Nike Inc (NKE)
Profitability ratios
Return on sales
| May 31, 2025 | Feb 28, 2025 | Nov 30, 2024 | Aug 31, 2024 | May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross profit margin | 42.73% | 43.82% | 44.60% | 44.84% | 44.56% | 44.30% | 43.96% | 43.52% | 43.52% | 43.85% | 44.59% | 45.38% | 45.98% | 46.20% | 45.96% | 45.28% | 44.82% | 43.26% | 42.91% | 43.15% |
| Operating profit margin | 7.99% | 10.39% | 11.26% | 11.91% | 12.36% | 11.15% | 11.02% | 10.58% | 10.49% | 10.99% | 11.69% | 11.99% | 13.33% | 14.88% | 15.45% | 15.66% | 15.37% | 10.72% | 8.81% | 8.07% |
| Pretax margin | 8.39% | 11.07% | 11.95% | 12.71% | 13.04% | 12.06% | 12.21% | 11.70% | 12.11% | 12.50% | 13.28% | 13.52% | 14.24% | 15.23% | 15.33% | 15.27% | 14.96% | 10.40% | 8.49% | 8.14% |
| Net profit margin | 6.95% | 9.43% | 9.98% | 10.60% | 11.10% | 10.14% | 10.28% | 9.82% | 9.90% | 10.82% | 11.47% | 11.96% | 12.94% | 13.06% | 13.32% | 13.17% | 12.86% | 8.90% | 7.39% | 7.20% |
The analysis of Nike Inc.'s profitability ratios over the period from August 2020 to May 2025 reveals patterns indicative of the company's evolving profitability profile.
Gross Profit Margin:
Nike's gross profit margin demonstrated a generally stable upward trend during the initial phase, rising from 43.15% in August 2020 to a peak of 46.20% by February 2022. After reaching this high point, a slight decline ensued, with the margin decreasing to approximately 43.52% by August 2023. Subsequently, the gross margin showed signs of stabilization, oscillating marginally around the low 44% range up to November 2024, before experiencing a modest decline to approximately 42.73% projected for May 2025. These fluctuations suggest that Nike has been effective in managing cost of goods sold relative to sales, although recent trends indicate some pressure on margin sustainability.
Operating Profit Margin:
The company's operating margin exhibited notable growth from 8.07% in August 2020 to a peak of around 15.66% in August 2021, reflecting improved operational efficiency or favorable sales mix. Post-2021, the operating margin generally declined, dipping below 11% by late 2022 and early 2023. Although there was a brief rebound to approximately 12.36% in May 2024, the margin continued to decrease toward 7.99% by May 2025. This downward trend in operating profitability indicates increasing operational costs or competitive pressures impacting earnings before interest and taxes.
Pretax Margin:
The pretax margin followed a pattern similar to the operating margin, increasing from 8.14% in August 2020 to around 15.27% in August 2021, then gradually declining to approximately 11.07% in February 2025. Minor fluctuations occurred, but the overall trend points to narrowing of pre-tax profitability, possibly reflecting higher non-operational costs or marginal increases in financial expenses.
Net Profit Margin:
Net profit margins showed an initial improvement, rising from 7.20% in August 2020 to approximately 13.17% in August 2021, consistent with the peak in operating margins. Subsequently, margins declined, reaching around 9.43% by February 2025. The net profit margin's downward trajectory illustrates a compression of net income relative to revenues, influenced by operational challenges, increased expenses, or other external factors impacting bottom-line results.
Overall Summary:
Throughout the assessed period, Nike experienced improvements in profitability ratios during the early 2021 period, aligning with growth and operational efficiencies. However, from 2022 onward, profitability ratios have generally declined, with gross, operating, pretax, and net profit margins all trending downward. This trajectory indicates increasing challenges in maintaining previous profit levels, potentially due to heightened competitive pressures, rising costs, or macroeconomic factors. While initial margins reflected strong profitability, recent figures suggest a moderating profitability outlook, highlighting the importance of strategic cost management and revenue growth to restore profit margins.
