preferred(960)(873)Other financing activities(68)(109)Cash provided(used)by financing activities(3,321)(1,846)Effect of exchange rate changes on ca

28、sh and equivalents(98)(55)Net increase(decrease)in cash and equivalents(2,084)862 Cash and equivalents,beginning of period8,574 9,889 CASH AND EQUIVALENTS,END OF PERIOD$6,490$10,751 Supplemental disclosure of cash flow information:Non-cash additions to property,plant and equipment$124$103 Dividends

29、declared and not paid526 481 The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.4Table of ContentsNIKE,INC.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITYCOMMON STOCKCAPITAL INEXCESSOF STATEDVALUEACCUMULATEDOT

30、HERCOMPREHENSIVEINCOME(LOSS)RETAINEDEARNINGSTOTALCLASS ACLASS B(In millions,except per share data)SHARESAMOUNTSHARESAMOUNTBalance at August 31,2022305$1,259$3$11,648$636$3,535$15,822 Stock options exercised1 69 69 Repurchase of Class B Common Stock(17)(123)(1,484)(1,607)Dividends on common stock($0.

31、340 per share)(526)(526)Issuance of shares to employees,net of shareswithheld for employee taxes2 63 3 66 Stock-based compensation194 194 Net income1,331 1,331 Other comprehensive income(loss)(77)(77)Balance at November 30,2022305$1,245$3$11,851$559$2,859$15,272 COMMON STOCKCAPITAL INEXCESSOF STATED

32、VALUEACCUMULATEDOTHERCOMPREHENSIVEINCOME(LOSS)RETAINEDEARNINGSTOTALCLASS ACLASS B(In millions,except per share data)SHARESAMOUNTSHARESAMOUNTBalance at August 31,2021305$1,278$3$10,521$(67)$3,886$14,343 Stock options exercised3 256 256 Repurchase of Class B Common Stock(6)(40)(928)(968)Dividends on c

33、ommon stock($0.305 per share)(483)(483)Issuance of shares to employees,net of shareswithheld for employee taxes3 83(26)57 Stock-based compensation170 170 Net income1,337 1,337 Other comprehensive income(loss)212 212 Balance at November 30,2021305$1,278$3$10,990$145$3,786$14,924 COMMON STOCKCAPITAL I

34、NEXCESSOF STATEDVALUEACCUMULATEDOTHERCOMPREHENSIVEINCOME(LOSS)RETAINEDEARNINGSTOTALCLASS ACLASS B(In millions,except per share data)SHARESAMOUNTSHARESAMOUNTBalance at May 31,2022305$1,266$3$11,484$318$3,476$15,281 Stock options exercised3 149 149 Repurchase of Class B Common Stock(26)(189)(2,409)(2,

35、598)Dividends on common stock($0.645 per share)and preferred stock($0.10 per share)(1,008)(1,008)Issuance of shares to employees,net of shareswithheld for employee taxes2 43 1 44 Stock-based compensation364 364 Net income2,799 2,799 Other comprehensive income(loss)241 241 Balance at November 30,2022

36、305$1,245$3$11,851$559$2,859$15,272 5Table of ContentsCOMMON STOCKCAPITAL INEXCESSOF STATEDVALUEACCUMULATEDOTHERCOMPREHENSIVEINCOME(LOSS)RETAINEDEARNINGSTOTALCLASS ACLASS B(In millions,except per share data)SHARESAMOUNTSHARESAMOUNTBalance at May 31,2021305$1,273$3$9,965$(380)$3,179$12,767 Stock opti

37、ons exercised13 725 725 Repurchase of Class B Common Stock(11)(69)(1,641)(1,710)Dividends on common stock($0.580 per share)and preferred stock($0.10 per share)(918)(918)Issuance of shares to employees,net of shareswithheld for employee taxes3 63(45)18 Stock-based compensation306 306 Net income3,211

38、3,211 Other comprehensive income(loss)525 525 Balance at November 30,2021305$1,278$3$10,990$145$3,786$14,924 The accompanying Notes to the Unaudited Condensed Consolidated Financial Statements are an integral part of this statement.6Table of ContentsNOTES TO THE UNAUDITED CONDENSED CONSOLIDATEDFINAN

39、CIAL STATEMENTSNOTE 1Summary of Significant Accounting Policies8NOTE 2Inventories8NOTE 3Accrued Liabilities8NOTE 4Fair Value Measurements8NOTE 5Income Taxes10NOTE 6Stock-Based Compensation11NOTE 7Earnings Per Share12NOTE 8Risk Management and Derivatives12NOTE 9Accumulated Other Comprehensive Income(

40、Loss)17NOTE 10Revenues19NOTE 11Operating Segments21NOTE 12Contingencies23NOTE 13Acquisitions and Divestitures237Table of ContentsNOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBASIS OF PRESENTATIONThe Unaudited Condensed Consolidated Financial Statements include the accounts of NIKE,Inc.and its su

41、bsidiaries(the“Company”or“NIKE”)and reflect all normalrecurring adjustments which are,in the opinion of management,necessary for a fair statement of the results of operations for the interim period.The year-end CondensedConsolidated Balance Sheet data as of May 31,2022,was derived from audited finan

42、cial statements,but does not include all disclosures required by accountingprinciples generally accepted in the United States of America(“U.S.GAAP”).The interim financial information and notes thereto should be read in conjunction with theCompanys latest Annual Report on Form 10-K for the fiscal yea

43、r ended May 31,2022.The results of operations for the three and six months ended November 30,2022,are not necessarily indicative of results to be expected for the entire fiscal year.The uncertain state of the global economy or worsening macroeconomic conditions could affect the Companys business,inc

44、luding,among other things,higher inventorylevels in various markets,higher inventory obsolescence reserves,higher promotional activity,reduced demand for product,reduced orders from wholesale customers forproduct and order cancellations.There could also be new or prolonged COVID-19 related restricti

45、ons or disruptions.Any of these factors,among others,could havematerial adverse impacts on the Companys revenue growth as well as overall profitability in future periods.NOTE 2 INVENTORIESInventory balances of$9,326 million and$8,420 million at November 30,2022 and May 31,2022,respectively,were subs

46、tantially all finished goods.NOTE 3 ACCRUED LIABILITIESAccrued liabilities included the following:NOVEMBER 30,MAY 31,(Dollars in millions)20222022Compensation and benefits,excluding taxes$1,220$1,297 Sales-related reserves1,1491,015 Import and logistics costs580489 Dividends payable534485 Allowance

47、for expected loss on sale397 Other2,5372,537TOTAL ACCRUED LIABILITIES$6,020$6,220(1)Refer to Note 13 Acquisitions and Divestitures for additional information.NOTE 4 FAIR VALUE MEASUREMENTSThe Company measures certain financial assets and liabilities at fair value on a recurring basis,including deriv

48、atives,equity securities and available-for-sale debtsecurities.For additional information about the Companys fair value policies,refer to Note 1 Summary of Significant Accounting Policies of the Annual Report on Form10-K for the fiscal year ended May 31,2022.(1)8Table of ContentsThe following tables

49、 present information about the Companys financial assets measured at fair value on a recurring basis as of November 30,2022 and May 31,2022,and indicate the level in the fair value hierarchy in which the Company classifies the fair value measurement:NOVEMBER 30,2022(Dollars in millions)ASSETS AT FAI

50、R VALUECASH AND EQUIVALENTSSHORT-TERM INVESTMENTSCash$788$788$Level 1:U.S.Treasury securities3,417 4 3,413 Level 2:Commercial paper and bonds622 29 593 Money market funds5,024 5,024 Time deposits753 645 108 U.S.Agency securities17 17 Total Level 26,416 5,698 718 TOTAL$10,621$6,490$4,131 MAY 31,2022(

51、Dollars in millions)ASSETS AT FAIR VALUECASH AND EQUIVALENTSSHORT-TERM INVESTMENTSCash$839$839$Level 1:U.S.Treasury securities3,801 8 3,793 Level 2:Commercial paper and bonds660 37 623 Money market funds6,458 6,458 Time deposits1,237 1,232 5 U.S.Agency securities2 2 Total Level 28,357 7,727 630 TOTA

52、L$12,997$8,574$4,423 As of November 30,2022,the Company held$3,060 million of available-for-sale debt securities with maturity dates within one year and$1,071 million with maturity datesgreater than one year and less than five years in Short-term investments on the Unaudited Condensed Consolidated B

53、alance Sheets.The fair value of the Companysavailable-for-sale debt securities approximates their amortized cost.Included in Interest expense(income),net was interest income related to the Companys investment portfolio of$49 million and$18 million for the three months endedNovember 30,2022 and 2021,

54、respectively,and$114 million and$35 million for the six months ended November 30,2022 and 2021,respectively.The following tables present information about the Companys derivative assets and liabilities measured at fair value on a recurring basis and indicate the level in the fairvalue hierarchy in w

55、hich the Company classifies the fair value measurement:NOVEMBER 30,2022DERIVATIVE ASSETSDERIVATIVE LIABILITIES(Dollars in millions)ASSETS ATFAIR VALUEOTHERCURRENTASSETSOTHER LONG-TERM ASSETSLIABILITIESAT FAIRVALUEACCRUEDLIABILITIESOTHER LONG-TERMLIABILITIESLevel 2:Foreign exchange forwards and optio

56、ns$953$759$194$134$93$41 Embedded derivatives6 6 1 1 TOTAL$959$765$194$135$94$41(1)If the foreign exchange derivative instruments had been netted on the Unaudited Condensed Consolidated Balance Sheets,the asset and liability positions each would have been reduced by$133million as of November 30,2022

57、.As of that date,the Company received$345 million of cash collateral from counterparties related to foreign exchange derivative instruments.No amount of collateralwas posted on the derivative liability balance as of November 30,2022.(1)9Table of ContentsMAY 31,2022DERIVATIVE ASSETSDERIVATIVE LIABILI

58、TIES(Dollars in millions)ASSETS ATFAIR VALUEOTHERCURRENTASSETSOTHER LONG-TERM ASSETSLIABILITIESAT FAIRVALUEACCRUEDLIABILITIESOTHER LONG-TERMLIABILITIESLevel 2:Foreign exchange forwards and options$875$669$206$76$65$11 Embedded derivatives5 5 1 1 TOTAL$880$674$206$77$66$11(1)If the foreign exchange d

59、erivative instruments had been netted on the Consolidated Balance Sheets,the asset and liability positions each would have been reduced by$76 million as of May 31,2022.As of that date,the Company received$486 million of cash collateral from counterparties related to foreign exchange derivative instr

60、uments.No amount of collateral was posted on the derivative liabilitybalance as of May 31,2022.For additional information related to the Companys derivative financial instruments and credit risk,refer to Note 8 Risk Management and Derivatives.The carrying amounts of other current financial assets an

61、d other current financial liabilities approximate fair value.FINANCIAL ASSETS AND LIABILITIES NOT RECORDED AT FAIR VALUEThe Companys Long-term debt is recorded at adjusted cost,net of unamortized premiums,discounts and debt issuance costs.The fair value of long-term debt isestimated based upon quote

62、d prices for similar instruments or quoted prices for identical instruments in inactive markets(Level 2).The fair value of the Companys Long-term debt,including the current portion,was approximately$8,410 million at November 30,2022 and$8,933 million at May 31,2022.The carrying amounts reflected on

