Footwear Insight - Business Report Quarterly

Sales: Declined by 10% to $11,589 million in quarter ended Aug. 31. North American sales tumbled 14% to $3.21 billion with Nike Digital (-15%), direct (-11%), wholesale (-11%), and stores (-1%) each falling. Total Nike brand footwear sales contracted by 11% to $7.46 billion Operating Profit: -24.6% to $1,209 million from $1,604 million. Gross margin: Rose by 120 basis points to 45.4% from 44.2% due to lower product costs, lower warehousing and logistics expenses and benefits from strategic pricing actions. Key developments: Realized lower sellthrough rates over the summer and flat Spring 2025 orders, which has led company to anticipate a "mid- single-digit" revenue decline for the final three quarters. Has abandoned its FY25 financial guidance as it awaits new president and CEO Elliott Hill to lead the group back. Admits comeback will take time but intends to ride newness and innovation to make it happen. Bullish on a running resurgence for the brand with men's and women's spring orders up double-digits globally. Orders also rose by double- digits in Q1 in the North American run specialty segment. Sales: Total Q2 revenues increased 23.4% in Swiss francs to approximately $668.5 million. Footwear sales stepped up 26.7% to approximately $638.8 million. Americas' sales raced ahead by 25.8% year-over-year to the equivalent of $435.7 million as the brand continues to take market share in the specialty run channel. Overall DTC sales lied 28.1% higher to approximately $246.6 million. Operating profit: +20.0% in francs to approximately $55.7 million. Gross margin: +40 basis points year- over-year to 59.9%. Key developments: Continues to expect a FY gross margin of approximately 60% and reported net sales of 2.26 billion Swiss francs ($2.66 billion). Focused on advancing its U.S. warehouse automation project as part of medium-term effort to scale up its North American distribution capabilities. Sales: Revenues fell by 5% year-over- year in Q2 to $63.9 million. But the Florsheim and Nunn Bush brands were up 3% and 8%, respectively, for the period ended June 30. Operating profit: -0.6% to $6.66 million. Gross margin: +60 basis points to 43.9% on lower inventory costs. Key developments: Encouraged by strength of at-once business headed in H2 despite conservative ordering patterns by many footwear retailers. Working to introduce more hybrid and athleisure styles. Sales: Revenue from ongoing business hit $424.8 million to exceed guidance by 3.6% as demand trends and supply chain execution continued to improve. Year-over-year sales trend improved to -18.4% in Q2 from -24.5% in Q1. Operating profit: -37% to $29.1 million. Gross margin: +440 basis points to 43.1% due to lower supply chain costs and lower sales of end-of- life inventory combined with less promotional ecommerce sales and a favorable distribution channel mix. Key developments: Progress is being made in the turnaround for the Saucony and Merrell parent. FY forecast from ongoing business is now $1.71-$1.73 billion with annual gross margin still pegged at 44.5%, up 460 basis points. n e 12 brand and retail capsules in the Scorecard offer a deeper dive into some of the companies featured in the Index. e 12 companies highlighted in the Scorecard will rotate each issue. 12 Footwear Insight Business Report Quarterly ~ Q3 October 7 2024 footwearinsight.com BRAND & RETAIL SCORECARD QUARTER 3 ENDING 9/23/24

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