Return on investment
| May 31, 2025 | Feb 28, 2025 | Nov 30, 2024 | Aug 31, 2024 | May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 10.12% | 13.14% | 14.53% | 15.73% | 16.66% | 15.39% | 15.27% | 14.80% | 14.32% | 14.52% | 14.48% | 13.76% | 15.44% | 18.06% | 18.39% | 19.08% | 18.13% | 11.41% | 9.68% | 9.06% |
| Return on assets (ROA) | 8.80% | 11.93% | 12.87% | 14.00% | 14.96% | 14.00% | 14.24% | 13.73% | 13.51% | 14.31% | 14.21% | 13.73% | 14.99% | 15.85% | 15.85% | 16.04% | 15.17% | 9.47% | 8.11% | 8.09% |
| Return on total capital | 25.59% | 35.18% | 39.00% | 42.43% | 43.74% | 42.08% | 42.85% | 41.69% | 42.24% | 42.41% | 41.77% | 39.48% | 43.68% | 48.08% | 48.04% | 50.86% | 54.34% | 35.09% | 34.76% | 36.19% |
| Return on equity (ROE) | 24.36% | 32.18% | 34.81% | 38.02% | 39.50% | 36.77% | 37.46% | 36.16% | 36.20% | 37.70% | 36.89% | 35.65% | 39.57% | 41.30% | 41.34% | 42.41% | 44.86% | 28.73% | 26.56% | 29.16% |
The analysis of Nike Inc.'s profitability ratios over the provided period reveals several notable trends and insights regarding the company's operational efficiency and profitability.
Operating Return on Assets (Operating ROA):
The Operating ROA experienced a significant upward trajectory from August 2020 through August 2021, rising from 9.06% to a peak of 19.08%. This indicates a substantial improvement in the firm's core operational efficiency, likely driven by effective cost management and revenue growth. Following this peak, the ratio demonstrated a declining trend, descending to approximately 13.76% by August 2022, and then fluctuated within a relatively narrow range of approximately 13.14% to 15.39% through to February 2024. A slight recovery in late 2023 and 2024 is observed, with the ratio reaching 15.39% in February 2024 before declining again towards the end of the period.
Return on Assets (ROA):
Nike’s ROA closely mirrors its Operating ROA with consistent improvements from August 2020 (8.09%) reaching a high of 16.04% in August 2021. This suggests effective utilization of total assets to generate earnings during that period. Post-2021, the ROA generally declined, settling around 12.87% to 14.96% in 2024, with some fluctuations, indicating a slight slowdown in overall asset efficiency. The decline becomes more evident toward the end of the projection, with the ratio falling to 8.80% by May 2025, pointing to diminished asset profitability.
Return on Total Capital:
The return on total capital exhibited considerable volatility but generally maintained high levels during 2021, peaking at 54.34% in May 2021. Afterward, there was a downward trend, although values remained relatively strong until late 2024, fluctuating in the low 40s percentile. Notably, a downward shift is observed from late 2024 onward, with the ratio decreasing to 25.59% by May 2025, signaling reduced effectiveness in generating returns relative to total capital employed.
Return on Equity (ROE):
Nike's ROE showed a marked increase from 29.16% in August 2020 to an all-time high of 44.86% in May 2021, reflecting strong profit generation relative to shareholders' equity, possibly driven by higher net income margins and leverage. The subsequent periods exhibited stabilization around 36-37%, with slight fluctuations. A more pronounced decline is apparent toward the end of the period, with the ROE falling to 24.36% by May 2025, aligning with the downward trend seen in other profitability ratios. This decline suggests increasing challenges in generating equity returns, potentially due to profit margin pressure, increased costs, or capital structure changes.
Summary:
Overall, Nike’s profitability ratios experienced a significant improvement during 2020–2021, driven by robust operational performance amidst growing sales and efficient management. However, this was followed by a gradual decline starting in late 2021 through to the forecasted period ending in 2025. The trends suggest that operational efficiencies, while initially strong, faced headwinds or market challenges, leading to reduced asset, capital, and equity returns. The trajectory highlights a period of strong profitability peaks, succeeded by stabilization and then decline, implying the need for strategic adjustments to sustain or improve profitability in the future.