63、the Unaudited Condensed Consolidated Balance Sheets for Notes payable approximate fair value.NOTE 5 INCOME TAXESThe effective tax rate was 19.5%and 11.0%for the six months ended November 30,2022 and 2021,respectively.The increase in the Companys effective tax rate wasprimarily due to a less favorabl

64、e impact from stock-based compensation and a shift in the Companys earnings mix.As of November 30,2022,total gross unrecognized tax benefits,excluding related interest and penalties,were$867 million,$652 million of which would affect theCompanys effective tax rate if recognized in future periods.The

65、 majority of the total gross unrecognized tax benefits are long-term in nature and included within Deferredincome taxes and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.As of May 31,2022,total gross unrecognized tax benefits,excluding relatedinterest and penalties,were$84

66、8 million.As of November 30,2022 and May 31,2022,accrued interest and penalties related to uncertain tax positions were$276 millionand$248 million,respectively,(excluding federal benefit)and included within Deferred income taxes and other liabilities on the Unaudited Condensed ConsolidatedBalance Sh

67、eets.The Company is subject to taxation in the U.S.,as well as various state and foreign jurisdictions.The Company is currently under audit by the U.S.IRS for fiscal years2017 through 2019.The Company has closed all U.S.federal income tax matters through fiscal 2016,with the exception of certain tra

68、nsfer pricing adjustments.Tax years after 2011 remain open in certain major foreign jurisdictions.Although the timing of resolution of audits is not certain,the Company evaluates all domestic andforeign audit issues in the aggregate,along with the expiration of applicable statutes of limitations,and

69、 estimates that it is reasonably possible the total grossunrecognized tax benefits could decrease by up to$20 million within the next 12 months.In January 2019,the European Commission opened a formal investigation toexamine whether the Netherlands has breached State Aid rules when granting certain t

70、ax rulings to the Company.The Company believes the investigation is withoutmerit.If this matter is adversely resolved,the Netherlands may be required to assess additional amounts with respect to prior periods,and the Companys income taxesrelated to prior periods in the Netherlands could increase.(1)

71、10Table of ContentsNOTE 6 STOCK-BASED COMPENSATIONSTOCK-BASED COMPENSATIONThe NIKE,Inc.Stock Incentive Plan(the“Stock Incentive Plan”)provides for the issuance of up to 798 million previously unissued shares of Class B Common Stock inconnection with equity awards granted under the Stock Incentive Pl

72、an.The Stock Incentive Plan authorizes the grant of non-statutory stock options,incentive stockoptions,stock appreciation rights and stock awards,including restricted stock and restricted stock units.Restricted stock units include both time-vesting restricted stockunits(RSUs)as well as performance-b

73、ased restricted stock units(PSUs).In addition to the Stock Incentive Plan,the Company gives employees the right to purchaseshares at a discount from the market price under employee stock purchase plans(ESPPs).Refer to Note 11 Common Stock and Stock-Based Compensation of theAnnual Report on Form 10-K

74、 for the fiscal year ended May 31,2022 for further information.The following table summarizes the Companys total stock-based compensation expense recognized in Cost of sales or Operating overhead expense,as applicable:THREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)2

75、022202120222021Stock options$79$81$154$146 ESPPs18 14 33 29 Restricted stock and restricted stock units97 75 177 131 TOTAL STOCK-BASED COMPENSATION EXPENSE$194$170$364$306(1)Expense for stock options includes the expense associated with stock appreciation rights.Accelerated stock option expense is p

76、rimarily recorded for employees meeting certain retirement eligibilityrequirements.(2)Restricted stock units include RSUs and PSUs.The income tax benefit related to stock-based compensation expense was$2 million and$87 million for the three months ended November 30,2022 and 2021,respectively,and$22

77、million and$273 million for the six months ended November 30,2022 and 2021,respectively,and reported within Income tax expense.STOCK OPTIONSThe weighted average fair value per share of options granted during the six months ended November 30,2022 and 2021,computed as of the grant date using the Black

78、-Scholes pricing model,was$31.31 and$37.53,respectively.The weighted average assumptions used to estimate these fair values were as follows:SIX MONTHS ENDED NOVEMBER 30,20222021Dividend yield0.9%0.8%Expected volatility27.1%24.9%Weighted average expected life(in years)5.85.8Risk-free interest rate3.3

79、%0.9%Expected volatilities are based on an analysis of the historical volatility of the Companys common stock,the implied volatility in market-traded options on the Companyscommon stock with a term greater than one year,as well as other factors.The weighted average expected life of options is based

80、on an analysis of historical andexpected future exercise patterns.The interest rate is based on the U.S.Treasury(constant maturity)risk-free rate in effect at the date of grant for periods correspondingwith the expected term of the options.As of November 30,2022,the Company had$584 million of unreco

81、gnized compensation costs from stock options,net of estimated forfeitures,to be recognized in Cost ofsales or Operating overhead expense,as applicable,over a weighted average remaining period of 2.7 years.RESTRICTED STOCK AND RESTRICTED STOCK UNITSThe weighted average fair value per share of restric

82、ted stock and RSUs granted for the six months ended November 30,2022 and 2021,computed as of the grant date,was$107.60 and$163.27,respectively.(1)(1)(2)11Table of ContentsThe weighted average fair value per share of PSUs granted for the six months ended November 30,2022 and 2021,computed as of the g

83、rant date,was$134.71 and$250.52,respectively.As of November 30,2022,the Company had$760 million of unrecognized compensation costs from restricted stock and restricted stock units,net of estimated forfeitures,to be recognized in Cost of sales or Operating overhead expense,as applicable,over a weight

84、ed average remaining period of 2.6 years.NOTE 7 EARNINGS PER SHAREThe following is a reconciliation from basic earnings per common share to diluted earnings per common share.The computations of diluted earnings per common shareexcluded restricted stock,restricted stock units and options,including sh

85、ares under ESPPs,to purchase an estimated additional 38.0 million and 9.2 million shares ofcommon stock outstanding for the three months ended November 30,2022 and 2021,respectively,and 35.1 million and 9.1 million shares of common stock outstandingfor the six months ended November 30,2022 and 2021,

86、respectively,because the awards were assumed to be anti-dilutive.THREE MONTHS ENDEDNOVEMBER 30,SIX MONTHS ENDEDNOVEMBER 30,(In millions,except per share data)2022202120222021Net income available to common stockholders$1,331$1,337$2,799$3,211 Determination of shares:Weighted average common shares out

87、standing1,559.0 1,582.4 1,563.1 1,582.2 Assumed conversion of dilutive stock options and awards13.4 35.0 16.0 36.3 DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING1,572.4 1,617.4 1,579.1 1,618.5 Earnings per common share:Basic$0.85$0.84$1.79$2.03 Diluted$0.85$0.83$1.77$1.98 NOTE 8 RISK MANAGEMENT

88、AND DERIVATIVESThe Company is exposed to global market risks,including the effect of changes in foreign currency exchange rates and interest rates,and uses derivatives to managefinancial exposures that occur in the normal course of business.As of and for the six months ended November 30,2022,there h

89、ave been no material changes to theCompanys hedging program or strategy from what was disclosed within the Annual Report on Form 10-K.For additional information about the Companys derivatives andhedging policies refer to Note 1 Summary of Significant Accounting Policies and Note 14 Risk Management a

90、nd Derivatives of the Annual Report on Form 10-K forthe fiscal year ended May 31,2022.The majority of derivatives outstanding as of November 30,2022,are designated as foreign currency cash flow hedges,primarily for Euro/U.S.Dollar,British Pound/Euro,Japanese Yen/U.S.Dollar and Chinese Yuan/U.S.Dolla

91、r currency pairs.All derivatives are recognized on the Unaudited Condensed Consolidated Balance Sheets at fairvalue and classified based on the instruments maturity date.12Table of ContentsThe following tables present the fair values of derivative instruments included within the Unaudited Condensed

92、Consolidated Balance Sheets:DERIVATIVE ASSETSBALANCE SHEET LOCATIONNOVEMBER 30,MAY 31,(Dollars in millions)20222022Derivatives formally designated as hedging instruments:Foreign exchange forwards and optionsPrepaid expenses and other current assets$745$639 Foreign exchange forwards and optionsDeferr

93、ed income taxes and other assets194 206 Total derivatives formally designated as hedging instruments939 845 Derivatives not designated as hedging instruments:Foreign exchange forwards and optionsPrepaid expenses and other current assets14 30 Embedded derivativesPrepaid expenses and other current ass

94、ets6 5 Total derivatives not designated as hedging instruments20 35 TOTAL DERIVATIVE ASSETS$959$880 DERIVATIVE LIABILITIESBALANCE SHEET LOCATIONNOVEMBER 30,MAY 31,(Dollars in millions)20222022Derivatives formally designated as hedging instruments:Foreign exchange forwards and optionsAccrued liabilit

95、ies$58$37 Foreign exchange forwards and optionsDeferred income taxes and other liabilities41 11 Total derivatives formally designated as hedging instruments99 48 Derivatives not designated as hedging instruments:Foreign exchange forwards and optionsAccrued liabilities35 28 Embedded derivativesAccrue

96、d liabilities1 1 Total derivatives not designated as hedging instruments36 29 TOTAL DERIVATIVE LIABILITIES$135$77 The following tables present the amounts in the Unaudited Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded and theeffects of cash flow he

97、dge activity on these line items:THREE MONTHS ENDED NOVEMBER 30,20222021(Dollars in millions)TOTALAMOUNT OF GAIN(LOSS)ON CASH FLOWHEDGE ACTIVITYTOTALAMOUNT OF GAIN(LOSS)ON CASH FLOWHEDGE ACTIVITYRevenues$13,315$4$11,357$(20)Cost of sales7,604 173 6,144(30)Demand creation expense1,102(2)1,017 Other(i

98、ncome)expense,net(79)125(102)20 Interest expense(income),net16(2)55(1)13Table of ContentsSIX MONTHS ENDED NOVEMBER 30,20222021(Dollars in millions)TOTALAMOUNT OF GAIN(LOSS)ON CASH FLOWHEDGE ACTIVITYTOTALAMOUNT OF GAIN(LOSS)ON CASH FLOWHEDGE ACTIVITYRevenues$26,002$(5)$23,605$(41)Cost of sales14,676

99、282 12,696(96)Demand creation expense2,045(3)1,935 1 Other(income)expense,net(225)207(141)11 Interest expense(income),net29(4)112(3)The following tables present the amounts affecting the Unaudited Condensed Consolidated Statements of Income:(Dollars in millions)AMOUNT OF GAIN(LOSS)RECOGNIZED IN OTHE

100、RCOMPREHENSIVE INCOME(LOSS)ON DERIVATIVESAMOUNT OF GAIN(LOSS)RECLASSIFIED FROM ACCUMULATEDOTHER COMPREHENSIVEINCOME(LOSS)INTO INCOMETHREE MONTHS ENDEDNOVEMBER 30,LOCATION OF GAIN(LOSS)RECLASSIFIED FROM ACCUMULATEDOTHER COMPREHENSIVE INCOME(LOSS)INTO INCOMETHREE MONTHS ENDEDNOVEMBER 30,20222021202220

