Good afternoon, everyone. Welcome to NIKE, Inc.’s Fiscal 2017 Second Quarter Conference Call. For those who need to reference today’s press release, you’ll find it at https://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, please 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. Following the conference call, the futures order schedule will be purchased through financial schedules on the NIKE Investor Relations website. 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 website, https://investors.nike.com. Now, I would 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.'s fiscal 2017 second quarter results. As the operator indicated, participants on today 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 website, 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 happy holidays everyone. Q2 was another quarter of positive momentum for NIKE, Inc. Let's start with the numbers. NIKE, Inc.'s second quarter revenues were up 6% growing to $8.2 billion, and on a currency neutral basis NIKE, Inc. revenues grew 8%. Gross margin declined approximately 140 basis points to 44.2%. Earnings per share increased 11% to $0.50. And we delivered ROIC of 31.3%. In the fast moving world of sports and youth culture, results like these come from our obsession with the consumer of knowing what they need and what inspires them. That’s what drive innovation at NIKE and innovation is what drives growth. Our approach has fueled 28 conservative quarters of growth at a scale that is unrivaled in our industry. We have a strong track record and more importantly we have an even better runway ahead. With the energy we see in sports right now along with today's more active lifestyle, it's no surprise that our industry continues to attract competition. As in sports, competition is a positive thing, it sharpens our focus. And we know there are areas in the short-term, but we haven’t executed as precisely as we would have liked. As good as we are, we can be even better by hyper-focusing on our most compelling growth opportunities. Starting with the consumer who is not asking for more products but looking for more choice of the products they love. We are responding by giving the consumer more distinctive options with fewer products, what we call edit to amplify. Reducing styles and highlighting key items in concepts has the huge impact across our entire value chain. And this is especially important in North America and our key geographies as we better manage supplying demand to drive productivity and profitable top line growth, while…

Thank you, Mark. Happy holidays everyone. The NIKE brand delivered another solid quarter of growth in Q2. As always my remarks are on a constant currency basis. The NIKE brand revenue grew 8% lead by broad-based growth across our largest geographies and categories. And NIKE brand DTC revenue increased 25% driven by continued strong growth in digital e-commerce, 11% comp store growth and new store expansion. In Q2, we attacked opportunities across our portfolio to strengthen and extend our leadership position. In particular, I'd like to mention three of note. First, we're seeing incredible momentum in basketball, to be clear basketball is back. Second, we have made tremendous progress aligning supply and demand in North America, returning this important geography to a pull market. And third, we continue to see strong and steady momentum in greater China as we to invest in that market to fuel growth. Now, let's take a look at some of our key categories starting with running. Running is our largest performance category and continues to be a tremendous source of innovation and growth with Q2 revenue growing at a double digit rate. It also continues to be one of our most influential and largest drivers of our sportswear business. Now, even as the weather turns, our runners never slowdown. They inspire us to provide solutions to help them get out and run more. Mark mentioned the popular LunarEpic, and in Q2, we launched the LunarEpic Flyknit Shield with its all weather construction design to keep the foot warm and dry. It's another example of how NIKE expands the market by adapting our popular platforms to new audiences and serve consumer needs. Other running footwear successes included the Pegasus 33 and the Air Max 2017, which features up Flymesh upper and the full length Max Air…

Thanks, Mark and Trevor. And, happy holidays to everyone on the call. The enduring passion for sport around the world and consumers desire to lead a more active lifestyle continue to fuel new opportunities for growth in our industry. And the growth potential in our industry has always attracted competition. That said, as Mark noted, Q2 was NIKE's 28 conservative quarter of growth. Each and every quarter over the past seven years, NIKE has grown despite healthy competition within our industry, extreme macroeconomic volatility, discontinuities in the retail landscape and rapidly evolving trends in consumer preferences. That track record does not happen by accident. As the leading brand in sport, we are on the offense always. We take nothing for granted. We continuously evaluate how we can better leverage our unrivaled portfolio of businesses and competitive advantages to grow the market and win. From a brand and business perspective, we are obsessed with staying one step ahead of consumer expectations and maintaining that focus and pace is what ultimately separates NIKE from the competition over the long haul. From a financial perspective, we're obsessed with delivering. One strong growth, two expanding profitability, and three high returns on invested capital. We continue to manage all of the operating levers in our business to deliver across all three dimensions of our financial model, and that had afforded NIKE unmatched scale and resources. Like the world's best marathoners, the results that we post always reflect moments where we have pushed the pace and moments where we took stock of the circumstances, and made adjustments. In the second quarter we executed on the plan that we shared with you 90 days ago. We pushed the pace with innovation because as Mark noted there is no such thing as sustained growth without innovation. We also…

[Operator Instructions] Your first question comes from Bob Drbul from Guggenheim Securities. Your line is open.

