Nike — Income Statement, Cash Flows & Balance Sheet

Is Nike profitable?

Nike's revenue fell sharply and profits were nearly halved, signalling a business under meaningful pressure.

Revenue declined across the board and gross margin compressed, meaning Nike earned fewer cents on every dollar of sales. The drop in net income was amplified by a $404M increase in demand creation (marketing) spending, while operating overhead fell only modestly — so costs did not shrink fast enough to offset the revenue decline.

A one-time restructuring charge in FY2024 makes the year-over-year profit comparison look even worse than the underlying trend.

Nike took a $443M workforce-reduction charge in FY2024, which inflated that year's costs. Stripping that out, the improvement in operating overhead in FY2025 is smaller than it first appears, and the underlying profitability decline is still significant.

Where does Nike's revenue come from?

Every geographic segment and both brands declined, with North America and Greater China seeing the steepest drops.

There was nowhere to hide — every segment contracted. Greater China's double-digit decline is notable given its long-term strategic importance, and Converse fell the hardest of any unit, continuing a multi-year slide.

Footwear, which is Nike's largest product category by far, drove most of the absolute revenue loss.

Footwear accounts for roughly two-thirds of total sales, so its decline had an outsized impact on the overall result. Apparel held up somewhat better, and equipment was the lone bright spot, though it is too small to move the needle.

Does Nike generate cash?

Nike still generates real cash from its business, but operating cash flow dropped sharply alongside profits.

Free cash flow (what's left after maintaining and investing in the business) fell by about half, tracking the decline in profitability. On a more positive note, Nike deliberately cut capital spending nearly in half, which cushioned the free cash flow impact somewhat.

Nike returned meaningful cash to shareholders even as its own earnings declined.

Nike scaled back buybacks in line with lower cash generation but kept growing its dividend, a sign management is committed to rewarding shareholders even during a down cycle. Combined returns still exceeded free cash flow, drawing down the company's cash balance.

How strong is Nike's balance sheet?

Nike's cash cushion shrank noticeably but remains substantial.

The cash reduction reflects both lower earnings and the continued return of capital to shareholders. Even after the decline, Nike holds over $9 billion in readily accessible funds, which provides a meaningful buffer.

Long-term debt is manageable and near-term maturities are limited, but leverage has risen relative to earnings.

Debt itself barely changed, but because earnings fell so sharply, debt now looks heavier relative to the company's profit-generating capacity. Retained earnings — the accumulated profits kept in the business over time — flipped negative, primarily because Nike has been returning more cash to shareholders than it has been earning. The next scheduled debt maturity of any size is $2 billion in November 2026, which is manageable given Nike's liquidity position.