101、21Derivatives designated as cash flowhedges:Foreign exchange forwards and options$(3)$(31)Revenues$4$(20)Foreign exchange forwards and options(101)253 Cost of sales173(30)Foreign exchange forwards and options2(2)Demand creation expense(2)Foreign exchange forwards and options(47)143 Other(income)expe

102、nse,net125 20 Interest rate swaps Interest expense(income),net(2)(1)TOTAL DESIGNATED CASH FLOWHEDGES$(149)$363$298$(31)(1)For the three months ended November 30,2022 and 2021,the amounts recorded in Other(income)expense,net as a result of the discontinuance of cash flow hedges because the forecasted

103、transactions were no longer probable of occurring were immaterial.(2)Gains and losses associated with terminated interest rate swaps,which were previously designated as cash flow hedges and recorded in Accumulated other comprehensive income(loss),will bereleased through Interest expense(income),net

104、over the term of the issued debt.(1)(1)(2)14Table of Contents(Dollars in millions)AMOUNT OF GAIN(LOSS)RECOGNIZED IN OTHERCOMPREHENSIVE INCOME(LOSS)ON DERIVATIVESAMOUNT OF GAIN(LOSS)RECLASSIFIED FROM ACCUMULATEDOTHER COMPREHENSIVEINCOME(LOSS)INTO INCOMESIX MONTHS ENDED NOVEMBER30,LOCATION OF GAIN(LOS

105、S)RECLASSIFIED FROM ACCUMULATEDOTHER COMPREHENSIVE INCOME(LOSS)INTO INCOMESIX MONTHS ENDEDNOVEMBER 30,2022202120222021Derivatives designated as cash flowhedges:Foreign exchange forwards andoptions$22$(37)Revenues$(5)$(41)Foreign exchange forwards andoptions386 518 Cost of sales282(96)Foreign exchang

106、e forwards andoptions(3)(3)Demand creation expense(3)1 Foreign exchange forwards andoptions246 273 Other(income)expense,net207 11 Interest rate swaps Interest expense(income),net(4)(3)TOTAL DESIGNATED CASH FLOWHEDGES$651$751$477$(128)(1)For the six months ended November 30,2022 and 2021,the amounts

107、recorded in Other(income)expense,net as a result of the discontinuance of cash flow hedges because the forecastedtransactions were no longer probable of occurring were immaterial.(2)Gains and losses associated with terminated interest rate swaps,which were previously designated as cash flow hedges a

108、nd recorded in Accumulated other comprehensive income(loss),will bereleased through Interest expense(income),net over the term of the issued debt.AMOUNT OF GAIN(LOSS)RECOGNIZEDIN INCOME ON DERIVATIVESLOCATION OF GAIN(LOSS)RECOGNIZED IN INCOMEON DERIVATIVESTHREE MONTHS ENDEDNOVEMBER 30,SIX MONTHS END

109、EDNOVEMBER 30,(Dollars in millions)2022202120222021Derivatives not designated as hedging instruments:Foreign exchange forwards and options$(6)$9$44$32 Other(income)expense,netEmbedded derivatives23(4)34(9)Other(income)expense,netCASH FLOW HEDGESAll changes in fair value of derivatives designated as

110、cash flow hedge instruments are recorded in Accumulated other comprehensive income(loss)until Net income isaffected by the variability of cash flows of the hedged transaction.Effective hedge results are classified in the Unaudited Condensed Consolidated Statements of Incomein the same manner as the

111、underlying exposure.When it is no longer probable the forecasted hedged transaction will occur in the initially identified time period,hedgeaccounting is discontinued and the Company accounts for the associated derivative as an undesignated instrument as discussed below.Additionally,the gains and lo

112、ssesassociated with derivatives no longer designated as cash flow hedge instruments in Accumulated other comprehensive income(loss)are recognized immediately in Other(income)expense,net,if it is probable the forecasted hedged transaction will not occur by the end of the initially identified time per

113、iod or within an additional two-monthperiod thereafter.In rare circumstances,the additional period of time may exceed two months due to extenuating circumstances related to the nature of the forecastedtransaction that are outside the control or influence of the Company.The total notional amount of o

114、utstanding foreign currency derivatives designated as cash flow hedges was approximately$17.4 billion as of November 30,2022.Approximately$798 million of deferred net gains(net of tax)on both outstanding and matured derivatives in Accumulated other comprehensive income(loss)as ofNovember 30,2022,are

115、 expected to be reclassified to Net income during the next 12 months concurrent with the underlying hedged transactions also being recorded inNet income.Actual amounts ultimately reclassified to Net income are dependent on the exchange rates in effect when derivative contracts currently outstanding

116、mature.As of November 30,2022,the maximum term over which the Company hedges exposures to the variability of cash flows for its forecasted transactions was 30 months.(1)(1)(2)15Table of ContentsUNDESIGNATED DERIVATIVE INSTRUMENTSThe Company may elect to enter into foreign exchange forwards to mitiga

117、te the change in fair value of specific assets and liabilities on the Unaudited CondensedConsolidated Balance Sheets and/or embedded derivative contracts.These undesignated instruments are recorded at fair value as a derivative asset or liability on theUnaudited Condensed Consolidated Balance Sheets

118、 with their corresponding change in fair value recognized in Other(income)expense,net,together with theremeasurement gain or loss from the hedged balance sheet position and/or embedded derivative contract.The total notional amount of outstanding undesignatedderivative instruments was$4.6 billion as

119、of November 30,2022.EMBEDDED DERIVATIVESEmbedded derivative contracts are treated as foreign currency forward contracts that are bifurcated from the related contract and recorded at fair value as a derivativeasset or liability on the Unaudited Condensed Consolidated Balance Sheets with their corresp

120、onding change in fair value recognized in Other(income)expense,net,through the date the foreign currency fluctuations cease to exist.As of November 30,2022,the total notional amount of embedded derivatives outstanding was approximately$360 million.CREDIT RISKThe Companys bilateral credit-related con

121、tingent features generally require the owing entity,either the Company or the derivative counterparty,to post collateral for theportion of the fair value in excess of$50 million should the fair value of outstanding derivatives per counterparty be greater than$50 million.Additionally,a certain level

122、ofdecline in credit rating of either the Company or the counterparty could trigger collateral requirements.As of November 30,2022,the Company was in compliance with allcredit risk-related contingent features,and derivative instruments with such features were in a net asset position of approximately$

123、820 million.Accordingly,the Companywas not required to post cash collateral as a result of these contingent features.Further,$345 million of collateral was received on the Companys derivative assetbalance as of November 30,2022.The Company considers the impact of the risk of counterparty default to

124、be immaterial.For additional information related to the Companys derivative financial instruments and collateral,refer to Note 4 Fair Value Measurements.16Table of ContentsNOTE 9 ACCUMULATED OTHER COMPREHENSIVE INCOME(LOSS)The changes in Accumulated other comprehensive income(loss),net of tax,were a

125、s follows:(Dollars in millions)FOREIGNCURRENCYTRANSLATIONADJUSTMENTCASH FLOWHEDGESNETINVESTMENTHEDGESOTHERTOTALBalance at August 31,2022$(746)$1,334$115$(67)$636 Other comprehensive income(loss):Other comprehensive gains(losses)before reclassifications45(138)(24)(117)Reclassifications to net income

126、of previously deferred(gains)losses309(263)(6)40 Total other comprehensive income(loss)354(401)(30)(77)Balance at November 30,2022$(392)$933$115$(97)$559(1)The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary a

127、re reclassified to Net income upon sale or uponcomplete or substantially complete liquidation of the respective entity.(2)Net of tax benefit(expense)of$0 million,$11 million,$0 million,$6 million and$17 million,respectively.(3)Net of tax(benefit)expense of$(16)million,$35 million,$0 million,$3 milli

128、on and$22 million,respectively.(Dollars in millions)FOREIGNCURRENCYTRANSLATIONADJUSTMENTCASH FLOWHEDGESNETINVESTMENTHEDGESOTHERTOTALBalance at August 31,2021$(126)$3$115$(59)$(67)Other comprehensive income(loss):Other comprehensive gains(losses)before reclassifications(155)336 6 187 Reclassification

129、s to net income of previously deferred(gains)losses 30 (5)25 Total other comprehensive income(loss)(155)366 1 212 Balance at November 30,2021$(281)$369$115$(58)$145(1)The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an investment in a foreign s

130、ubsidiary are reclassified to Net income upon sale or uponcomplete or substantially complete liquidation of the respective entity.(2)Net of tax benefit(expense)of$0 million,$(27)million,$0 million,$(2)million and$(29)million,respectively.(3)Net of tax(benefit)expense of$0 million,$(1)million,$0 mill

131、ion,$3 million and$2 million,respectively.(Dollars in millions)FOREIGNCURRENCYTRANSLATIONADJUSTMENTCASH FLOWHEDGESNETINVESTMENTHEDGESOTHERTOTALBalance at May 31,2022$(520)$779$115$(56)$318 Other comprehensive income(loss):Other comprehensive gains(losses)before reclassifications(227)578 (27)324 Recl

132、assifications to net income of previously deferred(gains)losses355(424)(14)(83)Total other comprehensive income(loss)128 154 (41)241 Balance at November 30,2022$(392)$933$115$(97)$559(1)The accumulated foreign currency translation adjustment and net investment hedge gains/losses related to an invest

133、ment in a foreign subsidiary are reclassified to Net income upon sale or uponcomplete or substantially complete liquidation of the respective entity.(2)Net of tax benefit(expense)of$0 million,$(73)million,$0 million,$7 million and$(66)million,respectively.(3)Net of tax(benefit)expense of$(16)million

134、,$53 million,$0 million,$6 million and$43 million,respectively.(1)(1)(2)(3)(1)(1)(2)(3)(1)(1)(2)(3)17Table of Contents(Dollars in millions)FOREIGNCURRENCYTRANSLATIONADJUSTMENTCASH FLOWHEDGESNETINVESTMENTHEDGESOTHERTOTALBalance at May 31,2021$2$(435)$115$(62)$(380)Other comprehensive income(loss):Oth

135、er comprehensive gains(losses)before reclassifications(283)685 14 416 Reclassifications to net income of previously deferred(gains)losses 119 (10)109 Total other comprehensive income(loss)(283)804 4 525 Balance at November 30,2021$(281)$369$115$(58)$145(1)The accumulated foreign currency translation

136、 adjustment and net investment hedge gains/losses related to an investment in a foreign subsidiary are reclassified to Net income upon sale or uponcomplete or substantially complete liquidation of the respective entity.(2)Net of tax benefit(expense)of$0 million,$(66)million,$0 million,$(4)million an

137、d$(70)million,respectively.(3)Net of tax(benefit)expense of$0 million,$(9)million,$0 million,$4 million and$(5)million,respectively.The following table summarizes the reclassifications from Accumulated other comprehensive income(loss)to the Unaudited Condensed Consolidated Statements ofIncome:AMOUNT

138、 OF GAIN(LOSS)RECLASSIFIED FROM ACCUMULATEDOTHER COMPREHENSIVE INCOME(LOSS)INTO INCOMELOCATION OF GAIN(LOSS)RECLASSIFIED FROMACCUMULATEDOTHER COMPREHENSIVEINCOME(LOSS)INTO INCOMETHREE MONTHS ENDEDNOVEMBER 30,SIX MONTHS ENDED NOVEMBER30,(Dollars in millions)2022202120222021Gains(losses)on foreign cur

