Good afternoon, everyone. Welcome to NIKE, Inc. Fiscal 2017 First Quarter Conference Call. For those who need to reference today’s press release, you’ll find it at investors.nike.com. Leading today’s call is Nitesh Sharan, Vice President, Investor Relations and Treasurer. Before I turn the call over to Mr. Sharan, let me remind you that participants on this call will make forward-looking statements based on current expectations and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in the reports filed with the SEC including forms 8-K, 10-K, and 10-Q. Some forward-looking statements concern future orders that are not necessarily indicative of changes in total revenues for subsequent periods due to mix of futures and at-once orders, exchange rate fluctuations, order cancellations, changes in the timing of shipments, discounts and returns which may vary significantly from quarter-to-quarter. In addition, it is important to remember a significant portion of NIKE, Inc.’s continuing operations including equipment; Converse, Hurley, and NIKE Golf are not included in these futures numbers. Finally, participants may discuss non-GAAP financial measures, including references to wholesale equivalent sales and constant dollar revenue. References to wholesale equivalent sales are only intended to provide context as to the overall current market footprint of the brands owned by NIKE, Inc. and should not be relied upon as a financial measure of actual results. Similarly, references to constant dollar revenue are intended to provide context as to the performance of the business eliminating foreign exchange fluctuations. Participants may also make references to other non-public financial and statistical information and non-GAAP financial measures. Discussion of non-public financial and statistical information and presentations of comparable GAAP measures and quantitative reconciliations can be found at NIKE’s Web site, investors.nike.com. Now I’d like to turn the call over to Nitesh Sharan, Vice President, Investor Relations and Treasurer.

Thank you, operator. Hello, everyone and thank you for joining us today to discuss NIKE, Inc. fiscal 2017 first quarter results. As the operator indicated, participants on today’s call may discuss non-GAAP financial measures. You will find the appropriate reconciliations in our press release which was issued about an hour ago and at our Web site, investors.nike.com. Joining us on today’s call will be NIKE, Inc. Chairman, President and CEO, Mark Parker, followed by Trevor Edwards, President of the NIKE Brand, and finally you will hear from our Chief Financial Officer, Andy Campion, who will give you an in-depth review of our financial results. Following their prepared remarks, we will take your questions. We’d like to allow as many of you to ask questions as possible in our allotted time. So, we would appreciate you limiting your initial questions to two. In the event you have additional questions that are not covered by others, please feel free to re-queue and we will do our best to come back to you. Thanks for your cooperation on this. I’ll now turn the call over to NIKE, Inc. Chairman, President and CEO, Mark Parker.

Thanks, Nitesh, and hello everyone. This summer proved just how powerful sport can be around the world. Some of the greatest performances of all time entertained us, and in the process inspired a new generation of athletes to get moving. At the same time, the look of sport continues to influence everyday style around the world. As a result, new brands are entering into the athletic landscape. The activewear market continues to outpace the overall apparel and footwear market, which itself continues to outpace global GDP growth. It’s a great time to be in the business of sports and as the market leader, this is a great time to be NIKE. We are on the frontend of all this growth, a driving force behind the expanding market. We not only see the upside across the landscape, we have both the scale and the skill to act on it. We believe in our strategy and in our complete offense. It’s proven to be NIKE's greatest competitive edge. We win now by editing our opportunities aggressively, we sharpen our execution, and we focus on those with the greatest impact and highest return and we build for the future by intensifying our investments in our brand and innovation. NIKE is on the offense like never before, driving up a global athletic market that holds tremendous potential for growth. Q1 is the start of what’s going to be a strong year for our company. Let's review the financial highlights. NIKE, Inc. first quarter revenues were up 8% growing to $9.1 billion. On a currency neutral basis, NIKE, Inc. revenues grew 10%. Gross margin was 45.5%, down 200 basis points to prior year. Earnings per share increased 9% to $0.73. And we delivered ROIC of 30.5%. It was the summer of amazing sports moments and…

Thanks, Mark. Q1 is always an exciting quarter for the NIKE brand but this past summer was something really special. It was full of global sports moments where our ability to deliver new and innovative products and create powerful consumer connections was on full display. And with that, we’re off to a good start to the year. On a constant currency basis, NIKE brand revenue grew 10% for the quarter led by double-digit growth in all international geographies. NIKE brand DTC revenue was up 22% driven by online growth of 49%, new store growth 10%. And finally global futures are up 7%. At NIKE, we take pride in developing authentic relationships with consumers all over the world. And this summer of sport highlighted how we take full advantage of the world's best athletes to deepen those connections. Our Unlimited You campaign during the Olympics offered an excellent example of that power with this message of inviting old athletes to push their limits reaching more than 480 million views online and 1.1 billion TV impressions around the world. For us, this energy is our engine as it continues to drive excitement and momentum for the NIKE brand. And ultimately this brand energy comes to life within our categories and through our geographies. Let's take a look starting with our categories. First, running. Growing double digits, this was the highest revenue quarter ever for our performance running category with strong growth across footwear and apparel. Leading the way for footwear were key products that translate our rich understanding of runners into groundbreaking performance innovations, like the LunarEpic Low and the Air Zoom Pegasus 33. What's more, the reinvention of our free technology reignited demand for one of the most iconic footwear franchises around the world. And with our deep passion for running…