I guess the first question that I have is, on the commentary around basketball. How does that fit into the revenue outlook for the back half of the year? Is that more the basketball business turning in the fourth fiscal quarter? Where are you seeing the turn in basketball, Trevor? Can you talk a little bit more about that?

Yes, absolutely. One other things that we get a chance to see is we get a chance to see basketball sort of in line. And what we are seeing is basketball is back, and the consumer response to the latest signature styles has been incredibly strong. And we're seeing some more energy moments to come. But what we've definitely seen in North America is we've seen healthy sell-throughs on the KYRIE 2s, the LeBron Soldier's, the KD 9s, the KOBE A.D. the Jordan XXXI. So, we're seeing a really comprehensive shift towards energy coming towards basketball, both in the numbers but also when you're on the street, on the ground, you're seeing it both on the court and off the court. One of the things I would like do at basketball is maybe broadened the context, so that we’re also thinking about our sportswear business, which is a part of basketball. And in sportswear, the Air Force 1 styles continues to actually perform very well, the Special Forces Air Force 1 was exceptionally strong, the Foamposite was also good, and Jordan, both on its performance Jordan 31 and the retro style did really well. So, all of those really put us in a position where we feel that we are poised to get ready for the NBA partnership as we go into the next year. So, all the energy signs are there for us, and so we see the back half continuing to accelerate in our basketball business.

And then I just have a follow-up question on -- so when you look at the inventory levels, I guess, specifically in North America and you look at the gross margin guidance. In retail today, there is a lot of the 25% off throughout many of the -- I think, the mid-tier players. So, can you just help us reconcile where you are with the clean inventory position that you talk about, North America being down 4%? And how -- what's happening at retail this month for instance is altering your outlook at all, if any?

Yes, Bob, this is Andy, I'll start. Happy holidays, by the way. As you noted, our inventory in North America is down and as we talked about on the call, we feel like we've made a tremendous amount of progress in tightening supply and demand and persisting ourself for more sustainable profitable growth in the second half. Just to give you some dimension on that, we have had very strong sell-through and in in-line. We had a great holiday season. We continue to see tremendous growth in nike.com, for example. And I'll remind you that we also have our factory store business, and that has been a great channel or outlet for us to take the actions that were required to rebound supply and demand. And we've seen phenomenal traffic and conversion and comp store growth in that dimension of the business. So, feel great from that perspective. And then, I'll hand it over to Trevor. But as Trevor noted, we are seeing tremendous opportunities for growth in some of the biggest and most important categories in North America; that being, sportswear, which continues to deliver strong growth, both footwear and apparel; we feel like we've really reignited through our momentum in basketball. And as Trevor said that -- we're fast approaching the launch of the NBA partnership. So, again, tighter inventories continued growth and a return to gross margin expansion in North America is what we see.

Yes, I think just to touch on what Andy just hit on. I would say that there is a more promotional activity in the marketplace; having said that when we tighten supply and demand we’re seeing increasingly stronger full-price sales so we feel good about that. In North America, again, we are seeing our sell-throughs perform at a much better level. The other thing that you will see coming into the spring season, you’re going to see lot of excitement in some of the great products we have on tap. So, we are very excited and bullish about as we launch the Air VaporMax, not only for the VaporMax itself, but also because it will drive a greater Air business across our business. So, we think as we bring more innovation in the marketplace that allows us obviously command stronger full-price in our products. And with that, I mean, we like said, we’re definitely seeing all the signs that the actual decline in inventory is now proven the stronger sell-through, we’re seeing stronger sell-through as a result.

Your next question comes from the line of Jim Duffy from Stifel. You may speak now.

I have a couple of questions, the first around your efforts to drive speed and agility. Can you speak in more detail around the express plan agenda, and maybe use LunarCharge as an example.

Yes, let me touch on that. We’ve always had the ability to move quickly and respond. What we’re doing now through express line, particularly as we scale this capability across the road, is to make this a sustained season-in season-out part of what we do and how we operate. The exciting thing about the express line is it literally puts us in a position to, as I have mentioned, deliver products from start to finish completely new product in weeks versus months. The LunarCharge is a great example on this last quarter of product that literally went through that complete start from scratch to completed products, went out to the market, and the sell-throughs on that have been incredibly positive. So, we’re now in the midst as we move into the second half of the year and then beyond, frankly, this is sort of new-norm is to make this a part of for the muscle that we have, I think, of this a more complete competitive advantage. We’re focused right now in footwear, but we see this scantling also across apparel as well. I am personally, as a product nerd, incredibly excited, not just by the ability to do this but to take it to significantly higher scale.