139、rency translationadjustment$(325)$(371)$Other(income)expense,netTotal before tax(325)(371)Tax(expense)benefit16 16 Gain(loss)net of tax(309)(355)Gains(losses)on cash flow hedges:Foreign exchange forwards and options$4$(20)$(5)$(41)RevenuesForeign exchange forwards and options173(30)282(96)Cost of sa

140、lesForeign exchange forwards and options(2)(3)1 Demand creation expenseForeign exchange forwards and options125 20 207 11 Other(income)expense,netInterest rate swaps(2)(1)(4)(3)Interest expense(income),netTotal before tax298(31)477(128)Tax(expense)benefit(35)1(53)9 Gain(loss)net of tax263(30)424(119

141、)Gains(losses)on other9 8 20 14 Other(income)expense,netTotal before tax9 8 20 14 Tax(expense)benefit(3)(3)(6)(4)Gain(loss)net of tax6 5 14 10 Total net gain(loss)reclassified for the period$(40)$(25)$83$(109)(1)(1)(2)(3)18Table of ContentsNOTE 10 REVENUESDISAGGREGATION OF REVENUESThe following tabl

142、es present the Companys Revenues disaggregated by reportable operating segment,major product line and distribution channel:THREE MONTHS ENDED NOVEMBER 30,2022(Dollars in millions)NORTHAMERICAEUROPE,MIDDLEEAST&AFRICAGREATERCHINAASIAPACIFIC&LATINAMERICAGLOBALBRANDDIVISIONSTOTALNIKEBRANDCONVERSECORPORA

143、TETOTALNIKE,INC.Revenues by:Footwear$3,963$2,063$1,370$1,108$8,504$517$9,021 Apparel1,685 1,281 393 435 3,794 21 3,815 Equipment182 145 25 56 408 6 414 Other 18 18 42 5 65 TOTAL REVENUES$5,830$3,489$1,788$1,599$18$12,724$586$5$13,315 Revenues by:Sales to Wholesale Customers$3,183$2,242$897$965$7,287

144、$304$7,591 Sales through Direct to Consumer2,647 1,247 891 634 5,419 240 5,659 Other 18 18 42 5 65 TOTAL REVENUES$5,830$3,489$1,788$1,599$18$12,724$586$5$13,315 THREE MONTHS ENDED NOVEMBER 30,2021(Dollars in millions)NORTHAMERICAEUROPE,MIDDLEEAST&AFRICAGREATERCHINAASIAPACIFIC&LATINAMERICAGLOBALBRAND

145、DIVISIONSTOTALNIKEBRANDCONVERSECORPORATETOTALNIKE,INC.Revenues by:Footwear$2,852$1,806$1,235$887$6,780$485$7,265 Apparel1,480 1,202 564 402 3,648 34 3,682 Equipment145 134 45 58 382 5 387 Other 6 6 33(16)23 TOTAL REVENUES$4,477$3,142$1,844$1,347$6$10,816$557$(16)$11,357 Revenues by:Sales to Wholesal

146、e Customers$2,327$2,112$896$784$6,119$303$6,422 Sales through Direct to Consumer2,150 1,030 948 563 4,691 221 4,912 Other 6 6 33(16)23 TOTAL REVENUES$4,477$3,142$1,844$1,347$6$10,816$557$(16)$11,357 19Table of ContentsSIX MONTHS ENDED NOVEMBER 30,2022(Dollars in millions)NORTHAMERICAEUROPE,MIDDLEEAS

147、T&AFRICAGREATERCHINAASIAPACIFIC&LATINAMERICAGLOBALBRANDDIVISIONSTOTALNIKEBRANDCONVERSECORPORATETOTALNIKE,INC.Revenues by:Footwear$7,768$4,075$2,603$2,172$16,618$1,093$17,711 Apparel3,179 2,434 767 848 7,228 42 7,270 Equipment393 313 74 114 894 14 908 Other 32 32 80 1 113 TOTAL REVENUES$11,340$6,822$

148、3,444$3,134$32$24,772$1,229$1$26,002 Revenues by:Sales to Wholesale Customers$6,210$4,445$1,736$1,879$14,270$647$14,917 Sales through Direct to Consumer5,130 2,377 1,708 1,255 10,470 502 10,972 Other 32 32 80 1 113 TOTAL REVENUES$11,340$6,822$3,444$3,134$32$24,772$1,229$1$26,002 SIX MONTHS ENDED NOV

149、EMBER 30,2021(Dollars in millions)NORTHAMERICAEUROPE,MIDDLEEAST&AFRICAGREATERCHINAASIAPACIFIC&LATINAMERICAGLOBALBRANDDIVISIONSTOTALNIKEBRANDCONVERSECORPORATETOTALNIKE,INC.Revenues by:Footwear$6,116$3,789$2,684$1,909$14,498$1,052$15,550 Apparel2,910 2,361 1,040 787 7,098 58 7,156 Equipment330 299 102

150、 116 847 14 861 Other 13 13 62(37)38 TOTAL REVENUES$9,356$6,449$3,826$2,812$13$22,456$1,186$(37)$23,605 Revenues by:Sales to Wholesale Customers$5,005$4,336$2,010$1,711$13,062$672$13,734 Sales through Direct to Consumer4,351 2,113 1,816 1,101 9,381 452 9,833 Other 13 13 62(37)38 TOTAL REVENUES$9,356

151、$6,449$3,826$2,812$13$22,456$1,186$(37)$23,605 For the three and six months ended November 30,2022 and 2021,Global Brand Divisions revenues included NIKE Brand licensing and other miscellaneous revenuesthat are not part of a geographic operating segment.Converse Other revenues were primarily attribu

152、table to licensing businesses.Corporate revenues primarily consistedof foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse,but managedthrough the Companys central foreign exchange risk management program.A

153、s of November 30,2022 and May 31,2022,the Company did not have any contract assets and had an immaterial amount of contract liabilities recorded in Accruedliabilities on the Unaudited Condensed Consolidated Balance Sheets.20Table of ContentsNOTE 11 OPERATING SEGMENTSThe Companys operating segments a

154、re evidence of the structure of the Companys internal organization.The NIKE Brand segments are defined by geographic regionsfor operations participating in NIKE Brand sales activity.Each NIKE Brand geographic segment operates predominantly in one industry:the design,development,marketing and selling

155、 of athletic footwear,apparel andequipment.The Companys reportable operating segments for the NIKE Brand are:North America;Europe,Middle East&Africa(EMEA);Greater China;and Asia Pacific&Latin America(APLA),and include results for the NIKE and Jordan brands.The Companys NIKE Direct operations are man

156、aged within each NIKE Brand geographic operating segment.Converse is also a reportable segment for the Companyand operates in one industry:the design,marketing,licensing and selling of athletic lifestyle sneakers,apparel and accessories.Global Brand Divisions is included within the NIKE Brand for pr

157、esentation purposes to align with the way management views the Company.Global Brand Divisionsrevenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.Global Brand Divisions costs representdemand creation and operating overhead expense

158、 that include product creation and design expenses centrally managed for the NIKE Brand,as well as costs associatedwith NIKE Direct global digital operations and enterprise technology.Corporate consists primarily of unallocated general and administrative expenses,including expenses associated with c

159、entrally managed departments;depreciation andamortization related to the Companys headquarters;unallocated insurance,benefit and compensation programs,including stock-based compensation;and certainforeign currency gains and losses,including certain hedge gains and losses.The primary financial measur

160、e used by the Company to evaluate performance of individual operating segments is earnings before interest and taxes(EBIT),whichrepresents Net income before Interest expense(income),net and Income tax expense in the Unaudited Condensed Consolidated Statements of Income.As part of the Companys centra

161、lly managed foreign exchange risk management program,standard foreign currency rates are assigned twice per year to each NIKEBrand entity in the Companys geographic operating segments and to Converse.These rates are set approximately nine and twelve months in advance of the futureselling seasons to

162、which they relate(specifically,for each currency,one standard rate applies to the fall and holiday selling seasons and one standard rate applies to thespring and summer selling seasons)based on average market spot rates in the calendar month preceding the date they are established.Inventories and Co

163、st of sales forgeographic operating segments and Converse reflect the use of these standard rates to record non-functional currency product purchases in the entitys functionalcurrency.Differences between assigned standard foreign currency rates and actual market rates are included in Corporate,toget

164、her with foreign currency hedge gainsand losses generated from the Companys centrally managed foreign exchange risk management program and other conversion gains and losses.Accounts receivable,net,Inventories and Property,plant and equipment,net for operating segments are regularly reviewed by manag

165、ement and are therefore providedbelow.21Table of Contents THREE MONTHS ENDEDNOVEMBER 30,SIX MONTHS ENDED NOVEMBER30,(Dollars in millions)2022202120222021REVENUESNorth America$5,830$4,477$11,340$9,356 Europe,Middle East&Africa3,489 3,142 6,822 6,449 Greater China1,788 1,844 3,444 3,826 Asia Pacific&L

166、atin America1,599 1,347 3,134 2,812 Global Brand Divisions18 6 32 13 Total NIKE Brand12,724 10,816 24,772 22,456 Converse586 557 1,229 1,186 Corporate5(16)1(37)TOTAL NIKE,INC.REVENUES$13,315$11,357$26,002$23,605 EARNINGS BEFORE INTEREST AND TAXESNorth America$1,497$1,235$2,874$2,669 Europe,Middle Ea

167、st&Africa990 806 1,965 1,681 Greater China511 569 1,052 1,270 Asia Pacific&Latin America485 388 985 869 Global Brand Divisions(1,226)(1,071)(2,413)(2,058)Converse153 132 362 336 Corporate(744)(503)(1,318)(1,048)Interest expense(income),net16 55 29 112 TOTAL NIKE,INC.INCOME BEFORE INCOME TAXES$1,650$

168、1,501$3,478$3,607 NOVEMBER 30,MAY 31,(Dollars in millions)20222022ACCOUNTS RECEIVABLE,NETNorth America$2,365$1,850 Europe,Middle East&Africa1,647 1,351 Greater China225 406 Asia Pacific&Latin America804 664 Global Brand Divisions87 113 Total NIKE Brand5,128 4,384 Converse244 230 Corporate65 53 TOTAL

169、 ACCOUNTS RECEIVABLE,NET$5,437$4,667 INVENTORIESNorth America$4,299$4,098 Europe,Middle East&Africa2,112 1,887 Greater China1,083 1,044 Asia Pacific&Latin America890 686 Global Brand Divisions214 197 Total NIKE Brand8,598 7,912 Converse353 279 Corporate375 229 TOTAL INVENTORIES$9,326$8,420(1)(1)22Ta

170、ble of ContentsNOVEMBER 30,MAY 31,(Dollars in millions)20222022PROPERTY,PLANT AND EQUIPMENT,NETNorth America$720$639 Europe,Middle East&Africa902 920 Greater China284 303 Asia Pacific&Latin America269 274 Global Brand Divisions794 789 Total NIKE Brand2,969 2,925 Converse41 49 Corporate1,844 1,817 TO