Thanks, Mark and Trevor, and good afternoon to everyone on the call. Strong growth, expanding profitability and high returns on invested capital are the three pillars of NIKE's financial strategy and our consistent delivery of results across all three of those dimensions over the long term is what continues to set NIKE apart in terms of creating value for shareholders. To be clear, first and foremost, NIKE is a growth company. We’re obsessed with bringing inspiration and innovation to every athlete in the world. And with more than 7 billion athletes on the planet, that’s no small feat. We are relentlessly in pursuit of our mission and our pace and intensity always accelerates around the biggest moments in sport. So, it should come as no surprise that we’re off to a great start against our growth agenda for fiscal year '17. As Mark noted, the past 90 days have been a hit parade for the NIKE brand and the amazing athletes and teams that we serve. From LeBron and Kyrie winning the NBA Finals in dramatic fashion all the way through to the unprecedented medal-winning performances of hundreds of NIKE athletes at the Olympic Games in Rio, those are the moments that bring out the best in NIKE pushing our brand and our pipeline of innovative, beautifully designed products to new heights. Powered by this inspiring summer of sport, our revenue grew to $9.1 billion in the quarter, up 8% on a reported basis and 10% on a currency neutral basis. Expanding profitability is another key pillar of NIKE's financial strategy. While margins contracted in the quarter, driven by foreign exchange and several temporary or discrete items, we continue to benefit from our more systemic, long-term drivers of margin expansion, including higher in-line average selling prices and benefits associated with…

[Operator Instructions]. Your first question is from Kate McShane from Citi.

Thank you. Good afternoon. Thanks for taking my question. My first question was just on innovation. Trevor, you went through a lot of detail and Mark too about innovation and a lot of the enhancements you’ve made over time. Just wondered if you could walk us through your view on introducing new platforms and how you reconcile that with just improving the innovation that you already have set forth?

Yes, actually that’s a good question. Let me take that. First of all, on a little more macro level, I think as I mentioned the current environment really plays right into NIKE’s strengths. We know that the athletic footwear and apparel segments being so strong and outpacing the rest of the footwear and apparel industry. We’re actually quite well represented in leading product on both the performance and the sportswear side of the business, as we talked about. There’s many things that we’re excited about including some of the product that’s in the market right now that I think has a lot of upside opportunity to more completely leverage things in performance, products and performance. Signature we talked about, LeBron Solider, the KD9, new KYRIE, Paul George signature shoes, of course the Air Jordon XXXI. Those are great examples. Running, we talked about the LunarEpic Low, really incredible new cushioning system there for a great ride. Pegasus, the update on a real classic in apparel. The running performance category both tops and bottoms, women’s sports bras. Those are some examples on the performance side. And then on the sportswear side, we’ve got classics that we’ve reissued as well as new updates, including innovation as part of those classics; Air Force 1, Air Max, Presto, Sock Dart, Roshe Two, Huarache just to name some of those. In terms of new upcoming innovation in Q2 we’ve got more signature basketball coming. The LeBron 14 is in the on-deck circle. That’s another great signature product for LeBron. The Air VaporMax, which we talked about in March, which is a phenomenal new modern interpretation of NIKE air cushioning, it’s incredible both in how it performs but how it looks. We have no iterations of free product. In apparel, we’ve got new base layer technology,…

Thank you so much. And just a follow-up question. I know you’ve been very focused at cleaning up the inventory in the premium channels. Wondered if you could update us on how inventory looks at the non-premium channels currently? And any other regional commentary you can give on how inventories look around the world? Thank you.

Yes. Hi, Kate. It’s Andy. I’ll start on that one. Overall, we feel great about the progress that we’re making from an inventory or maybe more broadly a supply and demand management perspective. As I noted, our overall enterprise inventory growth was driven by only a 3 percentage point increase in units. And actually we saw a decline in North America in particular in inventory both in the value of that inventory as well as the units actually declining even greater. So, while I noted that in margin, off-price sales had a negative mix impact, that was versus the prior year in the first quarter. We’re actually continuing to see those off-price sales tighten up as we make the progress we told you we would in terms of returning to a healthy pull market in North America.