My next question around greater China and your efforts in category oriented retail, could you talk a little bit about where you stand there and how much runway there is left to drive that agenda?

Yes, obviously, I was just in China actually couple of weeks ago. And the thing that I continue to see is the NIKE brand is really performing incredibly well. And I love to give a context, which is both when you go in the stores and you walk the streets, you can certainly see the energy and vibrancy for the brand, and you can see that in also in the strong sell-through that we’re seeing in the marketplace. Across Singles Day, Singles Day, we actually were three-times, it was 300% greater this year than last in terms of sales. And so, we’re seeing tremendous growth in the dot-com business. The categories that are performing well are sportswear, running, Jordan brand, and NIKE basketball, all performing really well, which were the key ones we decided to focus in on in China. We also continued to have really tremendous amount of doors in the marketplace over 6,000 doors. So we're really ever present in the market, which allows us to expand and tell the right stories and create the right impact. And one of the biggest tailwinds that we always have is sports participation. And as I mentioned in the prepared remarks, certainly, the Shanghai marathon is one example of watching this market become increasingly sophisticated around participation, around their connection to sports, and also their connection into sport culture. And so we’re seeing it across multiple dimensions. So I continue to feel very bullish about China as we do as a total Group, and again 10 consecutive quarters of continuous growth.

Your next question comes from Omar Saad from Evercore ISI. You may speak now.

I wanted to actually ask my first question about maybe some of your insights to help us think about the, potentially evolving tax environment with the new administration. There's been a lot speculation, hypothesizing around potential import adjusted tax and taxes on imported goods, foreign sourced goods. How do we think about potential puts and takes longer term as we try to incorporate our longer term model, how these tax changes could affect NIKE’s P&L?

Well Omar, you're absolutely correct, there's lots of speculation here. I believe it’s really too early to determine what specific changes may be proposed. But we are looking forward to working with the new administration, and Congress, regarding those potential reforms. I want to quickly add that NIKE continues to believe in free and fair trade. We are a global company, obviously, operating in over 190 countries, serving billions of consumers, with close to 70,000 employees. So the reality for us is the closer we can be to the consumers that we serve in markets around the world more efficiently we can do so, and more efficiently we can do so, I think, the better for NIKE. So, as far as specifics around trade and tax policy, again, I think it's too early to speculate. But we look forward to engage and being a part of that process.

And Mark, maybe as a follow-up along those lines, how do we think about manufacturing revolution? I mean, you've got a lot of things in the pipeline in terms of bringing some production back to North America. Does any change, at least hypothetically, in terms of the tax law, perhaps accelerate the opportunity to build-up more domestic manufacturing. Maybe, how should we think about the scale, and longer term timing around that process? Thanks.

Just broadly, Andy touched on this in little more depth. But we're incredibly excited about the ManRev initiative that we have. It's a long term commitment. We've made a lot of progress having real impact for NIKE. Again, speculation on tax incentives is a bit early. I will say that we're highly motivated, as I said, to engage and look for opportunities to bring our product capabilities closer to markets. We’ve talked about that publically and that continues to be the case. So, we’re looking for expanding on those opportunities as much as we possibly can and working with the administration in that respect. So, we’re making the real headway on our ManRev initiatives. Certainly, reflects as we talked about Apollo, we’ve got new methods of manufacturing that we’re really focused on here through our advanced product creation center. Some of the most exciting innovation we have beyond product is in this space. And the good news is it not only enables us to get closer to the market with more customized or personalized products potentially, but it also helps to just create a better business overall. So the financial impact is definitely there. And it creates new opportunities from a design standpoint; so, incredibly bullish on manufacturing revolution, ManRev as we call it. And I hope and we’ll engage proactively to make sure that to see what we can do anyway to make sure that that continues to be the case.

Omar, I would just say really on two fronts. As Mark said, we are committed to and abdicate for pre and fair trade, and we’ll continue abdicate for policies, both trade and tax that allow us to innovate, best serve consumers, expand our business, and drive growth. At the same time, as you know over the past several years, we very proactively and strategically have been evolving our operating model through investments and manufacturing revolution, and other supply chain initiatives, with the goal of not only being to yield benefits in terms of labor productivity and lower materials cost, but as we have said, the opportunity to be much closer to market and closer to the consumer.