171、TAL PROPERTY,PLANT AND EQUIPMENT,NET$4,854$4,791(1)Excludes assets held-for-sale as of May 31,2022.See Note 13 Acquisitions and Divestitures for additional information.NOTE 12 CONTINGENCIESIn the ordinary course of business,the Company is subject to various legal proceedings,claims and government in

172、vestigations relating to its business,products andactions of its employees and representatives,including contractual and employment relationships,product liability,antitrust,customs,intellectual property and othermatters.The outcome of these legal matters is inherently uncertain,and the Company cann

173、ot predict the eventual outcome of currently pending matters,the timing oftheir ultimate resolution or the eventual losses,fines,penalties or consequences relating to those matters.When a loss related to a legal proceeding or claim is probableand reasonably estimable,the Company accrues its best est

174、imate for the ultimate resolution of the matter.If one or more legal matters were to be resolved against theCompany in a reporting period for amounts above managements expectations,the Companys financial position,operating results and cash flows for that reporting periodcould be materially adversely

175、 affected.In the opinion of management,based on its current knowledge and after consultation with counsel,the Company does not believeany currently pending legal matters will have a material adverse impact on the Companys results of operations,financial position or cash flows,except as describedbelo

176、w.BELGIAN CUSTOMS CLAIMThe Company has received claims for certain years from the Belgian Customs Authorities for alleged underpaid duties related to products imported beginning in fiscal2018.The Company disputes these claims and has engaged in the appellate process.At this time,the Company is unabl

177、e to estimate the range of loss and cannotpredict the final outcome as it could take several years to reach a resolution on this matter.If this matter is ultimately resolved against the Company,the amounts owed,including fines,penalties and other consequences relating to the matter,could have a mate

178、rial adverse effect on the Companys results of operations,financial positionand cash flows.NOTE 13 ACQUISITIONS AND DIVESTITURESDuring the fourth quarter of fiscal 2022,the Company entered into separate definitive agreements to sell its entities in Argentina and Uruguay,as well as its entity in Chil

179、e,to third-party distributors.The related assets and liabilities of these entities within the Companys APLA operating segment were classified as held-for-sale on theConsolidated Balance Sheets within Prepaid expenses and other current assets and Accrued liabilities,respectively,until the transaction

180、s closed.As of May 31,2022,held-for-sale assets were$182 million and held-for-sale liabilities were$58 million.The sale of the Companys entity in Chile to a third-party distributor was completed during the first quarter of fiscal 2023.The impacts from the transaction were notmaterial to the Companys

181、 Unaudited Condensed Consolidated Financial Statements.During the second quarter of fiscal 2023,the Company completed the sale of its entities in Argentina and Uruguay to a third-party distributor.The net loss on the sale ofthese entities totaled approximately$550 million,$389 million of which was r

182、ecognized by the Company in prior periods and a corresponding allowance within in Accruedliabilities on the Unaudited Condensed Consolidated Balance Sheets.The previously recognized loss was primarily due to the anticipated release of the cumulativeforeign currency translation losses.Upon completion

183、 of the sale,these foreign currency translation losses were reclassified from Accumulated other comprehensiveincome(loss)to Net income within Other(income)expense,net,classified within Corporate,and were largely offset by the release of the valuation allowance recognizedwithin Accrued liabilities.Th

184、e remaining loss,primarily due to the devaluation of the local currency and cash equivalents included in the transfer of assets,was recognizedupon completion of the sale within Other(income)expense,net,classified within Corporate on the Unaudited Condensed Consolidated Statements of Income.Cashproce

185、eds received,net of cash and cash equivalents transferred,are reflected within Other investing activities on the Unaudited Condensed Consolidated Statements ofCash Flows.(1)23Table of ContentsITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONSOVERVIEWNIKE desig

186、ns,develops,markets and sells athletic footwear,apparel,equipment,accessories and services worldwide.We are the largest seller of athletic footwear andapparel in the world.We sell our products through NIKE Direct operations,which is comprised of both NIKE-owned retail stores and sales through our di

187、gital platforms(also referred to as NIKE Brand Digital),to retail accounts and to a mix of independent distributors,licensees and sales representatives in virtually all countries aroundthe world.Our goal is to deliver value to our shareholders by building a profitable global portfolio of branded foo

188、twear,apparel,equipment and accessories businesses.Our strategy is to achieve long-term revenue growth by creating innovative,“must-have”products,building deep personal consumer connections with our brands anddelivering compelling consumer experiences through digital platforms and at retail.Through

189、the Consumer Direct Acceleration,we are focusing on creating the marketplace of the future through more premium,consistent and seamless consumerexperiences,leading with digital and our owned stores,as well as select wholesale partners that share our marketplace vision.Over the last several years,as

190、we haveexecuted against the Consumer Direct Acceleration,we have grown our NIKE Direct revenues to be approximately 43%and 42%of total NIKE Brand revenues for thesecond quarter and first six months of fiscal 2023,respectively,and we have reduced the number of wholesale accounts globally.Additionally

191、,we have aligned ourproduct creation and category organizations around a new consumer construct focused on Mens,Womens and Kids and continue to invest in data and analytics,demand sensing,insight gathering,inventory management and other areas to create an end-to-end technology foundation,which we ex

192、pect will further accelerate ourdigital transformation.We believe this unified approach will accelerate growth and unlock more efficiency for our business,while driving speed and responsiveness as weserve consumers globally.CURRENT ECONOMIC CONDITIONS AND MARKET DYNAMICSOngoing supply chain challeng

193、es,macroeconomic conditions and the COVID-19 pandemic continue to create volatility in our business results and operations globally.Our second quarter and first six months of fiscal 2023 Revenues increased 17%and 10%,respectively,due to strong demand for our product and more product availableto meet

194、 this demand compared to the prior fiscal year,which was impacted by temporary factory closures due to COVID-19 and extended inventory transit times.During the first quarter of fiscal 2023,inventory transit times rapidly improved compared to fiscal 2022,and seasonal inventory that was ordered based

195、on the extendedtransit times,arrived earlier than planned leading to elevated levels of inventory at the end of the first quarter of fiscal 2023.During the second quarter of fiscal 2023 we made progress on normalizing our inventory levels,as Inventories decreased 3%compared to the first quarter of f

196、iscal 2023as a result of strong demand for our product across our wholesale and direct to consumer channels,and increased promotional activity,specifically in apparel in NorthAmerica.The marketplace remains promotional,and gross margin for the second quarter and first six months of fiscal 2023 was n

197、egatively impacted by high levels of promotionalactivity to sell excess inventory and create capacity in the marketplace for new seasonally relevant product.We have also adjusted our inventory purchases for theremainder of fiscal 2023 as we continue to prioritize reducing excess inventory in the mar

198、ketplace across our geographies.Additionally,gross margin continues to be negatively impacted by unfavorable fluctuations in net foreign currency exchange rates,elevated freight and logistics costs aswell as higher product input costs,including materials and labor.Strategic pricing increases partial

199、ly offset the negative impacts on gross margin for the second quarterand first six months of fiscal 2023 which decreased 300 basis points and 260 basis points,respectively.Most of our geographies are currently operating with little to no COVID-19 related disruptions.In Greater China however,we conti

200、nue to experience a higher level of storeclosures and reduced traffic in our retail stores due to COVID-19 related disruptions.During the second quarter of fiscal 2023,we managed through a higher number oftemporary store closures in Greater China primarily due to local government restrictions.Althou

201、gh these restrictions were lifted In December 2022,we expect theoperating environment will remain volatile which could continue to cause disruptions to our operations.We expect net unfavorable changes in foreign currency exchange rates,including hedges,will have a material negative impact on reporte

202、d Revenues,gross margin andIncome before income taxes for the remainder of fiscal 2023.Additionally,we expect the continued combination of elevated freight and logistics costs,increased productinput costs and increased promotional activity,partially offset by strategic pricing increases,will have a

203、negative impact on gross margin for the remainder of the fiscalyear.24Table of ContentsWe also continue to closely monitor macroeconomic conditions,including consumer behavior and the potential impacts inflation could have on consumer demand for ourproduct.While we believe our Consumer Direct Accele

204、ration Strategy continues to drive our business toward our long-term financial goals,worsening macroeconomicconditions could affect our business,including,among other things,higher inventory levels in various markets,higher inventory obsolescence reserves,higherpromotional activity,reduced demand fo

205、r our products,reduced orders from our wholesale customers for our products and order cancellations.There could also be new orprolonged COVID-19 related restrictions or disruptions across our geographies.Any of these factors,among others,could have material adverse impacts on our revenuegrowth as we

206、ll as overall profitability in future periods.SECOND QUARTER OVERVIEWFor the second quarter of fiscal 2023,NIKE,Inc.Revenues increased 17%to$13.3 billion compared to the second quarter of fiscal 2022 and increased 27%on acurrency-neutral basis.Net income was$1,331 million and diluted earnings per co

207、mmon share was$0.85 for the second quarter of fiscal 2023,compared to Net incomeof$1,337 million and diluted earnings per common share of$0.83 for the second quarter of fiscal 2022.Income before income taxes increased 10%compared to the second quarter of fiscal 2022 due to higher revenues,partially

208、offset by gross margin contraction and higherSelling and administrative expense.NIKE Brand revenues,which represent over 90%of NIKE,Inc.Revenues,increased 18%compared to the second quarter of fiscal2022.On a currency-neutral basis,NIKE Brand revenues increased 28%,driven by higher revenues across al

209、l geographies,led by increases in North America andEMEA.Additionally,NIKE Brand currency-neutral revenues were higher across footwear and apparel,as well as Mens,the Jordan Brand,Womens and Kids.Revenuesfor Converse increased 5%and 12%compared to the second quarter of fiscal 2022,on a reported and c

210、urrency-neutral basis,respectively,led by strong performance inNorth America,licensee markets and Western Europe,partially offset by declines in Asia.Our effective tax rate was 19.3%for the second quarter of fiscal 2023,compared to 10.9%for the second quarter of fiscal 2022,due to decreased benefits

211、 from stock-based compensation and a shift in our earnings mix.On August 16,2022,the U.S.government enacted the Inflation Reduction Act of 2022 that includes,among other provisions,changes to the U.S.corporate income taxsystem,including a fifteen percent minimum tax based on adjusted financial state

212、ment income,which is effective for NIKE beginning June 1,2023,and a one percentexcise tax on net repurchases of stock after December 31,2022.Based on our current analysis of the provisions,we do not expect these tax law changes to have amaterial impact on our financial statements;however,we will con

213、tinue to evaluate their impact as further information becomes available.During the second quarter of fiscal 2023,we completed the sale of our entities in Argentina and Uruguay to a third party distributor.For more information see Note 13 Acquisitions and Divestitures within the accompanying Notes to

214、 the Unaudited Condensed Consolidated Financial Statements.Now that we have completed the shift froma wholesale and direct to consumer operating model within our Central and South America(CASA)territory to a distributor model,we expect consolidated NIKE,Inc.andAPLA revenue growth will be reduced due

215、 to different commercial terms.However,over time we expect the future operating model to have a favorable impact on ouroverall profitability as we reduce selling and administrative expenses,as well as lessen exposure to foreign exchange rate volatility.USE OF NON-GAAP FINANCIAL MEASURESThroughout th