And maybe just to give a broader context around the inventory of the marketplace, I would say really around the world our in-line channels are very healthy really across the board. So we feel that we’ve made great progress in North America to make sure that we have obviously cleared the excess inventory and we’re bringing in new products into the marketplace and we’re seeing the result of that. Going forward, we will continue to manage the supply into the marketplace proactively to make sure that we maintain a pull market. If you look across to Western Europe, the inventory is actually in line with revenue growth. Maybe the only difference would be on the value side. You’re certainly seeing foreign exchange have some impact. Then in China we’re seeing inventories very healthy there and you’ve seen some inventory build. As we prepare for singles day, which is obviously a big impact and so we’re excited about that. So across the board, we feel very confident about the marketplace and the inventory position that we’re in today and we’re just excited about the pipeline and products that are coming through.

Thanks, Kate. We’ll take the next question please.

The next question is from Jim Duffy from Stifel.

Thank you. Good afternoon. Andy, can you share more detail on the magnitude of the discrete factors influencing the gross margin, specifically maybe itemize the impact of revenue in the golf business, the impact of the margin from additional off-price sales?

Yes, I would say the two biggest drivers of the margin contraction versus prior year were the bucket of discrete or temporary items that we referenced in foreign exchange. So those items most notably included the shift of operating overhead expenses into cost of goods sold. So that is a movement within our P&L versus a change in trajectory. And as I mentioned, it’s not always that evident to those on the call or otherwise that included in gross margin or in cost of goods sold is not just the product cost but also the investments in the team and resources that we deploy against innovation in Manufacturing Revolution and otherwise. Golf, as you highlighted, was another factor within gross margin both some charges that we took as well as the impact of exiting the golf equipment business. Frankly, it’s a great example of the edit to amplify approach that we’ve talked about in the past and we’ve talked about on this call increasingly being applied to operating overhead. That is having an impact on our margin in the short term and will over the balance of the year. It’s not reported as a discontinued operation. It’s in our numbers. But we are making those decisions because we believe our long-term focus, in other words what we will amplify as our focus on footwear and apparel and drive greater growth and profitability there, and we think we’ll see the benefits in margin and return on invested capital from the decision we made to edit.

Okay. Thanks. My next question is just on general trends. At the moment, lifestyle fashion trends appear to be gaining in popularity while on a relative basis performance appeal seemingly is softer. Can we speak to any historical precedents for this and how those trends played out in past cycles?

There’s always been a shift back and forth from a consumer standpoint. I’ll just back up and say though that sport in general and innovation have always been and I think always will be two of the most powerful drivers of culture and style. NIKE always – we’ve always started with the athlete. That’s how we create the insight to drive innovative product and then we amplify that across the portfolio, and sportswear is really important means of doing that. We see tremendous growth in all areas, specifically in both dimensions of performance and sportswear. We just had our most successful quarter ever for performance running and our sportswear business at the same time continues to be a massive growth driver for the company. So it’s really for us is the balance between the two and the relationship between the two. That intersection between performance and style I think is stronger than ever. And by the way, innovation is a huge part of creating a new esthetic and lifestyle product does prioritize I think at this stage with the consumer comfort and lightweight and breathability. So performance is really an element of sportswear for NIKE and that’s what helps to separate and distinguish NIKE in the marketplace.

I’ll maybe just add and say been there, done that certainly around as you approach the idea around sportswear and certainly the lifecycle that we go through. We continue to believe that our performance business is actually what is at the root of what drives continued innovation in the marketplace. We then leverage that point of view to create sport style innovation. And I think we’re in the best position where we can actually do both. We can serve the consumer who want a performance product to wear as a lifestyle product but also something that he can wear to compete – he or she to wear to compete in. And again, this current environment is great for us. This is when we are at our best and that’s why I said been there, done that and we’ll do it again. Just only it’s bigger and certainly it’s a great opportunity for us.

Thanks, Jim. We’ll take the next question please.

The next question is from Lindsay Drucker Mann from Goldman Sachs. Lindsay Drucker Mann, your line is open.

We’ll go to the next question please.

The next question is from Omar Saad from Evercore ISI.

Thank you. Thanks for the all the information, guys. Two quick questions. The first one, you really talked a lot about the Manufacturing Revolution. It seems like we maybe at an inflection here. The announcement with Apollo and opening plants in the U.S. Can you tell me – you first started talking about this a few years ago, what’s happening now that you’re seeing this inflection? What’s the change in that part of the supply chain that really gives you the confidence to accelerate – push on the accelerator there?

