Nike Inc. (NYSE:NKE)

The common-size income statement reveals significant fluctuations in profitability and expense management over the observed period. Revenue consistency at 100% across all periods allows for a focused analysis of expense ratios and their impact on net income. A notable pattern emerges in the cost of sales, which generally remained between 53% and 57% of revenues, with a peak at 62.73% in May 31, 2020.

Gross Profit Margin

Gross profit as a percentage of revenue demonstrated relative stability, generally fluctuating between 43% and 46%. However, a substantial dip to 37.27% occurred in May 31, 2020, coinciding with the highest cost of sales percentage. Recent periods (2024-2025) show a slight downward trend, falling to a low of 40.27% in February 28, 2023, and remaining subdued through the end of the observed period.

Operating Expenses

Operating expenses, encompassing demand creation, operating overhead, and selling & administrative costs, exhibited considerable variability. Demand creation expense showed a significant increase in May 31, 2020 (13.04%) before returning to a more typical range of 6% to 9%. Operating overhead expense also peaked in May 31, 2020 (37.51%) and again in May 31, 2025 (37.38%). Selling and administrative expense consistently represented the largest portion of operating expenses, ranging from approximately 28% to 34% of revenues, with a pronounced peak of 50.55% in May 31, 2020. The combined effect of these expenses significantly impacted operating income.

Operating Income

Operating income as a percentage of revenue experienced substantial swings. A significant loss was recorded in May 31, 2020 (-13.27%), directly attributable to the increased cost of sales and operating expenses. Following this, operating income generally recovered, peaking at 17.34% in February 28, 2021. However, a downward trend is observed in more recent periods, with operating income falling to 4.61% by February 28, 2026.

Net Income

Net income mirrored the trends in operating income, with a substantial loss in May 31, 2020 (-12.51%). Subsequent recovery led to a peak of 15.30% in February 28, 2021. The net income margin has declined in recent periods, reaching a low of 1.90% in February 28, 2023, and remaining below 7% through the end of the observed period. Fluctuations in interest and other income/expense had a relatively minor impact on net income compared to the core operating expenses.

The period from May 31, 2020, through November 30, 2021, appears to represent a recovery phase following a period of significant disruption. However, the more recent trend indicates increasing pressure on profitability, potentially due to rising operating expenses and a slight decline in gross profit margin. The consistency of revenue suggests that the challenges are primarily related to cost management and operational efficiency.