216、is Quarterly Report on Form 10-Q,we discuss non-GAAP financial measures,including references to wholesale equivalent revenues,currency-neutralrevenues,as well as Total NIKE Brand earnings before interest and taxes(EBIT),Total NIKE,Inc.EBIT and EBIT Margin,which should be considered in addition to,an

217、dnot in lieu of,the financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America(“U.S.GAAP”).References to wholesale equivalent revenues are intended to provide context as to the total size of our NIKE Brand market footprint

218、if we had no NIKE Direct operations.NIKE Brand wholesale equivalent revenues consist of(1)sales to external wholesale customers and(2)internal sales from our wholesale operations to our NIKE Directoperations,which are charged at prices comparable to those charged to external wholesale customers.Addi

219、tionally,currency-neutral revenues are calculated using actualexchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends excluding the impact of translation arising fromforeign currency exchange rate fluctuations.EBIT is calculated as N

220、et income before Interest expense(income),net and Income tax expense in the UnauditedCondensed Consolidated Statements of Income.EBIT Margin is calculated as EBIT divided by total NIKE,Inc.Revenues.Management uses these non-GAAP financial measures when evaluating the Companys performance,including w

221、hen making financial and operating decisions.Additionally,management believes these non-GAAP financial measures provide investors with additional financial information that should be considered when assessingour underlying business performance and trends.However,references to wholesale equivalent re

222、venues,currency-neutral revenues,EBIT and EBIT margin should not beconsidered in isolation or as a substitute for other financial measures calculated and presented in accordance with U.S.GAAP and may not be comparable to similarlytitled non-GAAP measures used by other companies.25Table of ContentsRE

223、SULTS OF OPERATIONSTHREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions,except per share data)20222021%CHANGE20222021%CHANGERevenues$13,315$11,357 17%$26,002$23,605 10%Cost of sales7,604 6,144 24%14,676 12,696 16%Gross profit5,711 5,213 10%11,326 10,909 4%Gross margin42.9

224、%45.9%43.6%46.2%Demand creation expense1,102 1,017 8%2,045 1,935 6%Operating overhead expense3,022 2,742 10%5,999 5,396 11%Total selling and administrative expense4,124 3,759 10%8,044 7,331 10%of revenues31.0%33.1%30.9%31.1%Interest expense(income),net16 55 29 112 Other(income)expense,net(79)(102)(2

225、25)(141)Income before income taxes1,650 1,501 10%3,478 3,607-4%Income tax expense319 164 95%679 396 71%Effective tax rate19.3%10.9%19.5%11.0%NET INCOME$1,331$1,337 0%$2,799$3,211-13%Diluted earnings per common share$0.85$0.83 2%$1.77$1.98-11%CONSOLIDATED OPERATING RESULTSREVENUESTHREE MONTHS ENDED N

226、OVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)20222021%CHANGE%CHANGEEXCLUDINGCURRENCYCHANGES20222021%CHANGE%CHANGEEXCLUDINGCURRENCYCHANGESNIKE,Inc.Revenues:NIKE Brand Revenues by:Footwear$8,504$6,780 25%36%$16,618$14,498 15%23%Apparel3,794 3,648 4%14%7,228 7,098 2%10%Equipment408 382

227、7%17%894 847 6%14%Global Brand Divisions18 6 200%200%32 13 146%149%Total NIKE Brand Revenues12,724 10,816 18%28%24,772 22,456 10%19%Converse586 557 5%12%1,229 1,186 4%10%Corporate5(16)1(37)TOTAL NIKE,INC.REVENUES$13,315$11,357 17%27%$26,002$23,605 10%18%Supplemental NIKE Brand RevenuesDetails:NIKE B

228、rand Revenues by:Sales to Wholesale Customers$7,287$6,119 19%30%$14,270$13,062 9%18%Sales through NIKE Direct5,419 4,691 16%25%10,470 9,381 12%19%Global Brand Divisions18 6 200%200%32 13 146%149%TOTAL NIKE BRAND REVENUES$12,724$10,816 18%28%$24,772$22,456 10%19%(1)The percent change excluding curren

229、cy changes represents a non-GAAP financial measure.See Use of Non-GAAP Financial Measures for further information.(2)Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.(3)Corporate revenues primarily consi

230、st of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse,butmanaged through our central foreign exchange risk management program.(1)(1)(2)(3)(2)26Table of ContentsSECOND QUARTER OF FISCAL 2023 COMPARED TO

231、 SECOND QUARTER OF FISCAL 2022On a currency-neutral basis,NIKE,Inc.Revenues increased 27%for the second quarter of fiscal 2023,driven by higher revenues in both the NIKE Brand and Converse.Higher revenues in North America,EMEA and APLA contributed approximately 12,9 and 4 percentage points to NIKE,I

232、nc.Revenues,with Greater China and Converseeach contributing approximately 1 percentage point of growth.On a currency-neutral basis,NIKE Brand footwear revenues increased 36%in the second quarter of fiscal 2023,driven by higher revenues in Mens,the Jordan Brandand Womens.Unit sales of footwear incre

233、ased 28%,while higher average selling price(ASP)per pair contributed approximately 8 percentage points of footwear revenuegrowth,primarily due to higher full-price ASP,net of discounts,on a wholesale equivalent basis.Currency-neutral NIKE Brand apparel revenues,for the second quarter of fiscal 2023,

234、increased 14%,driven primarily by growth in Mens.Unit sales of apparel increased10%,and higher ASP per unit contributed approximately 4 percentage points of apparel revenue growth,primarily due to higher full-price ASP.NIKE Brand wholesale revenues increased 19%and 30%compared to the second quarter

235、of fiscal 2022,on a reported and currency-neutral basis,respectively,primarilydue to increased product availability to meet demand.On a reported basis,NIKE Direct revenues represented approximately 43%of our total NIKE Brand revenues forboth the second quarter of fiscal 2023 and the second quarter o

236、f fiscal 2022.NIKE Brand Digital sales were$3.4 billion for the second quarter of fiscal 2023 compared to$2.7 billion for the second quarter of fiscal 2022.On a currency-neutral basis,NIKE Direct revenues increased 25%,driven by NIKE Brand Digital sales growth of 34%,comparable store sales growth of

237、 11%and the addition of new stores.Comparable store sales,which exclude NIKE Brand Digital sales,comprises revenues from NIKE-owned in-line and factory stores for which all three of the following requirements have been met:(1)the store has been open at least one year,(2)square footage has notchanged

238、 by more than 15%within the past year and(3)the store has not been permanently repositioned within the past year.Comparable store sales includes revenuesfrom stores that were temporarily closed during the period as a result of COVID-19.Comparable store sales represents a performance measure that we

239、believe is usefulinformation for management and investors in understanding the performance of our established NIKE-owned in-line and factory stores.Management considers this metricwhen making financial and operating decisions.The method of calculating comparable store sales varies across the retail

240、industry.As a result,our calculation of thismetric may not be comparable to similarly titled measures used by other companies.FIRST SIX MONTHS OF FISCAL 2023 COMPARED TO FIRST SIX MONTHS OF FISCAL 2022On a currency-neutral basis,NIKE,Inc.Revenues increased 18%for the first six months of fiscal 2023,

241、driven by higher revenues in North America,EMEA and APLA,partially offset by lower revenues in Greater China.Higher revenues in North America,EMEA and APLA contributed approximately 9,7 and 3 percentage points to NIKE,Inc.Revenues,respectively,while lower revenues in Greater China reduced NIKE,Inc.R

242、evenues by approximately 1 percentage point.On a currency-neutral basis,NIKE Brand footwear revenues increased 23%,driven by growth in Mens and the Jordan Brand.Unit sales of footwear increased 14%,whilehigher ASP per pair contributed approximately 9 percentage points of footwear revenue growth,prim

243、arily due to higher full-price ASP,as well as the favorable impact ofgrowth in our NIKE Direct business and higher NIKE Direct ASP.Currency-neutral NIKE Brand apparel revenues increased 10%,driven by growth in Mens.Unit sales of apparel increased 7%and higher ASP per unit contributedapproximately 3

244、percentage points of apparel revenue growth.Higher ASP per unit was primarily due to higher full-price ASP,partially offset by lower NIKE Direct ASP.NIKE Brand wholesale revenues increased 9%and 18%compared to the first six months of fiscal 2022,on a reported and currency-neutral basis,respectively,

245、primarilydue to increased product availability to meet demand.On a reported basis,NIKE Direct revenues represented approximately 42%of our total NIKE Brand revenues forthe first six months of fiscal 2023 and the first six months of fiscal 2022.NIKE Brand Digital sales were$6.3 billion for the first

246、six months of fiscal 2023 compared to$5.2billion for the first six months of fiscal 2022.On a currency-neutral basis,NIKE Direct revenues increased 19%,driven by NIKE Brand Digital sales growth of 29%,comparable store sales growth of 7%,and the addition of new stores.27Table of ContentsGROSS MARGINT

247、HREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)20222021%CHANGE20222021%CHANGEGross profit$5,711$5,213 10%$11,326$10,909 4%Gross margin42.9%45.9%(300)bps43.6%46.2%(260)bpsFor the second quarter of fiscal 2023,our consolidated gross margin was 300 basis points lower th

248、an the prior year and primarily reflected the following factors:Lower margin in our NIKE Direct business,driven by higher promotional activity in the current period,largely in North America to liquidate excess inventory(decreasing margin approximately 160 basis points);Unfavorable changes in net for

249、eign currency exchange rates,including hedges,(decreasing gross margin approximately 90 basis points);andLower NIKE Brand full-price product margins,on a wholesale equivalent basis,(decreasing gross margin approximately 20 basis points)reflecting:Higher NIKE Brand product costs,(decreasing margin ap

250、proximately 430 basis points)primarily due to product mix,elevated inbound freight andlogistics costs,and product input costs such as materials and labor;andHigher full-price ASP,net of discounts,(increasing gross margin approximately 410 basis points)due primarily to product mix and strategic prici

251、ngactions.For the first six months of fiscal 2023,our consolidated gross margin was 260 basis points lower than the prior year period and primarily reflected the following factors:Lower margin in our NIKE Direct business,driven by higher promotional activity in the current period,largely in North Am

252、erica to liquidate excess inventory(decreasing margin approximately 120 basis points);Unfavorable changes in net foreign currency exchange rates,including hedges,(decreasing gross margin approximately 80 basis points);Higher other costs(decreasing gross margin approximately 60 basis points);andNIKE

253、Brand full-price product margins,on a wholesale equivalent basis,were flat,reflecting:Higher full-price ASP,net of discounts,(increasing gross margin approximately 320 basis points)due primarily to strategic pricing actions and productmix;andHigher NIKE Brand product costs,(decreasing margin approxi

254、mately 320 basis points)primarily due to product mix,elevated inbound freight andlogistics costs,and product input costs.TOTAL SELLING AND ADMINISTRATIVE EXPENSETHREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)20222021%CHANGE20222021%CHANGEDemand creation expense$1,10

255、2$1,017 8%$2,045$1,935 6%Operating overhead expense3,022 2,742 10%5,999 5,396 11%Total selling and administrative expense$4,124$3,759 10%$8,044$7,331 10%of revenues31.0%33.1%(210)bps30.9%31.1%(20)bps(1)Demand creation expense consists of advertising and promotion costs,including costs of endorsement