Well, we’re actually starting to take some of this innovation to scale. I think that’s the short answer. For us, this is about getting product to the consumer faster, it’s about lowering our product cost as we talked about, really trying to drive greater labor productivity, less waste in the system, new design capabilities. These are all parts of Man Rev. I think though the difference, the inflection point that you mentioned, is really more about taking it to scale. With partners like Flex but then across our whole manufacturing partner base, so we’re really modernizing not just with any one partner but using that innovation to drive it across the whole base. So we talked about Flex and footwear, Apollo is a more recent focus for us on the apparel side. Our investment in the advanced product creation center here on the NIKE campus, some amazing innovations in looking at disruptive methods of make. Obviously, we’re aware of Flyknit. 3-D printing I think has got a lot of potential for scale. So we’re starting to see the impact at a greater level as we get quarter-to-quarter and I think that’s going to continue to grow.

Omar, I’d just add. Today, we’re seeing gains in the tens of millions of dollars per quarter and we certainly expect to see that expand over the long term. The tangible results that we’re seeing today are primarily driven by automation and being closer to market. In terms of automation specifically, we’re seeing greater yield in terms of our use of materials. So less waste means lower cost and we’re also improving the throughput in our manufacturing lines; in other words, improving labor productivity. I guess in short I’d say we’re increasingly confident the Manufacturing Revolution now across both footwear and apparel will have a significant impact on both revenue and margin long term. And as you know, as you start to see returns on your investment that starts to build momentum. So we remain bullish on that opportunity.

Thanks. And quickly I wanted to ask about the HyperAdapt platform that’s gotten a lot of buzz the last week or so. Help us kind of imagine where this platform can go? Is it really limited to shoes that can self-lace and tie themselves or is this the first foray and basically kind of a shoe with a power source that’s living and breathing, can adapt, sense and record data and is that the direction this might go in the future?

B. Absolutely, it’s sort of a gateway as to a whole new era of what we call personalized performance and that’s not just in terms of fit, it’s in terms of cushioning, support real time. That’s what is exciting about it. There’s a lot I’d love to talk about which I sometimes say, but I really can’t. But I’ll – suffice it to say at least at this stage that the HyperAdapt or the adaptive performance technology is not just centered on fit. We’ve got so many other opportunities from a complete performance standpoint. And what you’ll see coming out very soon in Q2 will be the tip of an iceberg that I think is actually quite compelling.

Thank you.

Thanks, Omar. Operator, we have time for one more question please.

The last question is from Lindsay Drucker Mann from Goldman Sachs.

Thanks. Sorry for that and thanks for letting me queue back in. Andy, I wanted to ask you about your comment on U.S. futures relative to sales. You said that sales should be outpacing futures. Can you give us any guidelines on how we should be thinking about the rate of sales or future growth for the U.S. division into the back half?

Sure, Lindsay. I think the key driver to keep in mind is sell-through to consumers. We’re seeing much tighter supply and demand and stronger sell-through to consumers. So in the same vein as some of the comments that I made around futures, futures are not really a proxy for revenue. In fact, you don’t need a proxy for revenue guidance because we provide that guidance. Really futures are one of the drivers. There are other dimensions of the business, be that what we call at-once or prop business, obviously, our factory stores. There are a number of other dimensions but one of the primary drivers of that greater growth on the revenue line as compared to futures in any given period is that strong sell-through. And as Trevor I think spoke about in a fair amount of detail, we’re seeing a return to a strong healthy pull market. And again that’s also evidenced or corroborated by the declining inventory in North America.

So maybe to ask another way, how should we thinking about the revenue growth outlook for the U.S. market into the back half of the year and how should we be thinking about the timeline to returning the U.S. business towards your long-term algorithm of revenue growth and some margin expansion?

As you know, Lindsay, we don’t give geography-by-geography quarterly revenue guidance. What I would tell you is precisely what we told you on the call, which is we do see revenue outpacing futures. And I’d reiterate our view on North America is the geography that we shared at our Investor Day in October. We see North America as a high-single-digit growth geography out to 2020. We don’t manage in a strict way to those measures in any given quarter but we’re as confident as ever in that trajectory driven by our brand and our product.

I’ll just say the brand in North America remains incredibly strong and we’re seeing really just great momentum across the business. As we obviously launched a lot of the new products into the marketplace, certainly the Solider 10, the KD9, XXXI, the Epic Low, I can continue naming a few but the point there would be that the marketplace just continues to see very great response to those items. So we feel very good about North America and its continued growth and the brand is as strong as ever. And we’re just seeing momentum in the marketplace and we’re excited about the pipeline of great products that we have coming. So, again, we just look forward to it. So it’s all good.

Okay, great. Thanks.

Thank you, Lindsay. That’s all the time we have for today. Thank you all for joining us. We look forward to speaking with you next quarter.

This concludes today’s conference. You may now disconnect.