The next question comes from Jonathan Komp with Robert W. Baird. Your line is open.

First, could I just ask a follow-up on the futures growth, and this is globally but also more specifically for North America. Any comments or perspective on how much your actions to better control the inventory and the tail maybe weighing on the total futures growth?

Yes, I think when you think about how we manage supply and demand, it's across several dimensions. One of those is managing sell-through in the market place on a weekly and monthly basis. We also, when we’re in a situation like we were in North America, do look longer terms. So as futures is typically six months out, we do look at the forward looking futures window that we’re in at any given time. And manage that order book in the context of what we see in the market as of that point and what we expect over the several months leading up to that point. So they are related, if they are not perfectly co-related or the only lever. But we absolutely are continually looking at the orders that we’re taking for two seasons out in the context of the trends in the marketplace.

And then maybe switching gears just a question on the SG&A line. You look very well managed in the quarter, better than maybe you had anticipated coming in, and the full-year was revised lower by a little bit. Any perspective on some of the efforts and maybe some the successes you’ve had on editing down the SG&A spend, and maybe the suitability of some of what you’ve seen?

Absolutely, as you know, and as Mark noted and I noted, we've grown for seven consecutive years, 28 consecutive quarters of growth. And over that period and well before that, we've always focused, first, on investing strategically and with the view towards the long-term. What we see today is the ability to continue to do that but reflect on our core level of investment and spending and frankly operational infrastructure. And take advantage of productivity gains we see. That wasn’t the quarterly phenomenon, as you know, and I'm sure you've been paying close attention over the last several quarters. It's something that we have seen as a sustained opportunity. I think it really ties back to a phrase that Mark, Trevor and I all love, editing to amplify. And that has now become more systemically how we think about our investments across SG&A. And what it also evidences is the strategic alignment across our management team. And I think its evidence of our management team’s ability to prioritize what's most important to fuel growth, and get leverage in other areas where we think we've got ample resources.

The next question comes from Sam Poser with Susquehanna. Your line is open.

I guess, the one thing I wanted to understand it's been, could you give us some idea of what percentage the direct-to-consumer business was of your total revenue in the quarter, and how that compared to last year? And how you’re thinking about that on a forward basis?

Yes, Sam. This is Andy. We don’t report percentage of business per se. And as you know, DTC is on a reported basis includes full retail sales and wholesale is at wholesale prices. So, to some extent, that was just on a revenue basis that would be comparing apples and oranges. But as you know again someone who has followed us for a long-time, the rate of growth in our DTC businesses has significantly outpaced the rate of growth, still growth in our wholesale business. And so that was also the case in the second quarter as you review our 10-Q filing, you will see some detail on that, the difference between our DTC business and our sales to third party wholesalers. At the same time, I think it's really important to note that what's most important to us is growing the overall market as we said. And that has less to do with owned versus partnered and more to do with the nature of the experiences that we’re putting into the marketplace. So that was a great example, it happens to be owned. But the focus is really much more personalized services to consumer, and creating what we're really calling the new square-foot, leveraging digital to more fully serve consumer and expand the productivity. And we're going to increasingly do that with our wholesale partners as well. We have several very strategic wholesale partners here in North America, Western Europe, and around the world. We have wholesale partners in China who operate NIKE branded stores for us. And we think that's a big opportunity, both owned and partnered going forward to extend the market.

Just a quick follow-up. I asked the question as it related to the futures numbers, and how to think about what percentage of the business really isn’t reflected in those futures numbers the way. So just the way people think of it, because clearly your decision to change the way you reported is also a change on how meaningfully it is to you, and that’s really where I was going with that question.

Yes, why don’t I -- I’ll give you better dimension on that Sam very briefly. Nike.com futures orders and our in line stores or full-price stores, futures orders are included in futures. Our NIKE factory store business, which is a very sizable business, in fact it’s a bigger business than our in line brick-and-mortar business, that factory store business in not included in futures. Obviously, there’re various rates of growth across those dimensions with the highest rate of growth being in nike.com. And I just note the last thing on nike.com, as we continue to see extraordinary growth in nike.com, we’re also expanding internationally and that can create some anomalies year-over-year in terms of stocking up the inventory for expansion and what not.

Okay, happy holidays everyone. Thanks for joining today. We look forward to speaking to you next quarter. Bye.

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