256、 contracts,complimentary products,television,digital and print advertising and media costs,brandevents and retail brand presentation.SECOND QUARTER OF FISCAL 2023 COMPARED TO SECOND QUARTER OF FISCAL 2022Demand creation expense increased 8%for the second quarter of fiscal 2023 primarily due to an in

257、crease in advertising and marketing expenses.Changes in foreigncurrency exchange rates decreased Demand creation expense by approximately 7 percentage points.Operating overhead expense increased 10%primarily due to higher wage-related expenses,higher strategic technology investments and higher NIKE

258、Direct costs.Changes in foreign currency exchange rates decreased Operating overhead expense by approximately 5 percentage points.(1)28Table of ContentsFIRST SIX MONTHS OF FISCAL 2023 COMPARED TO FIRST SIX MONTHS OF FISCAL 2022Demand creation expense increased 6%for the first six months of fiscal 20

259、23 primarily due to higher advertising and marketing expenses.Changes in foreign currencyexchange rates decreased Demand creation expense by approximately 6 percentage points.Operating overhead expense increased 11%primarily due to an increase in wage-related expenses,higher strategic technology inv

260、estments and higher NIKE Directcosts.Changes in foreign currency exchange rates decreased Operating overhead expense by approximately 4 percentage points.OTHER(INCOME)EXPENSE,NETTHREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)2022202120222021Other(income)expense,net$

261、(79)$(102)$(225)$(141)Other(income)expense,net comprises foreign currency conversion gains and losses from the remeasurement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currency derivative instruments,as well as unusual or non-operati

262、ng transactions that are outside the normalcourse of business.For the second quarter of fiscal 2023,Other(income)expense,net decreased from$102 million of other income to$79 million in the current year,largely due to the lossrecognized upon the completion of the sale of our entities in Argentina and

263、 Uruguay to a third-party distributor,partially offset by a favorable change in foreign currencyconversion gains and losses,including hedges.For the first six months of fiscal 2023,Other(income)expense,net increased from$141 million of other income to$225 million in the current year,primarily due to

264、 afavorable change in foreign currency conversion gains and losses,including hedges,and settlements of legal matters,partially offset by the loss recognized upon thecompletion of the sale of our entities in Argentina and Uruguay to a third-party distributor and favorable activity in the prior year r

265、elated to our strategic distributorpartnership transition within APLA.For more information related to our distributor partnership transition within APLA,see Note 13 Acquisitions and Divestitures within the accompanying Notes to theUnaudited Condensed Consolidated Financial Statements.We estimate the

266、 combination of the translation of foreign currency-denominated profits from our international businesses and the year-over-year change in foreigncurrency-related gains and losses included in Other(income)expense,net had unfavorable impacts of approximately$174 million and$361 million on our Income

267、beforeincome taxes for the second quarter and first six months of fiscal 2023,respectively.INCOME TAXESTHREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,20222021%CHANGE20222021%CHANGEEffective tax rate19.3%10.9%840 bps19.5%11.0%850 bpsOur effective tax rate was 19.3%for the second quarter

268、of fiscal 2023,compared to 10.9%for the second quarter of fiscal 2022,primarily due to decreased benefits fromstock-based compensation and a shift in our earnings mix.Our effective tax rate was 19.5%for the first six months of fiscal 2023,compared to 11.0%for the first six months of fiscal 2022,prim

269、arily due to decreased benefits fromstock-based compensation and a shift in our earnings mix.Refer to Note 5 Income Taxes within the accompanying Notes to the Unaudited Condensed Consolidated Financial Statements for additional information.29Table of ContentsOPERATING SEGMENTSOur operating segments

270、are evidence of the structure of the Companys internal organization.The NIKE Brand segments are defined by geographic regions for operationsparticipating in NIKE Brand sales activity.Each NIKE Brand geographic segment operates predominantly in one industry:the design,development,marketing and sellin

271、g of athletic footwear,apparel andequipment.The Companys reportable operating segments for the NIKE Brand are:North America;Europe,Middle East&Africa(EMEA);Greater China;and Asia Pacific&Latin America(APLA),and include results for the NIKE and Jordan brands.The Companys NIKE Direct operations are ma

272、naged within each geographic operatingsegment.Converse is also a reportable operating segment for the Company and operates predominately in one industry:the design,marketing,licensing and selling ofathletic lifestyle sneakers,apparel and accessories.As part of our centrally managed foreign exchange

273、risk management program,standard foreign currency exchange rates are assigned twice per year to each NIKE Brandentity in our geographic operating segments and Converse.These rates are set approximately nine and twelve months in advance of the future selling seasons to whichthey relate(specifically,f

274、or each currency,one standard rate applies to the fall and holiday selling seasons and one standard rate applies to the spring and summer sellingseasons)based on average market spot rates in the calendar month preceding the date they are established.Inventories and Cost of sales for geographic opera

275、tingsegments and Converse reflect the use of these standard rates to record non-functional currency product purchases into the entitys functional currency.Differencesbetween assigned standard foreign currency exchange rates and actual market rates are included in Corporate,together with foreign curr

276、ency hedge gains and lossesgenerated from our centrally managed foreign exchange risk management program and other conversion gains and losses.The breakdown of Revenues is as follows:THREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)20222021%CHANGE%CHANGEEXCLUDINGCURRE

277、NCYCHANGES20222021%CHANGE%CHANGEEXCLUDINGCURRENCYCHANGESNorth America$5,830$4,477 30%31%$11,340$9,356 21%21%Europe,Middle East&Africa3,489 3,142 11%33%6,822 6,449 6%25%Greater China1,788 1,844-3%6%3,444 3,826-10%-4%Asia Pacific&Latin America1,599 1,347 19%34%3,134 2,812 11%25%Global Brand Divisions1

278、8 6 200%200%32 13 146%149%TOTAL NIKE BRAND12,724 10,816 18%28%24,772 22,456 10%19%Converse586 557 5%12%1,229 1,186 4%10%Corporate5(16)1(37)TOTAL NIKE,INC.REVENUES$13,315$11,357 17%27%$26,002$23,605 10%18%(1)The percent change excluding currency changes represents a non-GAAP financial measure.See Use

279、 of Non-GAAP Financial Measures for further information.(2)Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.(3)Corporate revenues primarily consist of foreign currency hedge gains and losses related to r

280、evenues generated by entities within the NIKE Brand geographic operating segments and Converse,butmanaged through our central foreign exchange risk management program.The primary financial measure used by the Company to evaluate performance of individual operating segments is EBIT,which represents N

281、et income before Interestexpense(income),net and Income tax expense in the Unaudited Condensed Consolidated Statements of Income.As discussed in Note 11 Operating Segments in theaccompanying Notes to the Unaudited Condensed Consolidated Financial Statements,certain corporate costs are not included i

282、n EBIT of our operating segments.(1)(1)(2)(3)30Table of ContentsThe breakdown of earnings before interest and taxes is as follows:THREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)20222021%CHANGE20222021%CHANGENorth America$1,497$1,235 21%$2,874$2,669 8%Europe,Middle E

283、ast&Africa990 806 23%1,965 1,681 17%Greater China511 569-10%1,052 1,270-17%Asia Pacific&Latin America485 388 25%985 869 13%Global Brand Divisions(1,226)(1,071)-14%(2,413)(2,058)-17%TOTAL NIKE BRAND2,257 1,927 17%4,463 4,431 1%Converse153 132 16%362 336 8%Corporate(744)(503)-48%(1,318)(1,048)-26%TOTA

284、L NIKE,INC.EARNINGS BEFOREINTEREST AND TAXES1,666 1,556 7%3,507 3,719-6%EBIT margin12.5%13.7%13.5%15.8%Interest expense(income),net16 55 29 112 TOTAL NIKE,INC.INCOME BEFORE INCOMETAXES$1,650$1,501 10%$3,478$3,607-4%(1)Total NIKE Brand EBIT,Total NIKE,Inc.EBIT and EBIT margin represent non-GAAP finan

285、cial measures.See Use of Non-GAAP Financial Measures for further information.NORTH AMERICATHREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)20222021%CHANGE%CHANGEEXCLUDINGCURRENCYCHANGES20222021%CHANGE%CHANGEEXCLUDINGCURRENCYCHANGESRevenues by:Footwear$3,963$2,852 39%3

286、9%$7,768$6,116 27%27%Apparel1,685 1,480 14%14%3,179 2,910 9%10%Equipment182 145 26%26%393 330 19%19%TOTAL REVENUES$5,830$4,477 30%31%$11,340$9,356 21%21%Revenues by:Sales to Wholesale Customers$3,183$2,327 37%37%$6,210$5,005 24%24%Sales through NIKE Direct2,647 2,150 23%23%5,130 4,351 18%18%TOTAL RE

287、VENUES$5,830$4,477 30%31%$11,340$9,356 21%21%EARNINGS BEFORE INTEREST ANDTAXES$1,497$1,235 21%$2,874$2,669 8%SECOND QUARTER OF FISCAL 2023 COMPARED TO SECOND QUARTER OF FISCAL 2022On a currency-neutral basis,North America revenues for the second quarter of fiscal 2023 increased 31%,due primarily to

288、higher revenues in Mens.NIKE Directrevenues increased 23%,driven by strong digital sales growth of 31%,comparable store sales growth of 9%and the addition of new stores.Footwear revenues increased 39%on a currency-neutral basis,driven by higher revenues in Mens and the Jordan Brand.Unit sales of foo

289、twear increased 37%,whilehigher ASP per pair contributed approximately 2 percentage points of footwear revenue growth.Higher ASP per pair was primarily due to higher full-price ASP,partiallyoffset by lower NIKE Direct ASP,reflecting higher promotional activity,and a lower mix of full-price sales.(1)

290、(1)(1)31Table of ContentsOn a currency-neutral basis,apparel revenues increased 14%,driven by higher revenues in Mens.Unit sales of apparel increased 15%,while lower ASP per unit reducedapparel revenues by approximately 1 percentage point.Lower ASP was primarily due to lower NIKE Direct ASP,reflecti

291、ng higher promotional activity,and a lower mix offull-price sales,partially offset by higher full-price ASP.Reported EBIT increased 21%primarily due to higher revenues,partially offset by gross margin contraction and higher selling and administrative expense.Gross margindecreased approximately 320 b

292、asis points largely driven by lower margin in our NIKE Direct business due to higher promotional activity,higher product costs reflectinginput costs and inbound freight and logistics costs,and a lower mix of full-price sales.This was partially offset by higher full-price ASP,net of discounts,driven

293、by strategicpricing actions and product mix.Selling and administrative expense increased due to higher operating overhead and demand creation expense.Operating overheadexpense increased primarily due to an increase in wage-related expenses and increased NIKE Direct costs.The increase in demand creat

294、ion expense reflected highersports marketing expenses and an increase in digital marketing investments.FIRST SIX MONTHS OF FISCAL 2023 COMPARED TO FIRST SIX MONTHS OF FISCAL 2022On a currency-neutral basis,North America revenues for the first six months of fiscal 2023 increased 21%,due primarily to

295、higher revenues in Mens and the JordanBrand.NIKE Direct revenues increased 18%,driven by strong digital sales growth of 25%,comparable store sales growth of 6%and the addition of new stores.Footwear revenues increased 27%on a currency-neutral basis,largely driven by higher revenues in Mens and the J

