Nike Inc (NKE)
Profitability ratios
Return on sales
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 42.73% | 44.56% | 43.52% | 45.98% | 44.82% |
| Operating profit margin | 7.99% | 13.03% | 9.87% | 12.49% | 13.79% |
| Pretax margin | 8.39% | 13.04% | 12.11% | 14.24% | 14.96% |
| Net profit margin | 6.95% | 11.10% | 9.90% | 12.94% | 12.86% |
The analysis of Nike Inc.'s profitability ratios over the period from 2021 to 2025 reveals notable fluctuations and trends.
Gross Profit Margin:
This ratio demonstrates a relatively stable yet slightly fluctuating trend. It increased from 44.82% in May 2021 to 45.98% in May 2022, indicating improved efficiency in managing the cost of goods sold relative to revenue during that period. However, a decline to 43.52% occurred in May 2023, suggesting increased costs or pricing pressures. Subsequently, the margin increased again to 44.56% in May 2024 before declining to 42.73% in May 2025, reflecting some volatility but generally maintaining a level close to the mid-40s. This stability indicates that gross profit efficiency remains relatively resilient despite market fluctuations.
Operating Profit Margin:
This margin exhibits more pronounced variability. It declined from 13.79% in 2021 to 12.49% in 2022 and further to 9.87% in 2023, suggesting increased operating expenses or pressures on operational efficiency. A recovery is observed in 2024, with the margin reaching 13.03%, surpassing the 2022 level, but it then diminishes substantially to 7.99% in 2025. The overall downward trend in operating margin points to challenges in controlling operating costs or changes in operational dynamics impacting profitability at the operating level.
Pretax Margin:
The pretax margin mirrors the operating margin's patterns. It decreased from 14.96% in 2021 to 14.24% in 2022 and further declined to 12.11% in 2023. There was an improvement in 2024 to 13.04%, but a significant drop occurs in 2025 to 8.39%. The fluctuations suggest variable impacts of non-operating items, taxes, or other financial factors influencing pre-tax profits, with recent years evidencing a decline.
Net Profit Margin:
This ratio reflects the overall bottom-line profitability after all expenses. It was relatively stable from 2021 to 2022, remaining around 12.86% to 12.94%. However, a drop is noted in 2023, with the net profit margin decreasing to 9.90%. A recovery is observed in 2024, reaching 11.10%, yet it falls sharply to 6.95% in 2025. The net profit margins demonstrate vulnerability to fluctuations affecting profitability either through operational issues, cost management, or external economic factors.
Overall, Nike Inc.’s profitability ratios from 2021 to 2025 show periods of stability interrupted by declines, particularly marked in 2023 and 2025. While there is evidence of recovery in some margins in 2024, the sharp decreases in 2023 and 2025 highlight ongoing challenges in maintaining consistent profitability levels, possibly linked to rising costs, market conditions, or competitive pressures.
Return on investment
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 10.12% | 17.55% | 13.47% | 14.47% | 16.27% |
| Return on assets (ROA) | 8.80% | 14.96% | 13.51% | 14.99% | 15.17% |
| Return on total capital | 0.00% | 43.74% | 42.24% | 43.68% | 54.34% |
| Return on equity (ROE) | 24.36% | 39.50% | 36.20% | 39.57% | 44.86% |
The profitability ratios of Nike Inc. over the specified period demonstrate a pattern of variability and indicate shifts in the company's operational efficiency and return generation.
Operating Return on Assets (Operating ROA) experienced a decline from 16.27% on May 31, 2021, to 14.47% on May 31, 2022, followed by a further decrease to 13.47% in 2023. However, there was a notable uptick in 2024, with the ratio increasing to 17.55%, before a subsequent decline to 10.12% in 2025. This fluctuation suggests periods of operational strain or efficiency challenges, with a recent sharp decrease potentially reflecting pressures on core operations or asset utilization.
Return on Assets (ROA) aligns closely with the Operating ROA, decreasing from 15.17% in 2021 to 14.99% in 2022, and further to 13.51% in 2023. The ratio then increased to 14.96% in 2024, indicating some recovery, before a significant drop to 8.80% in 2025. Overall, the ROA trend indicates a moderate downward trajectory, especially pronounced in the most recent period, reflecting reduced overall profitability relative to total assets.
Return on Total Capital reveals a declining trend from 54.34% in 2021 to 43.68% in 2022 and further to 42.24% in 2023. The ratio remains relatively stable in 2024 at 43.74%, but by 2025, it sharply declines to zero, which may signal extraordinary circumstances or accounting changes affecting total capital or profitability measurement. The substantial decrease suggests a significant erosion of capital efficiency in generating returns.
Return on Equity (ROE) similarly exhibits a downward trend from 44.86% in 2021 to 39.57% in 2022 and 36.20% in 2023. There was a slight improvement in 2024, with ROE rising to 39.50%, but it declined again in 2025 to 24.36%. This pattern indicates diminishing shareholder returns over the period, with the latest figures pointing to decreased equity profitability.
In summary, Nike Inc.’s profitability ratios from 2021 to 2025 reveal an overall decline in operational and shareholder return metrics, punctuated by brief periods of recovery. The recent sharp fall in some ratios, particularly the return on total capital and ROE, suggests potential challenges in sustaining previous levels of profitability, possibly influenced by external economic factors, strategic shifts, or industry-specific pressures.