296、ordan Brand.Unit sales of footwear increased 22%,while higher ASP per pair contributed approximately 5 percentage points of footwear revenue growth.Higher ASP per pair was primarily due to higher full-price ASP,partially offset by lower NIKE Direct ASP,reflecting higher promotional activity.On a cur

297、rency-neutral basis,apparel revenues increased 10%,driven primarily by higher revenues in Mens.Unit sales of apparel increased 10%,while ASP per unitremained flat,as higher full-price ASP was offset by lower NIKE Direct ASP,reflecting higher promotional activity.Reported EBIT increased 8%primarily d

298、ue to higher revenues,partially offset by gross margin contraction and higher selling and administrative expense.Gross margindecreased approximately 390 basis points primarily due to higher product costs,reflecting higher input costs and increased inbound freight and logistics costs,lowermargins in

299、our NIKE Direct business due to higher promotional activity,a lower mix of full-price sales and higher other costs,in part due to inventory obsolescence.Thiswas partially offset by higher full-price ASP,net of discounts,largely due to product mix and strategic pricing actions.Selling and administrat

300、ive expense increased due tohigher operating overhead and demand creation expense.Operating overhead expense increased primarily as a result of higher wage-related costs,lower bad debtrecoveries and increased NIKE Direct costs.The increase in demand creation expense reflected higher sports marketing

301、 expenses and an increase in digital marketinginvestments,partially offset by lower advertising and marketing expense.EUROPE,MIDDLE EAST&AFRICATHREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)20222021%CHANGE%CHANGEEXCLUDINGCURRENCYCHANGES20222021%CHANGE%CHANGEEXCLUDIN

302、GCURRENCYCHANGESRevenues by:Footwear$2,063$1,806 14%37%$4,075$3,789 8%27%Apparel1,281 1,202 7%28%2,434 2,361 3%22%Equipment145 134 8%30%313 299 5%23%TOTAL REVENUES$3,489$3,142 11%33%$6,822$6,449 6%25%Revenues by:Sales to Wholesale Customers$2,242$2,112 6%28%$4,445$4,336 3%21%Sales through NIKE Direc

303、t1,247 1,030 21%44%2,377 2,113 12%32%TOTAL REVENUES$3,489$3,142 11%33%$6,822$6,449 6%25%EARNINGS BEFORE INTEREST ANDTAXES$990$806 23%$1,965$1,681 17%SECOND QUARTER OF FISCAL 2023 COMPARED TO SECOND QUARTER OF FISCAL 2022On a currency-neutral basis,EMEA revenues for the second quarter of fiscal 2023

304、increased 33%,primarily driven by growth in Mens.NIKE Direct revenues increased44%,driven by strong digital sales growth of 62%and comparable store sales growth of 24%,partially offset by store closures.32Table of ContentsCurrency-neutral footwear revenues increased 37%,driven by higher revenues in

305、Mens,the Jordan Brand and Womens.Unit sales of footwear increased 18%,whilehigher ASP per pair contributed approximately 19 percentage points of footwear revenue growth.Higher ASP per pair was primarily due to higher full-price ASP,as well asthe favorable impact of growth in our NIKE Direct business

306、.Currency-neutral apparel revenues increased 28%due primarily to higher revenues in Mens.Unit sales of apparel increased 11%,while higher ASP per unit contributedapproximately 17 percentage points of apparel revenue growth,primarily due to higher full-price ASP.Reported EBIT increased 23%primarily d

307、ue to higher revenues and lower selling and administrative expenses,partially offset by gross margin contraction.Gross margindecreased approximately 70 basis points primarily due to higher product costs reflecting input costs and increased inbound freight and logistics costs,higher other costsinclud

308、ing inventory obsolescence,lower margins in our NIKE Direct business reflecting higher promotional activity and lower mix of full-price sales.This activity waspartially offset by higher full-price ASP,net of discounts,in part due to strategic pricing actions,and higher off-price margin.Selling and a

309、dministrative expense decreaseddue to lower demand creation and operating overhead expense.Lower demand creation expense was driven by favorable changes in foreign currency exchange ratesand lower sports marketing expenses,partially offset by higher advertising and marketing expenses.Operating overh

310、ead expense decreased primarily due to favorablechanges in foreign currency exchange rates,partially offset by increased wage-related expenses,increased travel and related expense and lower bad debt recoveries.FIRST SIX MONTHS OF FISCAL 2023 COMPARED TO FIRST SIX MONTHS OF FISCAL 2022On a currency-n

311、eutral basis,EMEA revenues for the first six months of fiscal 2023 increased 25%,due primarily to higher revenues in Mens.NIKE Direct revenuesincreased 32%primarily due to strong digital sales growth of 55%as well as comparable store sales growth of 12%,partially offset by store closures.Currency-ne

312、utral footwear revenues increased 27%,driven by higher revenues led by Mens and the Jordan Brand.Unit sales of footwear increased 9%,while higher ASPper pair contributed approximately 18 percentage points of footwear revenue growth.Higher ASP per pair was primarily due to higher full-price and NIKE

313、Direct ASPs,aswell as the favorable impact of growth in our NIKE Direct business.Currency-neutral apparel revenues increased 22%due primarily to higher revenues in Mens.Unit sales of apparel increased 9%,while higher ASP per unit contributedapproximately 13 percentage points of apparel revenue growt

314、h,primarily due to higher full-price ASP,partially offset by lower NIKE Direct ASP.Reported EBIT increased 17%due to higher revenues and gross margin expansion as well as lower selling and administrative expense.Gross margin increasedapproximately 160 basis points primarily due to higher full-price

315、ASP,net of discounts,in part due to strategic pricing actions and higher off-price margin.This activity waspartially offset by higher product costs reflecting increased inbound freight and logistics costs and higher other costs including inventory obsolescence.Selling andadministrative expense decre

316、ased due to lower operating overhead expense,partially offset by higher demand creation expense.Operating overhead expense decreasedprimarily due to favorable changes in foreign currency exchange rates,partially offset by increased wage-related expenses,increased travel and related expense andlower

317、bad debt recoveries.Higher demand creation expense was primarily due to higher advertising and marketing expense,partially offset by favorable changes inforeign currency exchange rates.33Table of ContentsGREATER CHINATHREE MONTHS ENDED NOVEMBER 30,SIX MONTHS ENDED NOVEMBER 30,(Dollars in millions)20

318、222021%CHANGE%CHANGEEXCLUDINGCURRENCYCHANGES20222021%CHANGE%CHANGEEXCLUDINGCURRENCYCHANGESRevenues by:Footwear$1,370$1,235 11%21%$2,603$2,684-3%4%Apparel393 564-30%-24%767 1,040-26%-21%Equipment25 45-44%-39%74 102-27%-23%TOTAL REVENUES$1,788$1,844-3%6%$3,444$3,826-10%-4%Revenues by:Sales to Wholesal

319、e Customers$897$896 0%8%$1,736$2,010-14%-8%Sales through NIKE Direct891 948-6%4%1,708 1,816-6%1%TOTAL REVENUES$1,788$1,844-3%6%$3,444$3,826-10%-4%EARNINGS BEFORE INTEREST ANDTAXES$511$569-10%$1,052$1,270-17%SECOND QUARTER OF FISCAL 2023 COMPARED TO SECOND QUARTER OF FISCAL 2022On a currency-neutral

320、basis,Greater China revenues for the second quarter of fiscal 2023 increased 6%.The increase in revenues was primarily due to higher revenues inthe Jordan Brand.NIKE Direct revenues increased 4%due to digital sales growth of 9%and the addition of new stores,partially offset by comparable store sales

321、 declinesof 4%,in part due to reduced physical traffic as a result of COVID-19 related disruptions.Currency-neutral footwear revenues increased 21%,driven primarily by higher revenues in the Jordan Brand and Mens.Unit sales of footwear increased 15%,whilehigher ASP per pair contributed approximately

322、 6 percentage points of footwear revenue growth,driven by higher full-price and NIKE Direct ASPs,as well as a higher mixof full-price sales.Currency-neutral apparel revenues decreased 24%,due primarily to lower revenues in Mens and the Jordan Brand.Unit sales of apparel decreased 28%,while higherASP

323、 per unit contributed approximately 4 percentage points of apparel revenue growth,primarily due to higher full-price ASP and a higher mix of full-price sales,partiallyoffset by lower NIKE Direct and off-price ASPs.Reported EBIT decreased 10%as lower revenues and gross margin contraction more than of

324、fset lower selling and administrative expense.Gross margin decreasedapproximately 110 basis points,primarily due to higher product costs reflecting product mix and higher input costs,lower margins in our NIKE Direct business,partiallyoffset by higher full-price ASP,net of discounts,favorable changes

325、 in standard foreign currency exchange rates and a higher mix of full-price sales.Selling andadministrative expense decreased due to lower demand creation and operating overhead expense.The decrease in demand creation expense was primarily due to lowerretail brand presentation expense,favorable chan

326、ges in foreign currency exchange rates and lower investments in digital marketing,partially offset by higher advertisingand marketing expense.Operating overhead expense decreased primarily due to favorable changes in foreign currency exchange rates,partially offset by higher wage-related expenses an

327、d other administrative costs.FIRST SIX MONTHS OF FISCAL 2023 COMPARED TO FIRST SIX MONTHS OF FISCAL 2022On a currency-neutral basis,Greater China revenues for the first six months of fiscal 2023 decreased 4%,reflecting impacts from COVID-19 related disruptions.Thedecrease in revenues was primarily d

328、ue to lower revenues in Mens and Womens,partially offset by growth in the Jordan Brand.NIKE Direct revenues increased 1%dueto the addition of new stores and a 3%increase in digital sales.This increase was partially offset by comparable store sales declines of 4%in part due to lower physicalretail tr

329、affic as a result of COVID-19 related disruptions.Currency-neutral footwear revenues increased 4%,driven primarily by higher revenues in the Jordan Brand.Unit sales of footwear increased 1%,while higher ASP perpair contributed approximately 3 percentage points of footwear revenue growth,primarily du

330、e to higher NIKE Direct and full-price ASPs and a higher mix of full-price sales,partially offset by lower off-price ASP.Currency-neutral apparel revenues decreased 21%,due primarily to lower revenues in Mens.Unit sales of apparel decreased 16%,while lower ASP per unit reducedapparel revenues by app

331、roximately 5 percentage points,primarily due to lower NIKE Direct and off-price ASPs.Reported EBIT decreased 17%due to lower revenues and gross margin contraction,partially offset by lower selling and administrative expense.Gross margin decreasedapproximately 80 basis points,primarily due to higher

332、product costs reflecting product mix and higher input costs and lower margins in our NIKE Direct business.Thisactivity was partially offset by higher full-price ASP,net of discounts and favorable changes in standard foreign currency exchange rates.Selling and administrative34Table of Contentsexpense

333、 decreased due to lower demand creation expense,partially offset by higher operating overhead expense.The decrease in demand creation expense wasprimarily due to lower retail brand presentation costs,lower investments in digital marketing and favorable changes in foreign currency exchange rates,partially offset byhigher advertising and marketing expense.Operating overhead expense increased largely